Smart contracts are one of the features of blockchain technology that can revolutionize industries. Supply chain logistics, finance, ownership rights, copyrights, titles, and many other industries and business processes can improve efficiency, lower costs, increase process speeds, and automate tasks through the use of smart contracts. Not all blockchains are inherently smart contract capable. Some require a second-layer solution, such as Rootstock (RSK) for Bitcoin, and different blockchains have different protocols.
Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way, while avoiding the services of a middleman. To best understand the concept of the smart contract, think about a vending machine, arguably the world’s first smart contract. A smart contract, just like a vending machine, runs on a “if this happens then that will happen.”
In vending machine language, if you put in your dollar, then you will receive your drink of choice. In blockchain language, you drop your token into the blockchain and you get your, driver’s license, escrow payment, business contract. The smart contract further defines the rules of the transaction the way that a traditional contract does and automatically enforces those conditions. Contract lawyers beware of the smart contract.