In simplest terms, smart contracts are the holy grail of coding that automatically executes pre-determined terms between two parties. It exists within blockchain’s decentralized platform and requires absolutely no intermediatory party. Transactions are stable as well as unchangeable. It is easy to access these from DApps (decentralized applications).
Contrasting Smart Contract’s History and Present-Future
Smart contracts date back to the 1990s, even though blockchain came into being only in 2014. Nick Szabo birthed the protocol as a concept of a digital currency called Bit Gold. Even though it never actually came to be, it was the stepping stone for blockchains to make use of such stellar technology.
Considering that these contracts were unimaginable a decade ago, their market performance has been exceptional since 2019, with $106 million global smart contracts. There are constant updates to make it possible without needing coding knowledge. Ways to make it easily understandable and safe are underway.
Works like a Vending Machine?
Smart contracts are often compared to vending machines. Both systems provide products/services without a middleman to take the transaction forward. Automated exchange of money and goods is a common feature for the two. However, smart contracts are still a much more polished and enhanced payment method.
With that in mind, it is easy to understand how such contracts work. Once the conditions are set and terms are meditated, the transaction takes place automatically. The entire history of the transaction is encoded and recorded into the blockchain safely. The EVM (Ethereum Virtual Machine) stores the copy of the transaction while also laying down the rules of holding transactions.
Reaping Benefits of Smart Contracts
Smart contracts offer transparency by giving each party complete access to go over terms and conditions carefully. They protect personal data and identity unquestionably. Its speedy and autonomous process saves time and energy for all. Most of all, it guarantees a successful transaction with its self-executing mechanism. This holds all parties to their obligations to the contract. No middlemen or unforeseen formalities come in the way once the transaction takes its course.
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