What makes blockchains such an interesting investment is that there is no need for intermediaries (or brokers). This is both cost and time-effective. The other factor here is in its naturally effective decentralized system.
Blockchain Smart Contracts Ethereum
The idea of smart contracts came about in 1994 by a legal scholar and cryptographer Nick Szabo. It is known by other names like:
- Digital Contracts
- Blockchain Contracts
- Self-Executing Contracts
How does it work?
How it works is that contracts can be converted into a form of computer code. This can be stored and replicated which could be supervised by the network computers before they are used to run on the blockchain platform. Besides that, this helps to allow for ledge feedback.
So, what are smart contracts really?
If you have been interested in blockchains, you will surely have come across the term smart contracts by now. In most cases, smart contracts are closely and inter-related to Ethereum. So, what is it really? Smart contracts are used in blockchains so that you enjoy a straightforward and transparent way of carrying out transactions. Without using an intermediary or middlemen, this way has lesser (or none at all) conflicts. Through smart contracts, you can transfer and exchange anything of value whether it is money, shares or property.
Its like a vending machine
To understand smart contracts better, it would be best to use a typical vending machine as an example. What would you normally do if you need the services of a lawyer? You will first visit them, make the payment and then wait for the document to be ready for collection. With smart contracts, you can do that with a vending machine. This means that you pay with a bitcoin into the machine instead of visiting anyone. Then, the document will be dropped into your account (or wallet for that matter).
Benefits of Smart Contracts
So, what do you really get from smart contracts? Here are some of the known benefits:
- It is autonomous – You get to decide how the agreement will be made because there is no use of any intermediaries.
- Trusted – Without the broker or middleman, you need not have to worry about being manipulated by any third party
- Safe – Your documents will never be lost (human errors) because they are encrypted in a shared ledger
- Security – There is sufficient backup. In fact, your documents will be duplicated numerous times on the blockchain
- Technology – Because it uses encryption, your documents will be safe from hackers (they need to be specifically smart to hack in)
- Quick – With Smart Contracts, processing and retrieving of your documents are quick and very fast
- Accuracy – Smart Contracts are not only fast and cheap but they are very accurate and almost error-free
How do you use Smart Contracts?
To the loyalists, smart contracts would be the future of payments. In fact, it can possibly be used for everything in the chain. This could include:
- Governmental – A lot has been said about using smart contracts for governmental purposes with the most prominent being used for voting
- Automotive – This has been mentioned in various forums that smart contracts could play a prominent role in smart cars and smart parking, among others
- Properties – Without using a middleman or a broker, smart contracts facilitate payments which means you get to earn more
- Healthcare – The blockchain can be used to store and encode personal health records and for supervising of drugs