![]() ![]() What Are the Benefits of Using Smart Contracts? In a nutshell - smart contracts ensure that party A and party B are both fulfilling their end of the agreement. While users of centralized financial institutions, such as a bank or credit unions, are able to rely on intermediaries to manage a transaction, DApps must use smart contracts to ensure that each transaction is legitimate, transparent and trustless - and that goods or services are, in fact, being transferred in line with the predetermined provisions of the agreement. Many cryptocurrencies and decentralized applications ( DApps) function using smart contract code to facilitate the exchange of goods, services, data, funds and so on. ![]() ![]() They work by creating a digital agreement or contract whereby each party inputs a number of predetermined conditions or provisions that must be completed in order for the contract to be executed, without a middleman. Smart contracts remove unnecessary paperwork and expensive intermediaries that are required to facilitate traditional contracts, transactions and exchanges while upholding transparency and visibility on the blockchain. In a decentralized world based on mathematical computation such as a blockchain, a smart contract is an automatic and self-executing agreement that operates without the need of a central authority or rent-seeking third party. What Are Smart Contracts and Why Should I Care About Them?īefore we get into the strengths or shortcomings, let’s examine what a smart contract is. New to Bitcoin, cryptocurrencies and blockchain technology? If yes, then the following will give you an introduction to smart contracts, the fundamental blockchain technology, the backbone of decentralized finance ( DeFi) and explain how they’re being used in the most popular decentralized applications. If no, read along anyway, you may learn something new. ![]()
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