What’s a smart contract? A smart contracts provide a reliable method of tracking ownership of unique digital entities of value, which is money.
Smart contracts (also called self-executing contracts, blockchain contracts, or digital contracts) are simply computer programs that act as agreements where the terms of the agreement can be preprogrammed with the ability to self-execute and self-enforce itself. The main goal of a smart contract is to enable two anonymous parties to trade and do business with each other, usually over the internet, without the need for a middleman. The origin and history of smart contracts is much older than bitcoin and dates back to the 1990’s.The term ‘smart contract’ was first coined in 1993 by one of bitcoin’s alleged creators, Nick Szabo, and referred to self-automated computer programs that can carry out the terms of any contract.
Smart contracts, are created by computer programmers through the help of smart contract development tools, are entirely digital and written using programming code languages such as C++, Go, Python, Java. This code defines the rules and consequences in the same way that a traditional legal document would, stating the obligations, benefits and penalties which may be due to either party in various different circumstances. This code can then be automatically executed by a distributed ledger system.