AI-powered smart contracts: A revolutionary, impartial mediator
By: Roi Ben Ami
Tags: Cryptocurrency, Smart Contracts, Bitcoin, Ethereum, Blockchain

Smart contracts have been around for a few years now, but their popularity has only exploded with Ethereum’s rise to prominence. The benefits of smart contracts are immense, and the technology may be one of the most revolutionary developments in crypto.

What is a smart contract?

A smart contract Is essentially a code on the blockchain that allows two parties to enter into agreements without involving third parties or intermediaries like lawyers and bankers.

A Smart Contract is like a traditional contract. Still, instead of being written in legal jargon or computer code, it’s encoded as lines of programming logic that execute automatically when certain conditions are met.

The term “smart” derives from an analogy that suggests contracting parties should control their agreements just as they do in real life.

In general, Smart contracts are a digital self-executing contract that runs on blockchain technology. They can provide many advantages for all parties involved: from lawyers up to investors looking to invest in real estate projects without any concerns about possible fraud.

How do smart contracts work?

When purchasing with Bitcoin, the Smart Contract will write up code stating “Sale this specific item for 2 BTC,” Then, send it over the blockchain automatically sending you the goods.

The terms and the execution can be agreed upon at the moment of sign-up — with no need for third-party involvement if correct security measures are applied.

If either party breaches the agreement, they would not get their Bitcoin back but instead have to pay a penalty fee in ETH.

What are the uses and benefits of Smart Contracts?

The most common use for Smart Contracts is in the financial industry; sadly, an area that has traditionally been resistant to change and innovation. Most industry professionals will only work with large corporations that are already established in the field.

This is the entire premise behind Smart Contracts: Smart contracts remove third parties and fees that traditional agreements require.

This means there’s no need for costly intermediaries who add unnecessary steps between two business entities, taking up time and increasing fees paid by those involved in the transaction process; a huge benefit for industries like financial services, which need to settle disputes through law because it removes much of the legwork involved with those processes.

A perfect analogy of this would be mortgage contracts that are executed by code instead of paper documents. Thus reducing both time spent on transactions and unnecessary delays in loan approval; Saving time and money, and eliminating the possibility of fraud.

Another example is Smart Contracts being used to verify ownership (via intellectual property registration) which saves time in pursuing lawsuits or other complex legal processes.

What does the future of smart contracts hold?

This new model has enormous potential with endless benefits, though there are still issues such as regulation that need to be addressed before entering mainstream financial markets.

However, if regulators successfully address those issues before it enters global markets, then Smart Contract’s benefits may soon impact traditional banking models across the globe.