It seems like today there’s a smart version of everything. Smart homes, smart TVs, smart light bulbs, smart cars, the list goes on. In fact, a new addition to the list are smart contracts.
I know what you’re hoping for — contracts that magically have all the terms and agreements down as if it had read all parties minds and nixed a need for negotiation. Well, hate to be the bearer of bad news, but they’re not *that* smart. However, they are “self-executing” and use our favorite pal blockchain to enable them.
Smart contracts aim to help you with money, property, shares or anything that can be traded / exchanged / bought in such a way that reduces the need for a middle man and optimises transparency for all parties involved.
Typically the contracts are pre-written in a computer code and stored (then replicated) with blockchain. The contracts are then executed and run by the computers in the blockchain.
Perhaps the best part of these smart contracts is that they’re completely autonomous meaning that they aren’t controlled by anyone but, rather, they follow the instructions the parties have agreed to (which is the aforementioned computer code).
The benefits of smart contracts that stand out are:
- Autonomy: No one person owns the contract. No one person has control of it. Also, there is no need to rely on third parties. All of the above removes potential bias or ill-will.
- Trust: We’ve raved about blockchain for a while now. These contracts being backed by blockchain technology means that your documents are encrypted on a shared ledger, and all parties can have access to them.
- Redundancy: Another feature of blockchain is that the documents are duplicated many times over on the blockchain, and can’t ever be “lost”.
- Safety: Have we mentioned the smart contracts use blockchain? (haha, just pullin’ your leg) But really, blockchain means that your documents are uber safe via encryption, making them near-impenetrable by hackers.
- Speed: A self-executing contract means that they do what you need them to do when they need to do it. No more waiting for everyone to find a pen or get their affairs in order. These contracts save you time.
- Savings: As we mentioned with autonomy, smart contracts remove a need for a middle man which is one less person you have to pay.
- Precision: Key word of a smart contract is “smart.” These contracts execute the exact code provided, ensuring zero errors.
- Transparency: For organizations like governments, they could add another level of transparency to dealings.
Here is a more in-depth look at these contracts and what they stand to offer you and yours.
