Just try to imagine how much the internet has changed and evolved since it kicked off in 1983. It may have started as a simple way to share information to people across the globe, but now it is a whole new entity that continues to morph into a giant digital stew, full of ingredients that a lot of us have never even encountered prior.
In this article, we’ll talk about smart contracts. Let us try to help you understand what smart contracts are, what’s the logic behind them, and how they work in Web3.
IN A GIST
A smart contract is a self-executing digital contract stored on a blockchain, programmed to carry out specific actions when the agreed-upon conditions are fulfilled. Just think of it as a self-executing contract, one that carries out the terms that have been predefined between two parties.
This type of automation essentially removes the need for intermediaries, which significantly minimizes the risk for human error. Let’s take this as an example: you’re buying a preloved car online. If you and the seller set up a smart contract with agreed-upon conditions, the transfer of ownership of the car can only be executed when the release of full payment has been met. Of course, this depends on the conditions that you and the seller have set prior to the smart contract. What happens next is a smooth transaction that eliminates middlemen, reduces human mistakes, and enforces the terms of the contract without any meddling from outside parties.
THE APPLICATION
Smart contracts are transforming countless industries across the globe because it improve accountability and transparency between two parties, and it reduces middlemen, thereby cutting down costs, time, and effort. Let’s take, for example, real estate. Smart contracts have transformed the real estate industry and simplified many complex transactions and ensured that all conditions and agreements are met before the deal is considered “complete.”
Another example is those of insurance companies. Smart contracts are being used by insurance companies to automate claims processing and reduce the time and money involved in client-to-business transactions. The smart contract is able to automatically verify insurance claims and deliver premium service or payments based on the agreed contract. This is highly convenient in this fast-paced world, especially during emergencies or personal needs of clients.
Now the question comes if it’s a faultless methodology. The key to executing a smart contract for your business is to pair it with a smart contract audit—a security process that thoroughly examines the code of the smart contract to identify and address any potential vulnerabilities or risks. The primary purpose of the smart contract security audit is to identify and fix the flaws of the contract, thereby ensuring that there will be no failures or hacks within the system.
Of course, this manner of audit requires the expertise of experienced smart contract auditors who possess the automated tools and software support needed for a high-caliber audit.
