‘Smart Contracts’ is a term that is often used in the Blockchain world. ‘Smart Contracts are similar to legal contracts but are encoded in the ‘Blockchain’ . ‘Ethereum’, the public blockchain is the most popular way to create smart contracts.
We encounter physical ‘contracts’ throughout our life. Contracts are present when we start a new job(detailing the job details and the date of salary payments) , when we buy a new house(detailing our mortgage payments and the corresponding dates , when we buy a new vehicle(detailing loan payments)
Home loans, car loans and most other critical dealings come with contracts. ‘Contracts’ enable the buyer and seller to keep their word. In a home buying scenario, once the buyer completes all his mortgage payments, the loaner company should release the title and deed and all appropriate paperwork to the buyer. There are lengthy clauses which cover every aspect of our business dealings.
An example of a legal statement might be as follows: ‘If the bill is not paid by a certain due date, then add a corresponding late fee or revoke the license’.
What if this could be automated and enforced without any manual intervention? Is this possible? yes – by means of smart contracts.
In a ‘smart contract’ the contract itself is coded and it is further stored and monitored by the Blockchain network. Once a condition is met, the contract executes automatically. This ensures transparency along with elimination of middlemen.
‘Smart Contracts’ are mostly written in the ‘Solidity’ programming language.
This is just a short glimpse into the world of ‘smart contracts’. Join me as I uncover more technical topics about the ‘Blockchain’ world in subsequent posts…