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A Beginner’s Guide to Understanding the Blockchain (Part 3: Smart Contracts)

A quick summary of Smart Contracts. Source: www.academy.shrimpy.io
Visual representation of a traditional contract being executed. Source: https://dzone.com/
  1. Impossible for anyone to properly verify if contracts are upheld
Summary of how Smart Contracts work. Source: https://101blockchains.com/
  1. Costs: In the same vein, costs are drastically reduced too due to these intermediaries and paperwork being cut out.
  2. Efficient: Since they are written as code, these contracts execute almost instantaneously once conditions are met, without the kind of delays that are bound to take place in the case of a traditional contract, and when humans are involved instead.
  3. Accurate: Because of how these contracts are executed by code and algorithms instead of humans (that can potentially make errors), this ensures that agreements will be carried out to a tee, and without errors.
  4. Binding: It ensures that no one can default on the agreement, because once agreed upon, the code algorithm will execute no matter what the moment the pre-decided conditions are met.
  5. Transparent: Because the record of the transaction (after the execution of a smart contract) will be posted to the blockchain ledger for all relevant parties to see, there is full transparency in the whole process.
  6. Secure: As all transactions that occur on the blockchain are cryptographically encrypted, they are very difficult to hack or track. Moreover, the fact that the blockchain ledgers are distributed across so many different nodes render it almost impossible for records to be changed.
Source: https://101blockchains.com/

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Derek Lim

Derek Lim

A full-time educator, but even fuller-time Cryptocurrency and Blockchain nerd — Certified Blockchain Practitioner — Certified Bitcoin Professional