Imagine you could enter into a contract that would bind all the parties involved, execute itself, and would be one hundred percent transparent. This is what a smart contract is like, we are going to discuss more about this below.
Definition of Smart Contract
This is a type of contract that is digitally agreed upon and self-executes. The parties of the transaction agree to the contract and the details of their agreement are written into computer code. This agreement and code are distributed across the blockchain of the platform they are using. The code, therefore, is in charge of the execution of the contract, once agreed upon the transactions are irreversible and it can be tracked on the blockchain.
This type of contract promotes trust in the execution of contracts between anonymous people online, it is transparent and the terms of the agreements are immutably stored without any party being able to alter it. One of the things that make smart contracts so attractive is the fact that its execution is assured even without any legal system, centralized authority, and external enforcement agencies. The success of smart contracts is owed to the use of blockchain technology, smart contract is a creative use of this innovation that powers Cryptocurrencies.
The idea of smart contracts was birthed by Nick Szabo, his definition of smart contracts is what obtains today
Smart contracts are digital-based contracts that the agreements between people are written as computerized protocols that render the transactions irreversible, transparent, and traceable thereby fostering more trust between anonymous transacting parties and these contracts are run on the blockchain technology.