What are Smart contracts?
A smart contract, also known as a cryptocontract, is a computer program that directly controls the transfer of digital currencies or assets between parties under certain conditions.
A smart contract not only defines the rules and penalties around an agreement in the same way that a traditional contract does, but it can also automatically enforce those obligations. It does this by taking in information as an input, assigning value to that input through the rules set out in the contract, and executing the actions required. by those contractual clauses.
For example, determining whether an asset should go to one person or return to the other person from whom the asset originated.
These contracts are stored on blockchain technology, a decentralized ledger that also underpins Bitcoin and other cryptocurrencies. Blockchain is ideal for storing smart contracts because of the technology security and immutability.
Smart contracts are complex and their potential goes beyond the simple transfer of assets, being able to execute transactions in a wide range of fields from legal processors to insurance premiums to crowdfunding agreements to financial derivatives.
Smart contracts have the potential to disintermediate the legal and financial fields, in particular, simplifying and automating routine and repetitive processes for which people currently pay lawyers and banks sizeable fees to perform.
Back then there was little interest or activity using the idea of smart contracts because there was no digital platform that could support them. Today, with the growing adoption of Bitcoin and the support of blockchain technologies such as Ethereum, smart contracts are growing in popularity often built on top of digital currencies to trigger payments.
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