What do you understand by Smart Contracts?

We’ve probably seen a lot of this word smart contract and might not actually know what it is or how it works, so we will be discussing briefly what they actually are and how the work.
Smart Contracts

They are set of codes (computer codes) that carry instructions that are pre-determined, and with the help of smart contracts, there’s no need for a third part or what some may call middleman. No one is allowed to hold your personal information except you and the only person or thing that can verify it is the blockchain.

How do the smart contracts work?

We already know that they carry a set of computer codes of instructions, and the codes or instructions are if X happens, do Y. that means an action will be triggered when the terms are met.
The terms itself are digitally stored on the blockchain and can be tracked easily but after it has been defined, it can’t be altered and the parties involved in the business or transaction must agree to the smart contract terms and if the terms are not fulfilled or completed, there won’t be any contract.

The most basic use for smart contracts are for digital agreements that are used to complete transactions, that is, transfer of crypto without the need for a third party and once the agreement has been set up, smart contracts have to verify and be sure that the terms have been met and fulfilled before the transactions can be completed and assets exchanged to the parties involved.

They also have their benefits

There are some benefits of using smart contracts which are advantageous and some of them are;

It is autonomous

Secure, in the sense that function with cryptography to ensure that the records cannot be altered and secured.

It is transparent, which means it is for public view, everyone and anyone can view it on the blockchain.

No middlemen, it has help to scrap out the need for middlemen to verify information, the blockchain is now in charge of that.

*For every advantage or benefit there are also disadvantages

The smart contract is not all perfect; there are some weaknesses or flaw. Once the smart contract is launched, it’s impossible for it to be updated which can lead to some issues if there are problems with the codes.

The designs need to be perfect and secured as it is secured by the blockchain technology, because if they are not, the errors in their code may be taken advantage of.

*Uses of Smart Contracts Smart contracts can be used in different areas as long as it involves where assets can be transferred after the pre-defined terms are met. Such as Insurance companies and banks.

Smart contracts can also easy the process of distributing tokens in the ICO events

A decentralized app (DApp) can make smart contracts complete difficult and complicated tasks. And Smart Contracts can only be used for one type of transaction.

*Some Smart Contracts Platforms are; Terra Polkadot Ethereum Solana Cardano

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