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What Are Smart Contracts?

09/09/2020

What Are Smart Contracts?

You may have heard of smart contracts and their potential to replace the middle men of traditional
contract methods. But what exactly IS a smart contract? A smart contract is a computer program
using blockchain code that controls the assets and/or currencies being shifted between relevant
associations. Effectively, designated information is stored on a blockchain, in an immutable public
database that cannot be altered or changed without appearing on the system. This makes it
tamper-proof. The simplest Smart Contracts application can be sent and signed digitally,
removing third-party middle men. This in turn reduces the costs of paying for extra labour and
administration. Smart contracts can be used legally by companies and relevant parties providing
that they meet certain strict criteria.


Smart Contracts Explained
We’ve looked into the basic idea of what Smart Contracts are, but now let's take a deeper look.
From inception, smart contracts have been used by relevant parties to manage how agreements
are delivered and met. Over time, rapid development of technology has allowed smart contracts
to become automated and more efficient, giving them wider industry use.


The biggest development in smart contracts has been blockchain technology, which has
sanctioned the ability for networks of multiple computer networks to control the contract. This
means that there is not one singular person or group that has control of the contract, making
them unable to change the conditions without all relevant parties being able to witness the
change. Thanks to smart contracts using blockchain technology, there is no need for third party
involvement and assuming that strict guidelines are acted upon, agreement obligations can be
automatically enforced.


So, How Are Smart Contracts and Blockchain Useful?
Now that we have gone through what Smart Contracts and blockchain are and talked about them a
bit more in depth, we can ask: But how are they useful in industries looking to create a more
efficient way of contract signing? Smart contracts offer pin point accuracy in crucial binding legal
documents, can be specifically designed with efficiency and bulk contract interaction capability, and
easily manage high volumes of contract and business matters.


The decentralised system used by blockchain smart contracts reduces the middle men of contract
signing while obtaining all relevant details of deals between parties in a fraction of the time. Smart
contracts result in large financial savings across the board while reducing risk of fraud and
deceptive business dealings. These are ideal for allowing unique, flexible and expansive business
models into your industry, and provide legally binding documents that are efficient, accurate and
can be trusted. For trust and transparency, there is nothing like smart contracts using the
immutable blockchain technology.


Conclusion:
Smart contracts are the future in contract signing, with the trust and transparency provided by
tamper-proof blockchain technology. By using a decentralised system, the control over the
contract is spread to all relevant parties, making it impossible to tamper or change without all
parties being notified. Smart contracts remove third-party interference, resulting in saved money
for all involved and a clearer, more understandable system.


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