What are Smart Contracts?
Smart contracts help us automate exchange of money, manage property, execute shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.
The best way to describe smart contracts is to compare the technology to a vending machine. There is pre-defined set of conditions that need to happen for a transaction to happen. “IF” the correct amount of coins are deposited, it “THEN” tells the machine software you have satisfied the pre-defined set of conditions (money) on your end, so then “DO THIS” (action) and the machine releases the product to you.
With smart contracts, you simply send Cryptocurrency into the vending machine (ledger), and the product or whatever gets sent to you. More so, smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations (keep escrow for ‘x’ days).
Finally, of interest to the Treasury Exchange Clients, Smart Contracts can provide the benefit of trading currencies at a specific price or sell at a specific price automatically. As to the potential of smart contracts itself, there’s no end to the range of industries it can impact, from healthcare to automobiles to supply chains and to law. The list goes on and on.
Autonomy – You’re the one making the agreement; there’s no need to rely on a broker, lawyer or other intermediaries to confirm. Incidentally, this also knocks out the danger of manipulation by a third party, since execution is managed automatically by the network, rather than by one or more, possibly biased, individuals who may err.
Trust – Your documents are encrypted on a shared ledger. There’s no way that someone can say they lost it.
Backup – Imagine if your bank lost your savings account. On the blockchain, each and every one of your friends has your back. Your documents are duplicated many times over.
Safety – Cryptography, the encryption of websites, keeps your documents safe. There is no hacking. In fact, it would take an abnormally smart hacker to crack the code and infiltrate.
Speed – You’d ordinarily have to spend chunks of time and paperwork to manually process documents. Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes.
Savings – Smart contracts save you money since they knock out the presence of an intermediary. You would, for instance, have to pay a notary to witness your transaction.
Accuracy – Automated contracts are not only faster and cheaper but also avoid the errors that come from manually filling out heaps of forms.