What are Smart contracts and how do they work

Smart contracts explained

Suppose you’re going to rent a car. To complete a transaction, you pay in cryptocurrency via blockchain. Afterward, you receive a receipt for your virtual contract. Then you will be provided with a digital car key on a set date.

If the key doesn’t arrive on time, you will get a refund through the blockchain. Yet, if the key arrives before the specified date, you get the key while the other person gets the fee at the specified date. This means you can expect a safe and secure delivery through an If-Then function.

Neither one of the participants will be able to interfere with the contract without the other party knowing. And because there’s no middleman, no one can get corrupted and there are no middlemen’s fees.

This was an example, but smart contracts apply to all sorts of situations. It could either be a financial service, agreement, insurance premium, breach contract, credit enforcement, and more.

They are very powerful.

A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control, document, or relevant events and actions according to the terms of a contract or an agreement.

Smart contracts make it possible to perform exchanges without the need of a middleman — e.g. money, shares, properties, or about anything with a certain value.

A smart contract involves the transfer of money or property to a program. The program will run the code and automatically validates a condition that will determine if the asset must go to a person or back to another or if the funder should be refunded, or a combination of sorts. Meanwhile, the decentralized ledger will store and replicate the document, hence making it more secure.

Smart contracts’ pros:

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