With cryptocurrency boom new terms have invaded our language. New instruments require a name and an explanation. We hear "bitcoin", "blockchain", "ethereum", "mining", "crypto assets"... But what does this all mean? We need to learn everything about it. In this new phraseology related to that world we frequently stumble upon the term "smart contracts".
Well, what specifically is a smart contract?
A smart contract is an agreement between two or more parts that is autonomously executed using a blockchain. In other words, it's an informatic program that registers a series of specific conditions that include obligations and rights in a secure digital platform. Different to a conventional contract, it doesn't need an official entity, like a governmental authority to certify its validation. This contract has the capacity of automatically executing itself following instructions previously established.
An example
Everyone at least once has bought something in a vending machine. Lets suppose that we want to buy a beverage. Behind the glass we can see the different options available. Each option shows a code and a price. We select a choice. Then we insert the money and introduce the code, following the instructions that we have been given. The machine confirms the transaction and automatically proceeds to deliver the product and our change if any. All of this was made without the physical presence of a vendor. A smart contract is like the vending maching of our example but made into a software. It can follow instructions. And can also give and receive money in the name of the parts involved.
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