Explain me like I’m five: What are Smart Contracts

Blockchain-related topics are extremely hot nowadays and smart contracts is one of those. We decided to launch a series of articles where we will explain in plain language such things as blockchain, cryptocurrency, smart contracts and ICOs.

It can be challenging to explain the cutting edge technologies with simple words but I’ll give it a try as it seems very important to explain something that can completely change someone’s life within the next couple of years: make it easier, smarter, and clearer.

“The most interesting and useful thing about blockchains is their ability to empower people in new ways. Blockchains put power in the hands of people, and take it away from large institutions.” -Nick Tomaino

Having made the decision to implement Blockchain to MeetnGreetMe and to issue our own token we feel responsible for all our dear users and MeetnGreeters who are not very into this hi-tech world (the same as all of us just several months ago). So we have launched this series in order to explain it to our users. We’ve already explained Blockchain and have mentioned one of the greatest advantages of it — smart contracts. So let’s delve into it!

Smart contract is an agreement that has been codified and stored in the blockchain network (on each participant database). It defines the conditions to which all parties using contract agrees. So if required conditions are met then certain actions are executed.

As the smart contract is stored on every computer in the network, they all must execute it and get to the same result. This way users can be sure, that outcome is correct.

Smart Contracts are Awesome and here’s why:

Autonomy — You’re the one making the agreement; there’s no need to rely on any intermediary to confirm. Incidentally, this also rules out the danger of manipulation by a mediator, since execution of the contract is managed automatically, rather than by individuals.

Trust — All the documents are encrypted in a shared ledger. There’s no way they can be lost or modified.

Backup — Imagine if your bank lost your savings account. On the blockchain, each and every one of your friends has your back. The documents are duplicated many times over.

Safety — Cryptography, the encryption of websites, keeps your documents safe. The possibility of hacking is excluded.

Speed — It usually takes plenty of time and paperwork to manually process documents. Smart contracts use software code to automate tasks, thereby they enhance the effectiveness.

Savings — Smart contracts reduce costs since they knock out the presence of an intermediary. You would, for instance, have to pay a notary to witness your transaction.

Accuracy — Automated contracts are not only faster and cheaper but also avoid the errors that come from manually filling out heaps of forms.