What Are Smart Contracts?
There is a great deal of excitement surrounding this technology.
Smart contracts have the potential to be traceable, transparent,
and irreversible. As for security, they can record an undisputable
history of changes and verify electronic signatories. Scalability
and lower compliance costs are also important benefits to consider
when looking at the future of this field.
With these benefits in mind, you're probably wondering how
it all works. Smart contracts are made up of code, which can
self-execute and enforce an agreement. The entire process is
automated via a 'distributed ledger'. The same copy of
contract is downloaded onto every computer for all users to see.
This results in a secure system, as any manipulation can be seen by
others. A mutual trust is created between the parties, as execution
of the agreement is certain if the negotiated conditions are met.
Therefore, intermediaries are no longer needed when agreeing to a
contract.
