A smart contract is the term given to a code that runs on Blockchain, binding the two involved parties in its creation to the mutually agreed set of rules. It is automatically enforced when the previously mentioned conditions are met by both the parties. A smart contract basically facilitates, verifies and enforces the defined conditions or negotiations through technically embedded codes. These can be seen as the most non-complicated form of decentralized and automated contracts.
The mechanism incorporates digital assets and two or more participants who mutually decide upon a number of digital assets that they deposit into the contracts. These assets are then redistributed automatically among the involved parties conferring to a formula that is based on a certain data. This is unknown at the time of contract initiation.
Although termed a ‘smart contract’, they are not a replacement for legal contracts.
Smart contracts can track performances in real time settings, resulting in huge cost savings, while maintaining compliance and regulation. To obtain external information, smart contracts require information oracles.
Features of Smart Contracts are:
Capabilities of Smart Contracts are:
The smart contracts have the potential to be employed in multiple industries.