The best features that accompany using blockchain technology are its decentralized nature and capabilities of removing middlemen such as national and private financial institutions from the monopoly it currently has on global transactions. Included in the blockchain's decentralized structure is a feature known as smart contracts, an innovative function that will allow self-executing peer-to-peer transactions.
Smart
Contracts, in its simplest view, are digital escrow agreements made
between two parties that will automatically determine whether exchanged
assets should be sent to one person or returned to the sender based on
future conditions. During the time it takes the smart contract to
complete an automated transaction, the blockchain’s digital ledger
stores a copy of the transaction that is decentralized and immune from
fraud or discretion.
There
are three stages to a smart contract transaction; first, you, and
another party, will both sign the smart contract using your digital
signatures; second, the smart contract must then retain unhindered
access to the digital object(s) being transferred, such as digital coins
and blockchain tokens; finally, the source for the transferred amount
must be verified by the smart contract from the blockchain’s
synchronized headers.
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