Smart contracts are coded programs that are stored on a blockchain. They have been previously compared to a vending machine which works by automatically releasing snacks once a card, ticket or cash has been inserted into it. In the same way, smart contracts are programs that automatically execute an agreement or a contract after predetermined conditions are met. By automating the execution of agreements, they ensure that there is no time loss or need for intermediaries. Smart contract execution can result in the exchange of funds, registration of vehicles, data manipulation such as changing of names in land title deeds, issuing of tickets and many more.
Smart contracts are automatically executed once the conditions of the agreement are met. This means there is no need for a third party, like a bank, a broker, or a government.The possibilities are endless for smart contracts. They are already being used for financial trades and services, insurance, credit authorization, legal processes, and even for crowdfunding agreements (ICOs).
Smart contracts have significant advantages including;
- Speed; smart contracts are digital and automated hence once a condition is met, the contract is executed immediately. This saves time that would have otherwise been wasted in recording information manually.
- Efficiency and Accuracy; Errors can result when manually filling in documents, however, smart contracts are digital hence
- Trust and transparency; Smart contracts eliminate the need for a 3rd party instead records are shared across all participants hence no possibility of alterations.
- Cost effective; by eliminating the need for middlemen, they also eliminate extra fees that would have otherwise been required.
- Security: As they are recorded on the blockchain, smart contracts assure participants of security as they can neither be altered nor faked due to the immutable nature of Blockchain technology.
Blockchain smart contracts are assisting make transactions and business processes more secure, efficient, and cost effective. As Blockchain technology continues to mature, so will the use cases for smart contracts. It is inevitable that several industries including; agriculture, healthcare, insurance, banking and supply chain management will adopt the convenience that comes with smart contracts.
