What are Smart Contracts in Blockchain?
Smart contracts are one of the most significant, impactful, and valuable tools associated with blockchain today. We can use them to administer the transfer of fiat money, cryptocurrency, and goods & services transported across the world.
They are self-executing business automation computer programs that run when a predetermined set of conditions is satisfied. Therefore, they operate on simple “if/when … then” statements to achieve the desired outcome.
While blockchain stores the information regarding contracts, thus acting as a database and confirming that they have taken place, smart contracts are responsible for executing the terms for these contracts.
For example, consider a business deal between a retailer and a seller. Here, blockchain facilitates the transfer of fiat money/cryptocurrency in exchange for goods. A smart contract will act as a set of terms that will govern this transfer. These terms may look like this:
· Execute the payment from the retailer to the seller if the goods arrive on time
· If the goods arrive one day late, execute payment for 90% of the total amount.
Undoubtedly, smart contracts have enabled blockchain technology to excel beyond the scope of cryptocurrency and become applicable in numerous fields such as healthcare, digital identity, supply chain, trade finance, and real estate.
For example, Fantom Foundation is a renowned “permissionless smart contract platform” in the blockchain. It promises the users a customized, secure, fast, and relatively affordable exchange of tokens alongside other transactions.
The most attractive feature of smart contracts is that they run on a decentralized framework and eliminate the need for an intermediary. In this way, they facilitate transactions at lower costs and are time-efficient.
Moreover, it also helps them to remain tamper-free as all the parties involved have shared access to the results, and nobody can alter them.