Smart contracts has attracted widespread attention from software developers around the world
Smart
Contracts are computer programs which are intended to automatically perform,
control, or automatically document legally binding, exchange-able events or actions
based on the terms of an agreement or contract. The term was first used by the
World Wide Web and then popularized by eBay, PayPal, and other online payment
technologies. This technology provides real-time execution of legally binding,
exchange-able contract terms in a distributed network environment. Although
this technology is still relatively new, its obvious advantages have attracted
widespread attention from software developers around the world.
As
defined, a smart contract can be described as a computer program that
coordinates the transfer of legal obligations between two parties, using a
distributed network of computers to ensure contractual compliance with
applicable laws and regulations. These computer protocols are programmed by
legal experts in a variety of fields including computer science, law, and
finance. The primary advantage of smart
contracts is the speed and low cost of execution. The main reason for
this low cost is the efficiency with which the transactions are monitored and
validated. Another advantage is the absence of costly upfront costs for both
parties, as only relevant information is stored on the distributed database.
Considered
as a relatively new technology, smart contracts offer several unique features,
such as no possibility for one party to take legal action against the other
party; no possibility for double-spending of funds; no possibility for hidden
fees or penalties; no possibility for public reporting of financial activities.
Apart from these advantages, blockchains also provide an improved level of
security. In the absence of distributed ledgers, the possibility of hacking is
very high. Apart from these, smart contracts have also attracted the attention
of investors due to their potential for large gains.
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