A smart contract is a contract that executes itself, and works through the terms of agreement or contract being written into the lines of code directly. The code and the agreements in its lines exist on a decentralized blockchain network. The code carries out the contract as per the rules agreed between the involved parties, and the transactions linked with the whole thing can be traced but are irreversible.
Smart contracts make it possible to execute transactions and agreements between totally different and anonymous parties with 100% transparency and accuracy, and there is no need for a central governing or controlling body to act as a mediator between the two. The lines of code make sure that all things that are agreed upon between the parties are fulfilled. These contracts are executed over blockchains, but their scope surpasses that of virtual currencies, for which blockchains are famous. As a matter of fact, Blockchain technology has grown far beyond the scope of bitcoin or other cryptocurrencies.
QUICK FACTS ABOUT SMART CONTRACTS
- Smart contracts are contracts written in the form of lines of code rather than plain text, and they execute themselves. They run over decentralized record-keeping entities known as blockchains.
- Once initiated, a smart code cannot be aborted, and it will only stop after executing the whole thing.
- Nick Szabo was the first person to propose and name smart contracts in 1994.
- The transactions carried out by smart contracts are traceable, irreversible, and transparent.
Here are some of the terms that you need to know to be able to understand what smart contracts are and how they work.
Bancor is a blockchain protocol that makes it possible to exchange different sorts of cryptocurrency.
Satoshi Nakamoto is the inventor of bitcoin, the most famous and the most widely used cryptocurrency. Some people think that Nick Szabo is the real Satoshi, but he has denied it. However, he created “Gold Bit,” a cryptocurrency, a full decade before the creation of bitcoin.
Blockchain is the name given to the independent, decentralized record-keeping systems that keep track of smart contracts.
Bitcoin is the most famous cryptocurrency. It was invented by an anonymous developer known by the alias Satoshi Nakamoto.
Lightning Network is the second layer of security that works on top of the blockchains to make sure the exchange, conversion, and transactions of cryptocurrencies follow the rules.
APPLICATIONS OF SMART CONTRACTS
Smart contracts can be used in a number of scenarios where the human factor needs to be removed in order to minimize contingency. Here are some of the current and prospective uses of this technology.
- Insurance companies can use this system to release claims to a large number of people in case of a natural disaster.
- Transactions carried out on the deep web and other places that care a lot for anonymity use smart contracts to make sure that the other party will hold up their end of the deal.
- Any transaction where the parties do not want to reveal their identity to each other and do not want a third-party to be involved can be carried out using smart contracts.
THE FINAL VERDICT
That was a brief introduction to smart contracts. They can be a good way of making sure that a deal or agreement will be held up by the other party. The best part is that you can remain totally anonymous by using smart contracts. If you want to know more about the latest technology, politics, environment, and anything that matters for us, humans, WALL STREET MEDIA COMPANY is your one-stop location to get all the information.