The rapid development of technology, which affects all aspects of life, has led to the necessity to keep pace with this development in transactions, which in turn resulted in Smart Contracts.
Smart Contracts, are self-executing contracts, that is, self-executing, without third parties, which saves time.
Accordingly, we can prepare smart contracts, as an alternative to lawyers, as they play their role in enforcing commercial contracts.
Despite that, Smart Contracts were first proposed in 1994 by Nick Szabo, an American computer scientist and lawyer, it took effect in 2009 after blockchain was invented.
Szabo was the first to discover that a decentralized ledger can be used to enter into smart contracts or self-executing contracts.
How it Works?
Smart contracts are made by converting the contract into a code added into the computer, on the blockchain system, where it was saved.
This contract is accompanied by a copy of the ownership contract, whether the sold good is car, apartment, or any other.
The system on which this data is uploaded, it conforms to the contract with the legal terms and conditions of the contract.
It is worth noting that, the contract will never be executed unless it meets the conditions, and all financial dues have been paid, at the time specified in the contract.
All subscribers to the blockchain network that the contract was entered into are the witnesses on the contract, where every and each one of them has a copy of this contract.
Consequently, it is not possible to amend, delete or add anything after the enforcement of the contract.
Smart contracts are used to transfer ownership of money, stocks, or all kinds of property, or anything of tangible value, in a transparent and accurate manner, without the need for a third party.
In the event that a person wants to rent or buy an apartment, he can conclude a contract as follows:
Set a specific formula for the contract, with the date of implementation, and a copy of the ownership contract.
A digital key is sent and received at a specific time, so the seller can receive the money through it, and in the event that the amount was not received by the seller, the amount is returned to the buyer.
Once the contract meets the conditions set and the system verifies them, it is executed.
In case that the seller receives the digital key, it allows him to enter and receive the amounts specified in the contract.
While, if the contract violates any of the conditions, the process is canceled and the money is returned to the buyer’s account.
Smart contracts cannot be made with all currencies. Whereas, for example, there is the Apollo Currency that is scheduled to start supporting smart contracts in the first quarter of this year, and therefore, before this date, smart contracts could not be implemented.
One of the most famous and first currencies in which smart contracts are executed is Ethereum.
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