Smart contract

A smart contract is a digital program based on blockchain technology. A set of codes and data that perform pre-programmed functions when certain conditions are met.

The smart contract is a consensus, not controlled, audited by an external party, validated agreement between the parties. A smart contract is one type blockchain transaction, which cannot be influenced by any user, is carried out in a pre-programmed manner according to the conditions uploaded to the network. 

Users can interact with the contract by entering transactions into the system that trigger predefined functions. The operational logic of the contract is identical to real legal contracts, except that if the conditions are met, the execution of the agreed rules is automatic and enforced by the coding. 

Automatic fulfillment can be imagined as a vending machine whose pre-programmed "contract" would look like IF there is enough money inserted AND there is a drink selected, THEN the vending machine will dispense the drink. And just as the beverage vending machine makes it unnecessary for the merchant to employ a salesperson, who would otherwise count the money and dispense the drink, so the smart contract makes it unnecessary to employ legal entities who check the fulfillment of the contractual conditions and their consequences. 

An obvious example of smart contracts can be mortgage, where it can be programmed that if the buyer has paid all the downpayment and the contract was also published in the land office's database, which can also be requested digitally, the bank automatically rejects the credit portion, will be registered a mortgage, and ownership is transferred from the seller to the buyer. Currently, even though the parties agree on these steps in advance, each step must be verified by the current party and verified by the other parties. These circles account for a significant part of the transaction's resource requirements.

In the case of smart contracts, the ledger stores the contract documents, which ensures maximum security and transparency between the parties. In the case of a complicated commercial transaction, a lot of resources are spent on ensuring that the parties have the correct and up-to-date data and information. This is not necessary in the case of a smart contract, this type of control can be saved in the first place. In a decentralized system, only one copy of the contract and documents exists, there is no need to securely store the data at all participating parties.

Government and public administration functions, company management processes, production and supply chains can be made more efficient with smart contracts. With the possibility of smart contracts, it is  Ethereum blockchain enriched the digital universe, anyone can upload a smart contract to the system. The only drawback of the solution is that it cannot directly check events outside the digital world, so any condition that cannot be checked through an HTTP request requires manual interaction.