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What is Blockchain smart contracts and How does it work?2 min read


One of great things about the blockchain is that, it is a decentralized system, which exists between all permitted parties, there’s no need to pay Middlemen, and it also saves you time and conflict. Blockchain smart contracts have their problems, but they are faster, cheaper, trusted and more secure than traditional systems, which is why banks and governments are turning to them.

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A Blockchain smart contracts is literally a little program that uses computer code to execute transactions, based on the agreement within the contract. These smart contracts are stored and replicated and ran on a blockchain (a distributed ledger), accounting in ledger updates (Ethereum transactions).

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For example, you can make an automated payment into your savings account at the first of the month, knowing that your balance exceeds $5000. So there is a transaction that only gets executed when the agreement ($5k in account) is met at the first of every month.


Additionally Blockchain Smart Contracts can be viewed as is a sets of codes/ programs which defines the rule of blockchain and transactions. For example: Smart Contract such as “Z will pay to Y if certain conditions are met “ can be executed automatically

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Blockchain Smart contracts help traders exchange money, property, shares, or anything of value in a conflict-free and transparent way while avoiding the services of a middleman.

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One of the best ways to describe smart contracts is to compare the technology to a vending machine. Normally, you would go to a lawyer or a pay them, and wait while you get the document. With smart contracts, all you simply need to do is drop a bitcoins into the vending machine (i.e. ledger), and your escrow, driver’s license, or whatever comes into your account. Furthermore, smart contracts not only placed the rules and penalties around an agreement in the same way a traditional contracts does, but also automatically enforce those obligations.

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