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.
Elimination of intermediates means reduced fees and as a result, Smart Contracts are considered as an affordable concept.
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.