What is a smart contract?
A smart contract is a computer program which controls the transfer of cryptocurrencies between different people after specific conditions have been met. Smart contracts are run and executed by blockchain technology. In addition, the contracts are also stored in the Blockchain technology which can be described as a decentralized ledger which also runs cryptocurrencies such as Bitcoin. The beauty of smart contracts is that they work on their own. They are designed in a way that they depend on one another meaning that when one smart contract is completed it triggers the start of another.
Smart contracts offer more than just the transfer of digital currencies. Through Blockchain technology, these contracts can be used in different areas such as supply chain departments in companies, controlling online games, running a voting system among others. The beauty is that they cannot be interfered with because changing one contract would need you to change the entire coding which is practically impossible.
Benefits of smart contracts
- Security – smart contracts work through Blockchain technology which is decentralized which makes them very secure and impossible to hack.
- Speed – Through smart contracts transaction time is reduced and your transaction can be approved within seconds.
- Cost-efficient – Smart contracts have eliminated costs of hiring staff to monitor the progress of a transaction.
- Anonymity – Smart contracts are automatically performed which eliminates third-party involvement.