What is Smart Contract and how it works?
Introduction
In the current era of rapid deployment of blockchain solutions, Smart Contracts are gaining a unique prominence. Blockchain stores digital contracts in the form of smart contracts. Smart contracts include executable terms and conditions. They run automatically without any intervention of a third-party. The reason being, use of smart contracts is prevalent in a number of sectors such as the government voting system, healthcare, supply chain, financial services, etc. to resolve the issue of complex and mass transactions.
What is a smart contract and how does it work?
A smart contract is an agreement that involves two parties. It is in the form of executable code kept on a public database and that could not be changed by any party. Along with this, the smart contract processes the transactions automatically when the agreed conditions between both the parties are met. Thus, there are no issues of trusted parties while using the smart contracts.
How are they safe?
Due to its decentralized nature, no any central party could control smart contracts. Moreover, the hackers cannot hack them easily because in order to hack they need to hack more than half of the nodes of the blockchain. The reason being, smart contracts run in a safe and automatic manner.
Benefits of smart contracts
Basically, a smart contract is a set of protocols that facilitate automatic verification, and execution of an agreement between two parties. It can be beneficial to the stakeholders as below:
Accuracy
The automatic execution of smart contracts eliminates errors unlike manual contract filling.
Speed
Its execution is speedy enough to save hours of business personnel’s.
Safety
It is safe from infiltration due to encrypted contracts.
Autonomy
The end parties can enjoy high autonomy due to elimination of intermediaries.
Platforms supporting development of smart contracts are:
There are multiple platforms that support the creation of smart contracts including Ethereum, NEO, Hyperledger, Waves etc.
Ethereum
It is the most prominent platform for building smart contracts. It provides a decentralized virtual machine that executes code using an international network of nodes. Solidity is the smart contract language of Ethereum that helps the developers to create easier and less riskier contracts. Ethereum based smart contracts are the first preference of the blockchain developers.
NEO
NEO is not much recognized across the world. However, it offers trustless smart contracts and financial transactions that are intricate in nature. Along with this, it offer developers the ability to write smart contracts using already known programming languages. It also facilitates a simple and user-friendly platform for smart contract development.
Hyperledger
Hyperledger is an open source platform to create and develop distributed ledger frameworks for supporting business transactions. Linux Foundation hosts Hyperledger to deliver plug-and-play membership services. Like Ethereum, Hyperledger provides a set of tools and programming languages to support easier development of smart contracts.
Waves
Like Hyperledger, Waves is also an open-source platform. It focuses on speedy and scalable mainstream blockchain implementation. It prevents a smart contract from changing the behavior of another smart contract through tokenization.
Conclusion
Smart Contracts can eliminate the burden of managing the cumbersome transactions in an automatic manner. It can provide a secure environment for making transactions and accelerates the business processes. Now, the stakeholders do not have any need to prepare, maintain, and execute the contracts manually as the smart contracts are self acting. Smart Contracts eliminates the intermediaries to sustain the autonomy of the contracting parties. Thus, smart contracts facilitate extensive opportunities for the stakeholders to conduct smooth business operations globally.
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