Blockchain technology is the focal point for the development of bitcoin and most other cryptocurrency. It is a decentralized, distributed ledger that records a digital asset. Recently blockchain has been found to do much more. It has been found with enormous ability to execute smart contracts.
What it means.
A smart contract is a computer program or a transaction protocol which is intended to automatically execute, control or document legally relevant events and actions according to the terms of a contract or an agreement.
What it simply means is that it makes use of blockchain technology to verify, validate, capture and enforce agreed-upon terms between two parties or multiple parties. The blockchain is used and in fact it is the most important structure for building smart contracts because all the data stored in it is immutable and secured. In a nutshell it offers the highest form of security and every contract done is irreversible.
Smart contracts have actually come a long way. Available data shows it was first proposed in the early 1990s by a scientist Nick Szabo, who coined the term, using it to refer to “a set of promises, specified in digital form, including protocols within which the parties perform on these promises”.
For example, an asset or currency is transferred into a program and the program runs this code and at some point it automatically validates a condition and determines whether the asset should go to one person or back to the other person, or whether it should be immediately refunded to the person who sent it or some stuffs like that.
What you should know.
According to Jeff Garzik’s an astonishing blockchain expert, Smart contracts work on the “If-Then” premise. So, to put in a more basic form. He narrated a scenario, example; “UPS can execute contracts that say, ‘If I receive cash on delivery at this location in a developing, emerging market, then this product, will trigger a supplier creating a new item since the existing item was just delivered in that developing market.’” He concluded. So what contracts tries to automate the system and make it easier and irreversible. And due to its use and run within the blockchain, it offers a very high level of transparency and anyone could easily verify if the contract was executed or not.
What you must know.
All too often, many legal matters and projects are hampered by plenty paper works which gives rise to many mistakes and errors. However, the in-road making of smart contracts will cut off the middleman issues and improve the ease of doing business.
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