Smart Contracts are an agreement between two parties or individuals in the Form of a computer language or Code. Smart Contracts are part of the Blockchain is a digital Ledger (cash book), in the transactions with a crypto-currency a step-by-step to be written. The Ledger is at any time accessible to the public.
In other words, Smart Contracts code lines which are stored in a Blockchain, and the contract is fulfilled, if defined rules are met. It contracts are based on the code, the work, as defined by the parties involved. The advantages of Smart Contracts show most clearly in the companies in which they are typically used to implement a kind of Protocol, so that all employees can be on the outcome, without the participation of a mediator, sure.
Who invented Smart Contracts?
Nick Szabo is the one that the Smart Contracts invented, developed and designed. Smart Contracts were first introduced in 1994 by Nick Szabo, an American computer scientist, created in 1998, 10 years before the discovery of the Bitcoin, a digital currency called “Bit Gold”. Indeed, Szabo is often referred to as the original Satoshi Nakamoto, the anonymous architect of the Bitcoin, what he denies, however, always.
How Smart Contracts work?
The easiest method to describe what a Smart Contract is doing is using an example:
Purchase of a vehicle at a dealer:
There are numerous steps and it can be a tedious procedure. If you can’t pay for the vehicle completely, you need to take a vehicle loan or a different type of financing. This requires a sufficient credit rating and you have to fill in lots of forms with your personal data in order to confirm your identity. In addition, some people are involved in the process, for example, the seller, the financial agent and, if necessary, a Banker. In order to make this Service available, there are various costs and fees already in the basic price of the vehicle.
Smart Contracts in the Blockchain can make this complicated process that includes due to the lack of security between the members of the transaction, various means of men, very simple. If the identity is stored in a Blockchain, banks can take immediate agreement loans. A Smart Contract would be generated between a Bank, the dealer and the lender so that the lender, as soon as the funds were issued to the dealer, the right of the vehicle has, and the payment on the Basis of the accepted conditions is started. The transfer of ownership would be programmed so that the transaction is written to the Blockchain, between the members is shared and thus at any time can be checked.
The advantages of Smart Contracts
The Following are some advantages of Smart Contracts will be listed:
Speed and efficiency: Smart Contracts are computer-based and require less time for processing documents or the coordination and rectification of errors, often in the manually filled-in documents are included. The computer program is also more accurate than the traditional contracts.
Security: Blockchain-transaction records are encrypted and very difficult to hack. Since each individual data record with previous and subsequent data sets in a Distributed Ledger in relationship would need to be changed, the entire Blockchain in order to manipulate a single data set.
Certainty: Smart Contracts lead to implicit transactions, on the basis of predefined procedures, and the encrypted access data from these transactions are distributed to members. It must, therefore, check no one, whether the data from personal interests have changed. In addition, custom events can occur completely independently and automatically.
For example, the ownership of the previously named cart will automatically be transferred once the loan is paid off.
Smart Contracts are today primarily linked with crypto-currencies. Because of the decentralized rules of crypto-currencies are actually Smart Contracts with decentralized security and encryption. They are accepted in most of the currently existing cryptocurrency systems, and are the leading and one of the most hyped features of Ethereum.
Smart Contracts are a remarkably exceptional technology. In spite of the great hopes of uncertainty still prevails. So, for example, the Code that returns the contract must be correct and must not contain any errors. This can lead to errors, and sometimes, such errors can be exploited by hackers. A few days ago, the U. S. Commodity Futures Trading Commissioner programmers of Smart Contracts had warned of Predictive Code. CFTC is a founded in 1974, the municipal authority of the U.S. government, the monitored potential and alternative markets.
In his remarks, he had said that Smart Contracts are more manageable, so that developers can change in a way that you say upcoming results before. Smart Contracts are, in their diversity of application is virtually limitless, even to the extent, even to the reproduction of traditional financial instruments can be used. He continued that the original core developers have developed a Code, to which any number of applications can be built. Therefore, it is illogical to make them for each subsequent application that uses your technology, is responsible, without additional evidence for understanding or purpose. You may not even know that this was implemented is a kind of Smart Contract, and manipulated.
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This article was from English into German:
Senior IT Consultant and Crypto Enthusiast always in search of interesting news.