Smart Contracts in Laymen's terms

in #technology3 years ago

Blockchain and Crypto Currency is changing the world rapidly and a lot of industries will be influenced and also changed directly.


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I am writing a series of articles, which will assist non-technical users to understand more technical concepts. My main goal is to enable the non-technical audience to have conversations with the more technical audience.

Legal industry.

One of the industries that will be influenced over time is the Legal industry. This very professional and specialised industry, consists of millions of individuals around the world, and technology will have an impact on the number of lawyers actually required to fulfil the need and demand.

What is a smart contract?

Smart contracts are computer protocols intended to facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts were first proposed by Nick Szabo in 1996.

Proponents of smart contracts claim that many kinds of contractual clauses may be made partially or fully self-executing, self-enforcing, or both. The aim with smart contracts is to provide security that is superior to traditional contract law and to reduce other transaction costs associated with contracting.
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Workflows

Workflows have been around for many years and most of us have used these tools without even being aware that we do. A workflow is small piece of computer code written with the goal of executing a sequence of tasks automatically, based on input from a previous task.

It is usually easier to explain in by means of an example:

When you electronically apply for leave at you place of work, you usually select the dates you want to take leave, and then you submit it for approval. Your manager then get an email or a task to approve the leave. Your manager then approves the leave from where you will get an email sitting that the leave was approved. This is a workflow.

Another example is when you put in a Expense Claim electronically. There are many more examples that can be mentioned.

Smart Contracts vs Workflows


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A smart contract does exactly what a workflow does, with the difference, that there is no manager on the other side to approve the task, and there is usually money involved in the transaction. This also happens automatically. Let me explain by the means of an example.

You write a blog on Steemit. Various users vote for your blog article. After 7 days, the counting down timer indicates that the monetization period for the specific article is completed. Your Steem Power and Steem Dollar amount is calculated based on the average Steem price for the past 7 days market price. The money is then made available for you to claim. All of this happens automatically.

There are so many applications for Smart Contracting technology, especially in combination with Blockchain and Crypto Currency that I do not even want to start to mention. Let me just give you one example as explanation:

We all us water and electricity in our homes. Should we get to the point where our Water and Electricity Metres is managed by a Blockchain, which will ensure that we cannot have fraud as the Blockchain keeps a full audit trail of all transactions. These companies can now create smart contracts, to manage the whole process, from collecting the information to automatically receiving payment in Crypto Currency directly into their wallet.

I hope this article has helped somebody out there and should you have a specific question about any technology I will try my best to explain it for you in Laymen's terms.

Some of my other in Laymen's Terms Post.

Some of these posts have been written more than 10 Months ago :)
Artificial Intelligence in Laymen's terms
Blockchain and Digital Signatures - In Laymen's Terms
Trustless - What does it mean in laymen's terms?
Cyber Attacks explained in laymen's terms
Machine Learning - In laymen's terms
Internet of things and what it is in laymen's terms
Big data - What is it really about - In laymen’s terms

Happy Steeming!


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Thank you for posting @jacor.

In cryptospace everyday is a new day.....thank you for the information regarding Smart Contracts.

Thank you for your support. Cheers.

Hello jacor! Great article for newbies! Upvoted and re-steemed! Thank you

Great post, I was wondering what a Smart Contract is until now. haha, I just learned it by reading this post. Steemit is the best I learn many great things day by day.

Its so gonna revolutionize corporations governments and everything else in between.

All glory to the Blockchain, oh wait I mean Hypnotoad.

Thank you for a great comment @thecynic

such a nice article, im really looking for something like this. Can't wait for your next work

Good..
I need votes Exchange.
May you vote for me, I voted for yours? :)

Thanks for writing this article. I'm new to cryptocurrencies and blockchain and the term "smart contract" is one I've seen repeatedly in the week that I've been here, but really haven't been able to get a good definition of (particularly using real world examples like you did). Keep it up!

Very informative article...thanks for sharing..

Ohh thanks @jacor thanks for sharing with us these updates!!

It is a great pleasure. I hope it helps somebody on the platform to have more technical conversations.

Wow, now that's an awesome idea!! Imagine our water and electricity bill was run on smart contracts!! I wonder if the municipality would ever allow that - seeing no fraud is allowed - haha :D

It is indeed awesome. As you know we are building the @sportspodium platform. The entire platform will be running on smart contracts. As users provide data, they will automatically receive their loyalty rewards into their wallets

Yip, aware of the platform... That's totally awesome man!! I'm sure you guys will let us know more about it at Steem Saturday :)

We will indeed. The SportsPodium marketing and technical will be at the event and speak about this :)

"A smart contract does exactly what a workflow does, with the difference, that there is no manager on the other side to approve the task, and there is usually money involved in the transaction. This also happens automatically. Let me explain by the means of an example.

You write a blog on Steemit. Various users vote for your blog article. After 7 days, the counting down timer indicates that the monetization period for the specific article is completed. Your Steem Power and Steem Dollar amount is calculated based on the average Steem price for the past 7 days market price. The money is then made available for you to claim. All of this happens automatically."

thanks for that i have a beeter understanding of it now

Powerful idea. We hope to see the time and it must be this generation.

Your technical article are helpful. Keep it up. May God bless you for the noble service you are doing to the community.

It is only a pleasure @mhangami :) Thank you for the comment.

Finally a very clear and easy explanation about smart contracts! Thanks for the article!
You know, I think you are right regarding utilities like electricity and water. But maybe the even notaries will adopt the technology :)

Then I have reached my goal for this post :) Thank you for the kind comment @bitatlas. There are many more examples of how SmartContracts can be applied.

It's a new wonderful world! :)

Great article, thanks!

Do you think all big businesses will move over to smart contracts and away from paper contracts?