One of the features of Blockchain that makes it unique is its quality of decentralization which is shared between all the parties of the network thus, knocking out the role of middlemen or third-party intermediaries. This feature is extremely useful because it saves you from the chances of any process conflict and saves time too. Though there are many issues that are yet to be resolved, Blockchain offers faster, cheaper, and more efficient options as compared to the traditional systems. Due to this, even the banks and governmental organizations are turning to blockchains these days. Smart contracts can be termed as the most utilized application of blockchain technology in current times.
A smart contract is a set of computer code between two or more parties that run on the top of a Blockchain and constitutes a set of rules which are agreed upon by the involved parties. Upon execution, if these sets of pre-defined rules are met, the smart contract executes itself to produce the output. This piece of code allows decentralized automation by facilitating, verifying, and enforcing the conditions of an underlying agreement. Smart contracts enable you to exchange anything which consists of value including money, shares, property etc, in a transparent manner knocking out the requirement for a middleman and keeping the system conflict-free.
The accuracy, transparency, and automated system of Blockchain provides a single ledger as a source of trust and also removes possible intertwinings in communication and workflow. Mostly, business operations have to endure a back-and-forth, while waiting for consent and for internal or external issues to sort themselves out. A Blockchain ledger streamlines this. It also cuts out differences that typically occur with independent processing and that may lead to costly lawsuits and settlement delays.
WHY ARE SMART CONTRACTS THE NEED OF THE DAY?
By applying smart contracts in our day to day life, we can make phenomenal changes as they offer multiple benefits over the manual contracts. Let us check out the benefits offered by smart contracts,
Autonomy
You’re the one creating the agreement; there’s no need to rely on a broker, lawyer or other intermediaries for approval. This also eliminates the danger of manipulation by a third party, since execution is managed automatically by the network, rather than by one or more, possibly biased, people who may err.
Trust
Your documents are encrypted on a shared ledger. There’s no way that someone can say they lost it.
Backup
Imagine if your bank lost your savings account. On the blockchain, each and every one of your friends have your back. Your documents are duplicated many times over.
Safety
Cryptography is the encryption of websites that keep your documents safe. It is hacker-proof. In fact, it would take an exceptionally smart hacker to crack the code and gain access.
Speed
You’d usually have to spend a significant amount of time and paperwork to manually process documents. Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes.
Savings
Smart contracts save you money since they eliminate the presence of an intermediary. You would, for instance, have to pay a notary to witness your transaction.
Accuracy
Automated contracts are not only faster and cheaper but also avoid the errors that come from manually filling out heaps of forms.
To conclude, smart contracts normally work on a mechanism that includes digital assets along with multiple parties where the involved participants can automatically govern their assets. These assets and be deposited and redistributed among the participants according to the rules of the contract. Smart contracts have the potential to track real-time performance and are cost-effective.