A smart contract is a programmable set of terms that is capable of automatically enforcing itself upon the completion of pre-defined conditions through sensors and triggers. Smart contracts can be used to exchange money, property, shares, or anything else of value in a transparent and trustless manner, all while avoiding the services of a middleman. They are capable of executing complicated multi-party agreements beyond the capability of any singular organization, at a fraction of the cost and time.
The implementation of these programs also allows for an immutable, verifiable, and secure record of all contracts, transactions, and data involved in the transaction. There are many benefits smart contracts present:
Faster, more efficient settlement and negotiation times due to elimination of third parties
Lower operational overheads to keep track of data and manage transactions
Automation, along with simple compliance and reporting reduces administration and service costs associated with lawyers, bookkeepers, accountants, and more.
Trustless agreements – your documents are encrypted on a distributed, public ledger. There’s no way the information can be denied or altered.
Cryptography, or the encryption of websites to prevent hacking and fraud, keeps your documents safe. Every block on the chain would need to be simultaneously hacked in order to even slightly alter it, a feat no hacker is capable of.
Unparalleled accuracy that only digital processes can provide.
The beauty of a smart contract is its simplicity. Rather than hiring a lawyer to create a contract for you and relying on a slow and tedious legal process to enforce the terms, a smart contract automates the entire process.
In addition, all of the data surrounding the terms of the agreement remain in self-sovereign control – meaning that you control what parts of your data will be presented to the other party as well as the public. The digital nature of the transaction allows for streamlined transaction processes that can benefit anyone from startups to major corporations.