Smart Contract
A smart contract refers to a digital protocol that has all the terms between two parties who don’t need to meet physically to sign or execute it. It is written in code lines that are based on the blockchain network.[1] The smart contracts are facilitated, implemented, and negotiated, just like the traditional written or oral contracts but digitally. This innovation is intended to eliminate the necessity to pay or have third parties such as lawyers while parties are negotiating contracts.
The blockchain network or technology, which is the basis of the smart contract, refers to a collection of recorded data, managed and shared between computers that are owned by different people. This collected data is secured by cryptographic technology allowing only those who share the passwords to access the information. This technology also allows for the updating of the existing information, sharing of the information, and transparency.[2]
Advantages of smart contracts.
One of the advantages of master contracts is that it is affordable compared to hiring the services of a lawyer. Smart contracts allow the parties to trade, exchange ideas, pay for services, buy property, and trade company shares openly without the interference of lawyers. This enables the parties to conduct contractual obligations without necessarily paying an intermediary.[3] Furthermore, this technology is fast, clear, and transparent as the parties communicate openly with one another.
Disadvantages of smart contracts.
Although the sole purpose of smart contracts is to eliminate middlemen such as lawyers, this makes the subsequent contract legally weak. The fact that these contracts are dependent on the blockchain technology makes them prone to bugs.[4]
[1] Jake Frankenfield, “Smart Contracts” October 2019 Investopedia https://www.investopedia.com/terms/s/smart-contracts.asp
[2] Ameer Rosic, “Smart Contracts: The Blockchain Technology That Will Replace Lawyers” 2016 https://blockgeeks.com/guides/smart-contracts/
[3] Chirag Bhardwaj, “What Are Smart Contracts: Advantages, Limitations, and Use Cases” June 2018 Appinventiv https://appinventiv.com/blog/smart-contract-guide/
[4] Egor Pavlovich, “The Benefits and Limitations of Smart Contracts, and How We Can Make Them More Mainstream” January 2020 Coinspeaker https://www.coinspeaker.com/benefits-limitations-smart-contracts-can-make-mainstream/
References[edit]
Ameer Rosic, “Smart Contracts: The Blockchain Technology That Will Replace Lawyers” 2016 https://blockgeeks.com/guides/smart-contracts/
Chirag Bhardwaj, “What Are Smart Contracts: Advantages, Limitations, and Use Cases” June 2018 Appinventiv https://appinventiv.com/blog/smart-contract-guide/
Egor Pavlovich, “The Benefits and Limitations of Smart Contracts, and How We Can Make Them More Mainstream” January 2020 Coinspeaker https://www.coinspeaker.com/benefits-limitations-smart-contracts-can-make-mainstream/
Jake Frankenfield, “Smart Contracts” October 2019 Investopedia https://www.investopedia.com/terms/s/smart-contracts.asp
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