A smart contract is a set of cryptographic codes that consists of pre-determined rules and the execution of a task. In layman’s terms, the criteria are embedded in the code and once those criteria are met, the corresponding task or event is executed.
For example, you can write a smart contract about paying $450 for rent every 30th of the month, transferring the assets once the predetermined payment is received, vote on the day of elections with the records being untampered, etc. One of the most important qualities of smart contracts is that since the contracts are stored in a blockchain, they cannot be changed once written.
This quality has its own pros and cons. On one hand, it provides transparency and automation, on the other hand, the contract has to be written again if there is any flaw in the code, which sometimes makes the applications pricey. Smart Contracts provide the advantage of automation to its very fundamental nature. Due to the qualities mentioned above, Smart Contracts are autonomous, trustworthy, accurate, secure, and economical. They are economical in a way that the contracts will cut down the expenses incurred by middlemen.
Additional Read: What are Ethereum Dapps?
In today’s world where we are transitioning to Web3.0, smart contracts are the handyman for developers. It helps them in building various decentralized applications or Dapps and tokens among other things. Smart contracts are used in everything from new financial tools to logistics game experiences and so much more! The best part is they are stored on a blockchain like any other crypto transaction. Thus, once a smart-contract app has been added to the blockchain, it generally can never be reversed.
The Dapps that are built using smart contracts include DeFi tech that aims to transform the banking industry as we know it. DeFi apps allow crypto traders to engage in complex financial transactions without a third party involvement. Not only that, but they also enable traders to access these transactions from anywhere in the world. Some of the more popular smart-contract powered applications include:
In traditional finance, swapping currencies is expensive and time-consuming. The process is not always easy. But smart contracts and their ability to make transactions transparent without leaving room for any altercations make transactions taking place globally secure and easily accessible.
Additional Read: How DeFi will Reshape the Future of Finance
The list of challenges and technicalities goes on. Experts are trying to work on these critical issues but these issues often dissuade potential adapters from signing on. Several platforms already exist which use Smart Contracts among which Ethereum is the one that has pioneered its application. It is specifically designed and created to support Smart Contracts.
The success of a platform like Ethereum using Smart Contracts shows that when the issues are ironed out, Smart Contracts are a form of technology that will be the future of contracts.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. In case you have any queries, write to [email protected].
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