Unlike traditional contracts, which are concluded with the help of a lawyer, smart contracts are signed without intermediaries. In essence, such an agreement is a program that works according to an independent algorithm with the exact adherence to the agreed points. The exchange of money and other valuable assets occurs automatically, making it impossible for each of the parties to avoid or fail to fulfill their obligations. Most often, such contracts are used in the field of cryptocurrencies and blockchain, but due to their simplicity, versatility, and reliability, they are moving to the sphere of standard business relations between individuals or companies.
Nevertheless, experts recommend using smart contract auditing services before putting your electronic signature and proceeding to fulfill your part of the obligations.
Benefits of Smart Contracts
Hacken Is a service that helps avoid problems with smart contracts. You can go via iOS application penetration testing to make sure everything is ok. Then, you’ll open all the advantages:
- The Ethereum contract defines a clear sequence of actions that must be taken by the parties for the contract to work.
- If any of the parties does not fulfill their obligations, they will not be able to take advantage of the benefits provided by the contract.
- Instead of legal terms and conditions, smart contracts are concluded using computer algorithms. They cannot be distorted or misinterpreted.
- Money is transferred automatically, not manually, as is the case with traditional contracts.
- To conclude and execute the algorithm of this type of transaction, you do not need intermediaries in the form of banks or notaries. In fact, there is only a program between the parties, which works according to a strict algorithm aimed at ensuring that all participants receive what they came for.
Most often, these types of contracts work in conjunction with cryptocurrencies, but they are also used to automate mortgage payments, international settlements, insurance and incident history records, exchange confidential data between clinics, etc.