Smart Contracts: Lies or Not
Contrary to what the title says, I am only here to explain what Smart Contracts are without bringing technicality(understanding of programming) into it.
To properly explain explain Smart Contracts, we first need to have an understanding of what a Contract is:
Google tells us that a Contract is a “a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.”
The keyword here is agreement. One thing to also keep in mind is that an agreement is done between two or more persons.
What are Smart Contracts?
They are sets of conditions written in form of codes(languages understood by the computer) that brings about the occurrence of an event once a condition or set of conditions are met.
How Do They Work: The Full Gist 😎
Firstly, i’ll be establishing the fact that these contracts are taking place on the Blockchain.
For better understanding of what Blockchain is about, read my article titled, Blockchain: The Bedrock of Everything
Secondly, let’s contextualise everything
Jeremiah is a Blockchain Developer (a person that builds solutions solely for the blockchain). For one of Jeremiah’s solutions(application), he sets a condition that: If a portion of Bitcoin is to be transacted/sold between two parties, then the following must be satisfied .
- Party A which is the seller must have the required amount of Bitcoin and
- Party B which is the buyer must have an equivalent entity/price/currency of the amount of Bitcoin selected.
The Smart Contract then consults the Blocks of Information available in the ledger (Blockchain). The Smart contract confirms if both parties satisfies the conditions. If they do, it creates a payment event.
If for any reason, they do not satisfy the preset conditions, it initiates a cancel event.
The idea here is that the Smart Contract acts as a middle man thereby checking and deciding what happens or the list of events to initiate.
Benefits of Smart Contracts
IBM’s shared some benefits:
- Speed, efficiency and accuracy: Once a condition is met, the contract is executed immediately. Because smart contracts are digital and automated, there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents.
- Trust and transparency: Because there’s no third party involved, and because encrypted records of transactions are shared across participants, there’s no need to question whether information has been altered for personal benefit.
- Security: Blockchain transaction records are encrypted, which makes them very hard to hack. Moreover, because each record is connected to the previous and subsequent records on a distributed ledger, hackers would have to alter the entire chain to change a single record.
- Savings: Smart contracts remove the need for intermediaries to handle transactions and, by extension, their associated time delays and fees.
Before you leave again, my mind is troubled …
This is not a perfect explanation of what Smart Contracts are. I only shared my thoughts and understanding of it. For better understanding, check the references i have shared below. Thank you for reading 😊😊
Missing you already 😩
