Cryptocurrencies and other blockchain applications make headlines, but smart contracts play a critical role in allowing blockchains to communicate and share information effectively.
Whenever a technology emerges into the wider business marketplace, there is almost always going to be some ambiguity and confusion as to how exactly these technologies work. Even with all of the investment, discussion, and attention that has been paid to the blockchain and cryptoasset sector, there is still some ambiguity as to how exactly an implementation project should proceed. It is clear that every organization is different, and that every blockchain implementation will proceed differently, but the importance of smart contracts is something that exists in every situation.
Without getting overly technical, a solid working definition of what a smart contract is can be broken down into two general components. Firstly, a smart contract is a blockchain-augmented representation of a traditional contract, complete with counterparties, rights, obligations, and consideration being transferred between these counterparties. Secondly, these smart contracts allow the execution of either a portion of, or the entirety of, contractual rights and obligations with less human oversight and management. Put another way, smart contracts can automate at least some of the contract fulfillment tasks currently requiring human oversight. The contractual terms and conditions are written directly into the underlying blockchain code, helping to increase the integrity over these terms and conditions.
Read more: https://www.forbes.com/sites/seansteinsmith/2020/11/18/blockchain-enabled-smart-contractswhat-are-they-and-what-they-mean-for-blockchain-development/?sh=3c1a568ac745