Blockchain technology has been a disruptive force in the past decade, and smart contracts are one of its most innovative applications. Although the industry is still in its early stages of development, smart contracts have arguably seen the most growth.

Understanding smart contracts

Simply put: A smart contract is a digital contract that is stored on a blockchain and can be executed automatically. This means that it can enforce the terms of the contract without the need for a third party, such as a bank or government. Smart contracts have numerous potential applications, from streamlining business transactions to automating complex financial agreements. They could also be used to create new types of decentralized applications (dapps).

Zero trust agreements

Smart contracts have been heralded as a game-changing innovation, as they help to facilitate secure and trustless transactions. Trustless transactions are important because they provide security against fraud or theft; with traditional contracts, there is always the risk that one party may not uphold their end of the agreement. The smart contract itself is immutable, meaning it can neither be changed nor corrupted.

Although smart contracts are not yet widely adopted, they have the power to facilitate transactions between parties who have not previously worked together; as well as change certain industries forever.