About Smart Contracts#
Smart contracts are programs stored on the blockchain that run these programs when certain predetermined conditions are met. Smart contracts are typically used to automatically execute protocols so that all participants can immediately determine the outcome without the need for any intermediaries and without wasting time. Smart contracts can also automate workflows and trigger the next action when conditions are met.
Operation of Smart Contracts#
Smart contracts operate following simple "if/when...then..." statements written into the code on the blockchain. When the predetermined conditions are met and verified, the computer network executes the operation. These operations may include distributing funds to the respective parties, registering vehicles, sending notifications, or issuing receipts. The blockchain is then updated upon completion of the transaction. This means that transactions cannot be altered, and only authorized parties can see the results.
In a smart contract, multiple provisions can be established as needed to satisfy participants and successfully complete tasks. To establish terms, participants must determine how transactions and their data are represented on the blockchain, agree on the "if/when...then..." rules governing these transactions, explore all possible exceptions, and define a framework for resolving disputes.
Subsequently, developers can program the smart contract, although enterprises using commercial blockchains are increasingly providing templates, web interfaces, and other online tools to simplify the construction of smart contracts.
Advantages of Smart Contracts#
Speed, Efficiency, and Accuracy
Contracts are executed immediately once conditions are met. Because smart contracts are digital and automated, there is no need for paperwork and no time wasted reconciling errors typically caused by manual document completion.
Trust and Transparency
Without third-party involvement and with encrypted transaction records shared among participants, there is no need to question whether information has been altered for personal gain.
Security
Blockchain transaction records are encrypted, making them difficult to tamper with. Additionally, since each record is linked to preceding and succeeding records on the distributed ledger, hackers would need to alter the entire chain to change a single record.
Cost Savings
Smart contracts eliminate the need for intermediaries to process transactions, thereby eliminating associated time delays and costs.
Reference Article
https://www.ibm.com/cn-zh/topics/smart-contracts