lidiia @ stock.adobe.com
In the blockchain, smart contracts are executable and automatic agreements with specific terms that allow transactions to take place. They are publicly accessible, distributed in the blockchain, and can be audited. Smart contracts are self-regulated and automatically executed if pre-programmed conditions and agreements are met, making it possible to use and enforce them without needing a central authority, legal system, middleman, or broker to authorize the deal.
Smart contracts allow complex transactions such as transferring assets and the execution of contracts when the triggering event can be measured digitally, for example, digital payments or changes in public or private registries. Because blockchain technology prevents retroactive alteration, smart contracts are unmodifiable and final, which improves traceability and fairness. They can be created in minutes —at a fraction of the cost of traditional contracts—, are digitally signed, and carried out without the need for third parties such as lawyers or an escrow agent.