Smart Contracts can be explained as a blockchain-based technology which allows for the transparency of any transaction that's done on its network without the need for a third party. They are usually used in sectors and simple transactions that are usually needing an intermediary for deals and transaction to be a success.
Whether the transaction involves buying a kilo of chicken, buying a car, paying house rents, travel & hotel fees, buying a cruise ship, taking over a football club or a piece of land on mars, there are always lots of bureaucracy involved and loads of paperwork to prepare and sign. All these stress just to ensure that someone doesn't wake up tomorrow and start laying claims on our properties. We know Nobody likes stress and we also know that to trust another man (especially on deals that have heavy Worth) is a risky business. To trust without any collateral involved is to raise both hands up at the end of a cliff and smile at the person who is about to push you. Again, it's risky. If I'm going to allow you to push me off the cliff, I must at least have an anchor chained to my waste and another anchor to a very big rock that cannot fall. Eliminating all of these middle men and their bureaucratic processes is what the smart Blockchain is bringing to the table by offering transparency as its major marketing highlight, smart contracts development are know to be very effective and efficient in sealing deals and holding business partners or contracting parties accountable to each-other.
HOW SMART CONTRACT WORKS
Smart contracts work seamlessly with the use of Blockchain technology as its basic framework. Usually, a blockchain smart contract development platform is already on the ground to accommodate lots of users who will be needing the smart contract service. This means one doesn't have to go through the rigorous process of building a specialized Smart Contract algorithm every time there is a need to enter into an agreement. But then, it is important to know that Smart Contract platforms are essentially complex algorithms written to enforce an agreement between the contracting parties.
They are built in such a way that for every agreement that is made, the parties are able to enter its specific terms and conditions. This means that's the user can make use of just one account on a smart contract development platform to enter into lots of agreement without their terms and conditions crossing. Just like you can have one facebook account and engage millions of friends at the same time with just one account. Once the contract agreement has been logged by the contracting parties there is usually a window period of reminiscing over the agreement for the parties. They could skip it if they agree to. After the period, the parties are now left to click the "I AGREE" button. Once all the parties to the contract click the button, the Blockchain network locks in the agreement. The agreement as a necessity must contain what to do if a partner in the contract becomes unfaithful to the contract.
Such that the reward and reproach scheme is immediate without needing to file a lawsuit or digging up agreement papers to prove what was agreed upon. The partners knowing that the reward system is immediate and would, therefore, have no choice than to comply with the agreement. And in the case that they do not comply, they need not call on a third party to settle the breach in the agreement, the blockchain smart contract does it all.
SMART CONTRACT AND ITS ADVANTAGES
Blockchain smart contract development providers use the highest level of data encryption available, which is the same standard used by modern crypto-currency trading or exchange network. This level of protection makes them amongst the most secure sets of data on the world wide web.
This is a natural by-product of blockchain technology. Speed and accuracy of the blockchain technology bring about higher efficiency results in smart contract operations.
The visibility of the terms and conditions of these contracts makes it superior to the old contracting methodologies. There is no way to dispute the agreement once the contract gets locked in.
Guaranteed Outcome -
The most attractive feature of smart contracts may be its ability to reduce significantly or even eliminate the need for court processes and litigation since smart contracts are self-executing contracts. Parties commit themselves to the rules and regulations of the underlying code.
BACKUP & STORAGE
Records of essential details in each transaction are fully stored in the network and can easily be retrieved if they are a need for It in the future. Anytime your details are used in a contract, they are stored permanently for future records.
SMART CONTRACT AND THE FINANCIAL WORLD
The relationship between the blockchain smart contract and the financial world is a symbiotic one. Though not all contract has to do with finances we can agree that 70% of the times the word "contract" is used, there are always financial obligations attached to it. Also, knowing that the framework of smart contracts itself is the blockchain technology first came to disrupt the financial world by trying to create credible decentralized alternatives to the fiat currency.
If there is anyway smart contract hits our financial systems the hardest, then it would be joy of having the ability to create cross-border contracts between individuals and business. Usually, when business deals are going to be sealed, all the parties to the deal will have a series of meetings to decide what is and what is not going to be on the contract. With the smart contract, all the parties can make a well enforceable agreement from the comfort of their home office or even on the couch in their lebensraum.
Also, since all smart contract relies on the blockchain framework, which also hosts the cryptocurrency sphere, most Smart Contract development platform, therefore, involves Cryptocurrencies in their framework using it as the reward and reproach tool for users on contracting connections. This means high publicity and usage opportunity to spread the cryptocurrency movement even among top guns in the business world who will be using the smart contract tool.
Escrow services of commercial banks are also not needed again. Commercial banks who will usually make clients pass through a whole lot of paperwork in setting up escrow accounts have noted on the clients as they can now use a smart contract which is even more enforceable than the bank's service due to its speed in executing final terms of the deal.
Blockchain smart contract is going to hit the financial world even harder when it becomes a common tool even for individuals trying to buy a pencil, a great deal of the financial powers (monies) will move around it.