Smart Contract

Smart Contracts

• A smart contract is essentially a programmed protocol which governs the execution and control of the terms of an agreement. It is a legally binding contract which reduces the need of intermediates and additional costs of agreement while significantly nullifying the chances of fraud.
• While smart contracts are becoming a norm for Blockchain-based organizations to enter into an agreement without knowing each other, the earlier versions of smart contracts are known to all. Vending machines. Technically speaking, they are known to be the oldest technology equivalent to smart contracts.
• Technically speaking, they are known to be the oldest technology equivalent to smart contracts.
• DAOs are built around smart contracts. It gives the members of the DAO enough flexibility and freedom while enforcing the laws and terms of its agreement.
• But this invites a question. How can a contract self-execute?
• Let’s say, you are paid $1500 a week for working 40 hours. Now, someone has to approve your timesheet, and then approve your payment before the money reaches you. Even if it’s digital, there is someone verifying it at the backend.
• With smart contracts, this someone is obsolete. The transaction history is authorized, recorded, and stored safely and publicly. Since everyone controls the contracts, no-one controls it. Thus, there is no chance of violation or tampering with the contract.