What is a smart contract?

What is a smart contract?

Barbara Renata Lorincz2 August 2019

What is a smart contract?

A smart contract is one of the most useful blockchain tools that allows you to trade goods anywhere in the world. In the following article, you can read about what it is used for and why it can be attractive to the general public.

Smart contracts are self-executing, business automation applications that run on a decentralized network such as blockchain.

While the blockchain acts as a large database, administering transactions, smart contracts execute pre-determined conditions; think about it as a computer executing on "if/then" or conditional, programming.

If one of the terms of a smart contract is met - for example, when the goods arrive in the port - two trading parties can agree to exchange cryptocurrency - bitcoin, fiat money transfer or shipment of goods, then the process goes smoothly. The status of the smart contract and all its data is stored in a blockchain ledger, so no further human intervention is required.

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