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We all have heard the term Smart Contract .
When Satoshi Nakamoto invented blockchain ,it was meant to perform transactions only.
Ethereum smart contracts made it the prime choice to build Dapps over it.
So now let's see about Smart Contracts
What are Smart Contracts?
Definition
A smart contract is a pre-arranged agreement written in code so that certain events, such as sending coins or paying interest, will happen when the code is triggered.
Smart Contracts are the foundation for DeFi ,Dapps and allow the creation of many new opportunities on the blockchain.
Think of a smart contract as an honest broker & assistant.
History : Smart Contracts
The idea of a smart contract was first brought alive by Nick Szabo in 1996 who has a background in computer science, cryptography, and law.
Szabo wanted something better than a piece of paper with pen signatures.
He believed that contracts needed to have functionality. He further designed Bit Gold, a mechanism for a decentralised digital currency in 1998. Though the idea was never implemented it created a base that led to the popularity of Bitcoin after 10 years.
How Do Smart Contracts Work?
Let’s take an example now : If we talk about a lot of online websites which are the website we don't trust or an example if I want to buy something online I have some specific website in mind example in India Amazon ,flipkart, Ajio are famous but I don't even try other websites example let's say there's a website named as abc.com where you can buy stuff online maybe I will not buy from them for reason
- I don't trust them
- Maybe it's not secure it can do any fraud. So let's say if I order something on abc.com as a prepaid order but I'm paying the amount before getting the product so what if the product is not delivered so there's a transition from my side but what if abc.com is a trusted company but not the delivery service so let's say XYZ is responsible to take that product from ABC and delay it to me what if they are doing some fraud and so ABC will also pay them right so when I pay let's say â‚ą100 for the product out of which maybe there will be some Commission which this people will be getting right the delivery company so there's a trust issue between three different parties right from my side to ABC from ABC to XYZ.
We can slove this using Smart Contracts How? so let say entire payment system will be automated example I will buy something from ABC which will be prepaid order But then ABC will not receive that money they will receive the money only when I receive the product so it is that it's something like if-then right so in programming we do that so if you can implement that programming in that system in that supply chain management that is Smart contracts
So I am paying but then it is not received by ABC it will be received only when I get developed X wise it will receive the commission from ABC only when they deliver the product right so that's the smart contracts in fact we can use this not just for supply chain management but also for let's say if you buy a car we have lot of middle person right so we have a dealer we have a finance company in between who will give you a my options so we can automate those stuff as well they a lot of legal stuff going on so smart contracts is efficient when it comes to all this process making it fast so there are certain benefits of this it is fast it is secure because they're using blockchain here and it builds trust which is very important so not just Amazon flip cart but all this ecommerce company if they can implement smart contracts people will crush them right because trust is the issue here so that's the Smart Contracts .
Benefits of Smart Contracts
- The contract is immediately executed when a condition is met.
- Because smart contracts are digital and automated, there is no paperwork to deal with
- No time was spent correcting errors that can occur when filling out documentation by hands
- There's no need to worry about information being tampered with for personal gain because there's no third party engaged .
What I covered? What is Smart Contract? History Smart Contract? How Smart Contract work? Benefits of Smart Contract
This brings us to the end of the Article.
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