What are blockchain smart contracts? Let's look at the main benefits of smart contracts and how they can be used. Can they really change our lives for several years?
Actively, smart contracts began to develop in 2014. In the period 2016-2017, the number of blockchain smart contracts have increased tens of times. Today you can see their application in many industries. For example, the Propy project offers its users to buy or sell a house for cryptocurrency. The rights and obligations of the buyer and the seller are regulated on the basis of smart contracts.
What are blockchain smart-contracts?
A smart contract is a small software script that describes the relationship of users. In fact, it is similar to the usual legal contracts that we are used to seeing, only with some differences. The algorithm of smart-contract is stored in the blockchain and starts actions under certain "if-than" conditions. To make it more clear, consider a few examples:
- If the user invests 10 ETH in the system, then he receives 1000 tokens.
- If the user invests 10 ETH in the system before January 1, then he receives 1000 tokens + 10%.
- If before January 30, the balance in the system will be less than 100 ETH, all users will receive a refund.
As you can see, the main benefit of smart-contracts is the absence of intermediaries. Everything is controlled using a pre-written program (script). The human factor disappears, it gives certain and important advantages, but at the same time, there are new rises, which we will talk about further.
Benefits of blockchain smart-contract
The rapid growth of smart contracts is obliged by the development of the cryptocurrency. First of all, it should be noted Ethereum. This is one of the few platforms(currency) that enables you to create your own smart contracts. The main benefits of digital contracts:
- No presence of intermediaries. As already mentioned, the absence of intermediaries makes the process much easier and faster. Now there is no need to seek help from a lawyer. Everything follows the pre-written code.
- Safety and confidentiality. All contracts are stored in the blockchain, in an encrypted form. The goal of the system is that no one can change the smart-contract or replace the data. In addition, private keys are used for signing, which increase the level of security.
- Speed. Paper work takes a long time. The use of blockchain smart-contracts significantly speed up the process of concluding transactions.
- Saving money. Smart contracts exclude intermediaries from the business process. Once written, the program can be used for different transactions for different users.