The world is waking up with the impressive capabilities of Blockchain, and Smart Contract is also an indispensably important factor.
What is Smart Contract ?
The best way to describe smart contracts is to compare the technology to a vending machine. Ordinarily, you would go to a lawyer or a notary, pay them, and wait while you get the document.
With smart contracts, you simply drop a bitcoin into the vending machine (i.e. ledger), and your escrow, driver’s license, or whatever drops into your account. More so, smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations.
Essentially, smart contracts can be used in all cases ranging from finance to insurance premiums, contract breaches, property law, credit enforcement, financial services, legal processes and crowd-funding agreements.
The Benefits of a Smart Contract
Thanks to blockchain, Smart contracts have some undeniable benefits:
Self-sufficiency: Smart contracts do not need to be notarized by a lawyer, notary, or any other third party. So, it completely eliminates cheating or manipulation by these individuals.
Cost reduction: Most of the stages are automated, and intermediaries are almost entirely eliminated.
High speed: Anyone with experience handling a contract is aware that it is an extremely time-consuming process. However, it takes only a few minutes or even seconds to deal with a contract on the blockchain.
Information security and accuracy: Smart contract is encrypted and distributed to the nodes. This ensures that the contracts will not be lost or modified without your permission.
So when compared to the traditional contract, what are the breakthroughs of a Smart Contract?
Traditional Contract and Smart Contract
Traditional contracts are created by legal experts and require a third party to execute. It might lead to a lack of transparency and be somehow time-consuming. Especially, it will be difficult to solve unexpected problems, thus costing a fortune.
Smart contracts are created by computer programs in languages such as C ++, Go, Python, Java. It also clearly states the terms and required actions in case of contract breach. The only difference is that Smart Contract does not require human intervention, ensuring accurate and fair implementation. The whole code of Smart Contracts will be implemented by Blockchain Distributed Ledger.
Of course, smart contracts are still not perfect, and more researches are required to find the perfect solutions. However, it is undoubtedly true that businesses with the timely adoption of new technologies will be the leaders. Smart contracts have opened up a new door and made our dream to enter the Industry 4.0 come true.