Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. These contracts are stored on a blockchain network and are automatically executed when certain conditions are met.
Smart contracts are considered to be a key component of many blockchain-based systems, such as Ethereum, and can be used to facilitate, verify, and enforce the negotiation or performance of a contract. They can also be used to create decentralized autonomous organizations (DAOs) which are digital organizations that are run by code rather than people.
The use cases for smart contracts are vast and varied, and include things like supply chain management, voting systems, and property ownership. Smart contracts can also be used to automate the distribution of funds, such as in the case of crowdfunding, and can be used to create decentralized exchanges (DEXs) which allows users to trade cryptocurrencies without the need for a centralized intermediary.
Smart contracts are considered to be more efficient and secure than traditional contracts, as they are executed automatically and are stored on a tamper-proof blockchain network. However, it’s important to note that smart contracts have limitations, and if the code is not written correctly, it can have unintended consequences.
