A transaction protocol or computer program that is intended to control, execute or document automatically for actions and legally relevant events in terms of an agreement or contract is called a smart contract.
It is a simple program stored on a blockchain that runs when it meets predetermined conditions. The idea behind smart contracts is to automate the execution of agreements, so all the participants are sure of the outcome. There is no involvement of any intermediary and hence no delays. Coins like Solana, Ethereum offer smart contract models.
The term Smart Contracts was first proposed by Nick Szabo in 1994. He was an American Scientist and inventor of BitGold, the first virtual currency, discovered 10 years before Bitcoin. Most of Szabo’s predictions are coming out to be true as we continue to discover more about blockchain technology.
Benefits of Smart Contracts
- Accuracy, efficiency, and speed: The contract is executed the moment it meets the predetermined condition. As the system is completely automated and digital, there is no need for any paperwork and no space for errors that often happen in the manual filling of documents.
- Transparency and Trust: There is no involvement of any third party. Transactions are encrypted and no one can alter anything for their benefit.
- Savings: No intermediaries involved. And that results in faster transactions.
- Smart contracts are highly dependent on programmers. And as they developed by humans, there is a significant chance of error. And this error can lead to exposure to bugs and vulnerabilities.
- Blockchain is often looked down due to the inefficiency to scaling the network. And the same applies to smart contracts.
We are slowly moving towards the blockchain world. Sooner or later, the world will accept Smart contracts. And instead of the traditional contracts, these contracts will take over. Smart contracts are still growing. Learn as much as you can to make the most of the opportunities present in front of us.