Blockchain: Smart Contract How it Works

The smart contract in Blockchain is a software application that works without human intervention. Here I have shared the Smart Contract backend process.

smart contract

Smart Contract Mechanism.

1. What is Smart Contract

  • A smart contract is a protocol that can auto-execute, facilitate, verify, or enforce the negotiation of a contract.
  • Agreement between two parties you can say as a contract.
  • Incorporating the rules of the physical contract into the computing world, you can say as a smart contract
  • Blockchain supports you to create smart contracts.
  • Smart Contracts are self-executing programs that run on the blockchain and are capable of enforcing rules
  • Using Blockchain as a platform and making an agreement or contract between more than two parties, you can say as Smart Contract.

2. Traditional Markets 

Blockchain Smart Contract

3. Top Benefits of Smart Contract

  1. Currently, smart contracts are being used only in Crypto Currencies
  2. Now Smart Contracts being used in all financial transactions
  3. A smart contract can then raise funds for the foundation to complete a certain objective
  4. The primary benefit is to avoid middlemen and to avoid fraud and cheating in the business world

4. Smart Contract-Based Markets

Smart markets

5. When Smart Contract Initiated

  • Smart contracts are self-executed programs. So they run automatically whenever they need it. 
  • Each Smart contract in Blockchain stored in a Block.
  • Smart contracts have the following capabilities-self-execute, self-verify, self-enforce, and self-constraint the agreement between two parties.

6. How many smart contracts are present in Blockchain

  1. You can create 'N' number of smart contracts in Blockchain
  2. Smart Contract Manager oversees all the transactions created in a network such that it avoids any fraud or cheating.
Summary

  • The contracts created under the blockchain platform you can say as smart contracts. The legality of contracts monitored by computers but not by human beings. They enforce rules and creates alerts when something went wrong.

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