Smart contracts are digital agreements written as codes that are used by buyers and sellers on the blockchain, it’s built within the blockchain which is decentralized. Many blockchains implemented Smart Contracts like – Bitcoin, Ethereum, Cardano, Eos, Tron or Tezos. Nick Szabo is a computer scientist who first proposed in 1994 the idea of smart contracts and invented virtual currency 10 years before Bitcoin. One of the oldest implementations of smart contracts are vending machines.
Being a publicly run system, the data of each and every transaction is stored and is unchangeable and there are no middle man or a third party to block or revoke your payments from reaching their destination.
They are mostly used in real estate deals where the buyers and sellers create a smart contract and digitize the real estate.
Digitize real estate? What’s that?
NO! They don’t create digital real estate, it’s actually the connecting of 2 dealers making an agreement on a deal.
Or let’s say that you’re a tenant, and you create a smart contract with your landlord and make an agreement that you’ll be paying the rent on a date every month, what you do then is create a smart contract that automatically pays your landlord the rent every month without you having to interfere.
Why should you use smart contracts?
Intelligent contracts are known for their safety, in fact, they are the safest ways of agreeing. A smart contract doesn’t require a third party to execute the contacts and is stored at the database of platforms like Ethereum, which is decentralized making it safer than ever. Smart contracts are the foundation of DeFi – Decentralized Finance.
As it is a digital contract, the accuracy provided by a smart contract is impeccable as they execute the terms and conditions for you which is highly secured and cannot be manipulated.
Having no middle man means that it’s transparent and there’s a direct communication between the buyers and sellers which is the reason why it’s adored by people who care about trust and privacy.
It’s so safe that even the government voting systems and health records of patients are stored as smart contracts using a private keys.
Smart contracts can become the future one day, they are not just used for one industry but can be used for any sectors from the health industry to the finance industry to the insurance industry.