As seen in a previous article, a smart contract can be created on the Ethereum blockchain by anyone. But what are they exactly? And what can you achieve with them? Here are some answers:
What is a smart contract?
It is a program meant to directly control digital assets. While a traditional legal contract defines rules between several parties, a smart contract goes beyond that and writes the rules in a blockchain to ensure a transfer of assets only when the conditions match those in the contract. Through this approach, an asset is thus tied to a program which is stored on a blockchain. The program executes the code automatically when a condition is met, it determines if the asset has to be sent to a person or be refunded or send somewhere else, or a combination of all that.
Smart contracts guarantee very precise conditions for execution. There is no room for confusion, and no disputes possible. A smart contract is set a certain way and cannot be modified, deleted or be made to act differently, thus ensuring a perfect upholding of its conditions, no interpretation is possible.
What can be done with a smart contract?
Smart contracts are faster than regular contracts as the execute automatically when the conditions are met. They do not require any intermediaries and are cheaper. This way, it is easy to imagine some interesting implementations in supply chain for example, it could make it easier to track merchandise more efficiently. Or also in real estate where a someone renting an apartment could make his deposit on a blockchain and be absolutely sure to get his deposit back the instant the landlord has reviewed the condition of the apartment.
Anything requiring a payment could potentially benefit from a smart contract stored on a blockchain to make payment faster, safer, more reliable and automatically generated when all conditions are met.
Blockckain technology opens up a new range of possibilities that might eventually change the way we think of assets and money transfers, not needing a middleman to validate transactions could become the norm. This could eventually lead to a complete overhaul of our conception of trust in deals and transactions.
Do you agree? What is your opinion on the future of smart contracts and their potential?