The blockchain is a decentralized ledger that records digital transactions. It’s like a huge accounting book where transactions between two parties are recorded. The blockchain is shared among many users and it can only be updated by consensus of the network members. Because there’s no central authority (like a bank), blockchain technology has gained popularity as an alternative way to do business.
Smart contracts are self-executed with no need for human intervention.
Smart contracts are self-executed with no need for human intervention. They are software code that can be executed on a blockchain, where they automatically implement their terms when certain conditions are met.
Smart contracts are used to facilitate, verify and enforce many types of contractual clauses. For example:
- Escrow services — A third party holds funds in escrow until both parties agree it’s appropriate to release them (e.g., after delivery). This reduces the risk that either party will try to cheat the other by taking possession of goods before payment is made or withholding payment after delivery has been made.
- Payment systems — Payments between two individuals can be facilitated by creating an automated system which requires both parties’ signatures before releasing funds from one account into another account on behalf of both parties involved in this transaction; this makes sure nobody gets paid twice while still allowing both sides complete control over how much money goes where at any given time (you could even use this type of system if you wanted).