About smart contracts

WhiteBIT
Published 14 September 2021

🤔 How do they work? 🤔

A smart contract is a protocol that digitally facilitates, verifies, or enforces certain conditions. 

For example, a company sells its shares, and an investor wants to buy them. To draw up a regular contract, you need to involve a lawyer who will check all the conditions. In a smart contract, these functions are performed by a “smart” code. It will monitor compliance with all conditions and automatically distribute assets between the participants. If one of the conditions is not met, the smart contract is invalid.

Benefits of smart contracts:

▪️ they are autonomous. The absence of third parties help to avoid unnecessary costs of paying for their services;

▪️ they are fast. Code checks conditions much faster than people;

▪️ they are safe. The code inherited blockchain features: the terms of the contract cannot be changed or canceled. Its data is stored in a distributed ledger and verified by each node in the network.

Smart contracts are used in crowdsale (most often on Ethereum) and tested in insurance, audit, and logistics. Do you think smart contracts will ever replace regular ones? 

WhiteBIT Team