What are Smart Contracts in Blockchain, Importance & How Smart Contracts Work

Whenever someone buys a house, begins a new job, or purchases a candy bar, a contract is created between the two (or more) parties involved in the exchange. This contract defines and records the terms of the transaction, denoting the required actions of each participant.

Alone, a standard contract has no power to enforce the terms that it defines. Instead, a legal or governmental third party oversees the execution of a standard contract, ensuring that each party faithfully carries out their end of the bargain. If the terms are violated, the transacting parties must rely on this intermediary to rectify the broken contract.

However, thanks to recent advancements in distributed ledger technology, lawyers or other intermediaries are no longer required to oversee contracts. Using smart contracts, people can, for the first time, execute and enforce contracts without involving middlemen.

This video will give you a brief introduction to smart contracts along with how they actually work, empowering you to understand their fundamental concepts and how smart contracts will change the world.