What are Smart Contracts? And How it Related To Blockchain
As
a Infograins is premier Blockchain
Application Development company, Infograins Software Solution
always try to provide you authentic information about various
technologies and today, we are about to tell you something about
smart contracts.
We
are familiar with the traditional approach in the business when
always a third party is involved between the two parties while a
transaction is made. Bank institution or any government establishment
may work as the third party. However, the involvement of a third
party can be risky at times. After the development of the blockchain
technology, businessmen are allowed to use a decentralized
approach to open the door of new possibilities as the alternative to
the traditional approach. A smart contract is one of such alternative
models.
What
is the concept of Smart Contract?
As
the word ‘contract’ shows, it is not much different from the
normal contract but it is a digital contract and a tiny computer
program stored inside a blockchain represents it. All the terms and
conditions are stored in this software and it verifies all the
conditions before the execution of the terms.
We
have told about the importance of the third party in the
establishment of the business contract. But if we talk about a smart
contract, there is no need for a third party and both of the parties
may interact with each other directly.
A
decentralized approach does not need the involvement of any third
party and it means you have to trust the Smart Contract. Then you
might have a question about the reliability of the Smart Contract.
How
does a Smart Contract Work?
A
Smart Contract is a coded program that generally contains specific
terms that are executed only when certain conditions are satisfied.
Suppose
two parties want to make a contract, they would need a platform that
may serve as a third party and this platform is solely responsible
for the fulfillment of agreed conditions.
There
is another way to make a contract in which both of the parties make
an agreement using a Smart Contract. In this case, the Smart Contract
will be coded on the basis of a certain algorithm to ensure that all
the agreed terms are fulfilled and both of the parties cannot cheat
each other in any condition.
Advantages
of Smart Contracts
As
mentioned above, Smart Contract work in the scope of Blockchain
technology and they are based on the same traits such as fraud
resistance, safety, and security, decentralization etc. Due to the
support of BlockChain technology, Smart Contracts are used as a
reliable alternative for business contracts and transactions.
Some
of the advantages provided by Smart Contracts are explained below:
No
involvement of a third party:
As
a prime advantage, Smart Contracts make the deal possible between two
parties without the need of any third party or intermediate platform.
Affordability:
Elimination
of intermediates means reduced fees and as a result, Smart Contracts
are considered as an affordable concept.
Failure
resistance:
There
is no chance of failure since the contract does not depend on a
single person and the network will continue to exist without any
problem even when an individual leaves the blockchain network.
Reduced
cases of fraud:
Smart
Contracts are supported by Blockchain technology and thus, any
malicious activity is not allowed in the extremely safe network.
If
you are interested in Blockchain
Application Development due to any type of requirement, we,
at Infograins Software Solution, may help you understand this
advanced technology clearly and we are sure that we are capable of
providing you reliable and safe Blockchain Solutions.
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