“A smart contract is a code put into a blockchain to automate transactions and make them be executed in a reliable way. It can execute agreement terms settled between two or more parties, without relying, as a standard contract, on a third institutional party, like a bank or any other institution.”
Smart contracts are nothing more than a contract but regulated by its digital code. Like any other type of arrangements, smart contracts are aiming to establish, control and guarantee all the clauses within it. Walking aside blockchain technology, smart contracts are, in fact, stored inside a blockchain. Working as an automation tool, what distinguishes it from standard agreements is relying upon the blockchain. In summary, smart contracts are the information code stored onto the blockchain. Therefore, it has the same benefits and advantages. Security, transparency, immutability, and reliability.
The code inside each smart contract will, automatically update the ledger and, make sure that every piece of information is respected and properly executed.
As an example, in the Myrillion ecosystem, if an artist is about to sign a contractual agreement with a manager, their demands should be written on the smart contract like it would be in a regular system. What exactly is making them respecting all the terms? It’s the association between smart contracts and the blockchain technology. All the conditions have been automatically pre negotiated, all the payments are automatically distributed, and all the parties are, therefore, rightfully compensated.
There are some obvious advantages to working with blockchain and smart contract technology.
- Parties involved are just the ones needed;
No more banking agents, institutional organizations or public or private corporations evaluating, authorizing and controlling all the terms and the parties involved. Users will add through the Myrillion smart contracts their conditions, which will be automatically applied, without the possibility of human action.
- The blockchain is working as an attorney;
As the information and every single step of the contractual terms are stored in the blockchain, the user does not need to be worried about whether the other party will respect the conditions or not. Thanks to its digital code information and automation, all the terms will be automatically distributed between all of the actors involved. For more safety, the blockchain is also providing a backup with no extra costs associated.
- Fees and extra costs are vanishing;
In opposition to the traditional model, there won’t be any additional fees.
In fact, on a regular basis, making a transaction from one banking account to another is not as simple as it seems. Usually, procedures like transferring your money or even holding a bank account imply fees.
With blockchain and smart contracts those fees are a thing from the past. The one-on-one relationship decreases all the extra costs.
- Contracts are respected;
Due to its automation feature, smart contracts are the most effective and reliable contractual agreement you can sign as the network and the ecosystem automatically records and stores every piece of data.
- Promote trust among the network;
The network can be seen as a third party. Although it has no interferences on the smart contract itself, they can act as a regulator. This way, scams are avoided and are helping to predict and prevent a future attack.