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As we all know, digital society is a general trend in the future. In the future digital society, one of the problems people will face is how to transfer some dependencies in the physical society to the virtual world. This is an important issue for IT technology. A huge challenge. Smart contracts are a type of contract program that emerged in this context, and the uses of this automatic contract are very attractive. A smart contract is a piece of code deployed on a shared, replicated ledger that can respond to external information received. Many investors want to know what are the advantages of this smart contract? Let the editor of the currency circle take you through an article to understand the advantages of smart contracts.

 What are the advantages of smart contracts?

It is undeniable that as a very valuable tool, smart contracts have become one of the core components of the blockchain and have the following advantages:

Independence: Smart contracts exclude the possibility of third-party intervention. The guarantee of the transaction is the program itself. Unlike an intermediary, it will not give reasons to doubt its integrity and ensure accuracy when executing the contract.

Reliability: Smart contracts are executed digitally and automatically, that is, the contract automatically executes transactions according to predetermined rules, and these records are shared among participants. If one party to the transaction fails to fulfill its obligations, the other party is protected by the smart contract conditions.

High efficiency: Relying on manual processing of contracts will take up a lot of time and delay the completion of goals. Smart appointments can respond to user requests at any time, greatly improving the efficiency of interaction.

Low costs: Smart contracts reduce operating costs due to the elimination of middlemen fees, as well as the opportunity for both parties to cooperate under more favorable conditions, thus reducing the coordination costs of auditing and enforcing such agreements.

Security: Since smart contracts are stored in a blockchain distributed network, their results are verified by everyone in the network. Therefore, once the contract is created, any tampering with the code will be immediately noticed and difficult to be destroyed, thus ensuring the safe and smooth operation of the blockchain project.

With the continuous development of technology, smart contracts have gradually gone beyond the scope of the contract itself and can support more general and trustworthy computing models, empowering blockchain to open up broader application scenarios.

 The birth of smart contracts

In 1996, American cryptographer and programmer Nick
Szabo first proposed the concept of smart contracts, earlier than the birth of blockchain technology. According to Szabo's conception, smart contracts are digital protocols for information transmission that automatically execute transactions through algorithms after meeting established conditions and fully control the entire process. However, due to the lack of a trusted execution environment at the time, smart contracts were not applied to actual industries.

Regarding smart contracts, a more primitive example is a vending machine. By programming relevant transaction rules in advance, it can automatically collect money and distribute products. This not only replaces offline stores to cut transaction costs, but also expands services to provide 24/7 availability instead of limited opening hours.

Following the logic of a vending machine, Szabo speculates that the digital revolution will change the process of contracting: traditional contracts will no longer be applicable, and contract parties will choose to adopt smart contracts and improve what he identifies as "the four basic goals of contract design." Enforcement: Observability, verifiability, privacy, and enforceability. According to Szabo, improvements in executing these four goals will greatly enhance partnerships globally.

With the development of the Internet today, the business models or reasons for existence of many technology giants are due to the lack of such a trusted native aggregation layer. Smart contracts provide a solution for exactly this.

The content above is the editor’s detailed answer to the question of what are the advantages of smart contracts. I hope everyone can understand the advantages of smart contracts in one article. In fact, in addition to the advantages of smart contracts introduced above, it also has many shortcomings. Everyone must learn to see the multi-faceted nature of a thing. Because the code of smart contracts is written by developers, there is the possibility of errors. If the smart contract is put on the blockchain, it cannot be changed, so once a loophole occurs in the smart contract, it will be devastating for the project. of blow. In addition, because it is currently not subject to any government regulation, many potential problems will arise once government agencies intervene in legislation.