What are smart contracts?

What are smart contracts?

Have you ever heard the term "smart contract" and wondered what it means, especially if you're not familiar with all the tech jargon out there? You're not alone! Today, we're going to break down the concept of smart contracts in a way that's easy to understand, even if you've never heard of blockchain before.

What is a Blockchain?
Before we dive into smart contracts, let’s briefly touch on what a blockchain is. Imagine a digital ledger that’s shared among a network of computers. This ledger records transactions, like a traditional ledger, but it's decentralized — no single person or entity controls it. Each transaction is verified by multiple participants in the network, making it highly secure and transparent.

Smart Contracts 101
Now, let's talk about smart contracts. A smart contract is like a traditional contract, which is an agreement between two or more parties. However, it's digital and automated. Think of it as a set of rules or conditions programmed into a computer code that automatically executes actions when those conditions are met. These could be anything from transferring money to issuing a ticket for an event.

Why Are They Called 'Smart'?
They are 'smart' because they work automatically without human intervention once the agreed-upon conditions are fulfilled. This automation makes them efficient, fast, and less prone to errors or manipulation.

Real-World Examples
To make it clearer, let’s consider a few examples:

  1. Vending Machine: A vending machine is a basic form of a smart contract. You select a product, insert money, and the machine automatically gives you the product without needing a human to oversee the transaction.
  2. Insurance Claims: In insurance, a smart contract could automatically process a claim and trigger a payment once certain verified conditions, like a flight delay, are met.

Utilizing Smart Contracts with Avail Wallet

Avail Wallet simplifies the use of smart contracts, making them accessible and user-friendly, even for those new to blockchain technology. Understanding the importance of legal validity, Avail is partnering with representative lawyers across various jurisdictions. This collaboration ensures that each smart contract is paired with a corresponding legally binding document, making them enforceable in court. For instance, consider a freelance graphic designer who needs assurance of timely payment upon project completion. Through Avail, the designer can set up a smart contract with their client, which is automatically linked to a legal agreement reviewed by lawyers. This contract could be programmed to release payment to the designer once they upload the final design files and receive approval from the client. This not only streamlines the transaction but also provides both parties with a secure, trustless system for conducting business, backed by the legal strength of a court-recognizable contract. Avail empowers users to conduct transactions with enhanced confidence and efficiency, blending the innovation of smart contracts with the solidity of legal frameworks.

This feature will be rolling out in parts of the EU initially next year and we plan to expand to more jurisdictions soon after.