A smart contract as its name implies can be referred to as a digital-based contract where its terms of service or conditions are set up using a computer program. Furthermore, we can think of it as a regular contract that you sign when you are about to purchase a house or start at a new job but instead of signing with a pen, you have the contract written with a computer program and you give your consent by just clicking on "sign".
What is in a Smart Contract?
A smart contract has three-part namely;
- The parties
- The Contract
- Execution
Like I said earlier, you can relate a smart contract to a regular contract you sign when you are about to enter into a legal agreement with your boss or your client. Therefore, a smart contract has "the parties" which represent the people involved in the contract, then the contract itself (which is the terms or conditions on which the contract is based), and finally, it is smart; Execution performs the functions included in the terms.
Note: The smart contracts are stored on the blockchain.
For example, once Leom signs this contract, perform a token transfer from his wallet to his trading account.
Smart contracts are now defined and can be worked on, which can be used in a court of law. Is that not interesting?
Also, another wonderful part of a smart contract is that it can trigger an execution event of another smart contract. Meaning, that once a condition is met in smart contract A, perform this operation on smart contract B.
Make sure both parties are in agreement on the operations that are to be performed. That is a smart contract simplified.
Any questions? or feedback? Kindly drop it in the comment.
I look forward to more simplified web 3 contents.