Ethereum is the world’s second largest cryptocurrency and the biggest provider of customizable blockchain options. One of them is the Ethereum Smart Contracts option that you may have heard along with the ERC 20 token. What it does is that it allows other people to program on the blockchain and write their own independent programs on it. The bitcoin itself has a smart contracts apparatus but it is limited to the currency exchange.
These smart contracts act as autonomous agents and automatically fulfill the contract based on what is programmed in them. Once the contract is in place, no one not even the coin’s founders and the Ethereum developers can change of influence it in any way. Due to this automated contract approach, new companies and their coins are being launched on the Ethereum blockchain. These new coins are completely independent coins and they take advantage of the already existing blockchain of Ethereum so they don’t have to develop and deploy their own. The smart contracts ensure the contract being carried out according to the programmed instruction. You can use a smart contract to:
- Enforce multi-signature contract so that funds can only be reimbursed if the particular people agree to it.
- See to it that companies fulfill their obligations like if you buy insurance packages from a company, you would want it to be automatically enforced rather than going to court and indulge in legal battles.
- Store information about anything at all. You can use the Ethereum blockchain to form a permanent non-erasable library. This is extremely useful like for example when you want to enter the details of a partnership based equity in your new company, hold records of your membership teams, etc. The application of this aspect of the smart contracts is limitless.
Smart contracts can also interact with other smart contracts and get triggered in a chain. For example if a smart contract is signed between a person who needs investors for a project, a set of contracts can be signed between the investors and that person.
The first contract would monitor the amount of money in his Ethereum or Fiat currency account specified for this project. If a payment is received, another contract can automatically disburse the money in the form of ETH into each investors’ ETH accounts. It is that easy.
It is clear that the smart contracts and Decentralized Autonomous Applications or dapps are the building blocks for the future.
Compound your bitcoin by 5 times in a year! Click Here