Smart Contracts: Evolution And Benefits

1. Smart Contracts: Evolution And Benefits Introduction The term “smart contract” is used for a computer code that automatically implements the entire agreement or some parts of it. It is stored on a platform based on blockchain. A smart contract is executed across more than one computer. This procedure is followed in order to get consensus to validate the contract. Due to its structuring on the blockchain technology, it inherits its properties to store an immutable record of data. Smart contracts are a step forward than traditional contracts as they do not require a third person for its execution. Smart contracts can be differentiated into two categories such as public smart contracts and permissioned smart contracts. This is done on the basis of the underlying blockchain type. With smart contracts, one can eliminate the extra administration cost and at the same time minimize the interaction between two parties. Evolution of Smart Contracts “Smart contract” as a term was first used by Nick Szabo in 1998 when he was a graduate student at the University of Washington. Szabo used a practical example of a vending machine to show the working of a smart contract. Once the customer is satisfied with the conditions of the “contract” by inserting money in the machine, the machine automatically acts upon the unwritten agreement and delivers the desired snack. However, with the advancements in the field of technology, smart contracts have also evolved. Today a number of platforms are available where one can easily build a smart contract. Ethereum is the most popular platform for developing smart contracts as and when desired by the parties. Another such platform is ​PCEX​ which allows the parties to utilize the facility of smart contract and it also provides escrow services for the same. Although smart contracts were created to support BItcoin and cryptocurrency world. But developers realized its potential quickly and expanded its use further. Hence, “smart contract” which is developed on blockchain has evolved and improvised with time. Visit us at ​www.panaeshacapital.com

2. Benefits of Smart Contracts Smart contracts possess a number of advantages over traditional contracts. One of the major advantages is its high accuracy. A smart contract records every aspect with precise detail. This detail is then implemented to avoid the pitfalls of traditional contracts. Another very important advantage of using a smart contract is its transparency. The terms and conditions of this contract is visible to all the relevant parties and it cannot be hampered after being established. Smart contracts also promise high speed and security. These contracts utilize the highest level of data encryption available in today’s world. With such a high level of encryption, smart contracts promise no threat and high speed of processing. Conclusion Smart contracts have a long way to go before their mainstream adoption. However, they have made a strong impact on reward and incentive structure and reshaped the way parties make a contract. In a short period of time, smart contracts have gained its popularity and at the same time proven its potential to the world. Visit us at ​www.panaeshacapital.com