Set in the ubiquitous nature of the blockchain, smart contracts are a self self-fulfilling contracts which are automatically enforced upon the satisfaction of all conditions and whose terms are recorded in the form of code. This feature does away with the need for intermediaries, as these contracts take action on their own once the conditions have been set. With this comes a shift in how many industries function, such as finance, real estate, and insurance by optimizing their processes and providing greater services.
A smart contract is a type of "if-this-then-that" program. For example, a smart contract in an insurance claim can automatically release money if certain conditions are met. For example, the relevant weather data is confirmed. In real estate, smart contracts make transactions more efficient by automating the process of payments and title transfers in light of the contract compliance of all the relevant parties.
Smart contracts are a major upgrading of multiple fronts of our societies. By eliminating intermediaries, they reduce costs and shorten the processes. Their immutable and transparent nature ensures that all parties can trust the execution of the contract. Also, automation reduces human errors, and disputes, and accurate terms are reinforced by the code.
Although smart contracts are still in the developmental stage, they give rise to issues like coding errors, security breaches, and uncertainty about regulatory aspects. In addition, their reliance on accurate data (oracles) can create risks if the data sources are compromised.
Smart contracts are the new wave of financial contracts that people are getting better and trusting the efficiency of, it uncovers decentralized automation in the future.
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~ Nesaty