The term ‘smart’ is synonymous with technology; we have smartphones, smart homes and even smart contracts, which we discuss in this short article. A smart contract is written in computer code and is fully executable when specific conditions are met. Typically used on blockchains, smart contracts can be used in supply chain management, insurance and real estate, to name but a few.
How smart contracts work
Smart contracts work in the following way;
First, two or more parties agree on the contract details, then the contract is written in computer language and deployed on a blockchain; when all the predefined conditions are met, the smart contract automatically executes without the need for any third-party involvement. The terms and conditions of the contract cannot be changed and this saves a lot of time and money for many business transactions, as no third parties are required.
Are there security risks?
Of course, there are always security risks when it comes to computer code and the best way to secure smart contracts is to arrange for a smart contract security audit from an established provider. This can prevent serious consequences further down the line and there are US companies that specialize in smart contract auditing, which can be found online.
What are smart contracts used for?
There are many applications for smart contracts, including the following:
- Supply chain management – Automating payments, tracking goods and ensuring transparency.
- Insurance – Automated claims processing and automated payouts.
- Real estate – The automation of property transactions, escrow services and lease agreements.
- Elections – Voting on secure platforms that are fully verifiable.
- Financial transactions – Secure and transparent financial transactions.
The use of smart contracts certainly saves a lot of time and, therefore, money, as it removes the need for third-party involvement, while it also streamlines the process.
Blockchain technology
While blockchain technology has been around for a few years, it has been adopted for many applications, which include cryptocurrency, trading and even governments are now using blockchains for things like property ownership, qualifications and even citizen ID. One of the big advantages of blockchain is the decentralized ledger-based system that is fully transparent, where all participants play an important role.
Smart contract auditing
It is important to carry out smart contract security audits on a regular basis, especially if the blockchain is constantly being developed. This ensures compliance, as well as revealing any vulnerability issues, which could lead to serious consequences. If you would like to contact a US company that offers smart contract audits, start with a Google search and browse the list of websites until you find what you are looking for.
As a conclusion, smart contracts are a growing component of blockchain technology that are used in many ways; cyber-security is always a concern and with smart contract auditing, you can be sure that the system is secure.
