Blockchain Cryptocurrency and Smart Contracts

  1. Firstly, a contract between two or more parties is written in code, and posted on the blockchain.
  2. Secondly, an event has to trigger the execution of the smart contract. Relevant examples in this case include when a sum of money is sent, when an expiration date is met, when a price rises above a certain value and more.
  3. Thirdly, once the triggering event takes place, the contract self-executes, according to the terms original put into code. Once this happens, both parties get what they promised to one another through the use of the contract. If the conditions are not met, then the program will decide whether the funds should go back to their respective owners. At the same time, the blockchain ledger on which the contract is stored will record all transaction details and hence give it immutability on the network. This means that regardless of whether a contract ends up self-executing or not, all details will still be stored in a transparent manner.
  • Their function of multi-signature accounts, thus making the spending of funds only possible when a certain number of people agree, as per the original conditions put into place. If an agreement is not reached, then the smart contract will not execute;
  • Being able to manage agreements between users, and treating both parties as equals, as per the conditions that both users have agreed to;
  • Providing further utility to other possible contracts, and through the use of secondary-smart contracts, linked to the original one;
  • A means to store information and records, according to the network conditions.

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‘Better than a bank’

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