Smart Contract

Smart Contract is an automatically enforced agreement, the terms of which are encoded in a programmable language onto the blockchain. Two parties can perform reliable transactions not only without intermediaries but also without disclosing each other’s identity. The program transmits the advance payment to the corresponding party automatically confirming that the terms are fulfilled.

Where is it used? In essence, smart contracts are stored within the blockchain and can be automatically activated if certain conditions are met.

What’s the use of it? To demonstrate, these contracts eliminate the third party interactions which are regulating all conditions of a deal or a task to be done.

Interesting facts

  • The “smart” part of the contract is in not needing the other party’s cooperation to execute the agreement.
  • For instance, the Bitcoin protocol can be used to create smart contracts.
  • For governments, smart contracts running on the blockchain can make voting systems completely trustless and much more secure.