A simple example of a Smart contract could be compared to vending machine. Step 1 . A person would insert cash into the vending machine to make a certain purchaseStep 2.
the money inserted triggers an event where the vending machine enablesthe person to key in the code for the item the user wants to purchaseStep 3. the person makes the selection for the desired item on the keypadStep 4. the vending machine then executes the selection and released the product with correct change if any is due Step 5. the person collects the product and any owed change Step 6. Transaction successfully completed and both parties are satisfied Smart contracts operate on the same principle – code is designed to trigger a response when certain agreed conditions are met, transaction rules are enforced and verified and the transaction is processed.
Benefits of Smart contracts• Trust – no third-party intermediaries are needed this allows for full control over the agreements• Accuracy – a Smart contract records all the terms and conditions in explicit detail• Transparency – the details of the Smart contract are visible to all relevant parties• Security – Smart contracts runs on the Blockchain and it allows for those transactions to be run very quickly• Security – Smart contracts will use the same security that crypto currencies use • Paper free – no paper required for Smart contracts – no impact on the environment