Decentralized Exchanges (DEXes) are one of the hottest topics of Digital Currency/Blockchain Networks. While talking about DEXes, “A Smart Contract” becomes an important topic to be discussed specially. If you have purchased assets such as a vehicle and real estate, definitely you might experience a complex procedure including many documentation and agreements. Blockchain networks also consist of many transactions including both physical and virtual assets. This context consists of an introduction for Smart Contract; the agreements that are used within Blockchain Networks.
A Smart Contract is a set of digital codes that contains the terms and conditions of the agreement among the peer-to-peer transaction. These codes are automatically executed and stored within the blockchain. These agreements (Smart Contracts) provides better security for the exchanges of assets such as money, property, and shares. The most famous programming languages that are used to write the codes of smart contracts are Solidity, Vyper, and Serpent. The main objective of using a smart contract is to improve the transparency and trust between both peers. When a transaction is initiated, the relevant details are coded as a smart contract. The important details of the transaction automatically stored in the blockchain. Therefore, both participants are able of checking the transaction details/information at any time.
Advantages of Smart Contracts
Trust and Security
Since the smart contracts are automatically generating, the records cannot be changed according to benefit of a single party. None of the participants would worry about the adulterations of the relevant information of the transaction. Most of the time the recorded data are encrypted and these are having a very less probability of been hacked. A smart contract is not an individual block, the details that consist in the smart contract are connected with some previous data as well. If any unauthorized party is hacking the system, he has to change the entire distributed ledger. Since this cannot be done the security of the transactions becomes high.
Speed and Accuracy
Since all these parameters are in a digital platform no paperwork is required. Even no need to prepare the documentation manually. Therefore, the transactions can be done at a better speed. As there are no errors that can arise from manual work, the transactions are happening accurately.
Cost-effective
In a physical transaction, always a middle party would be required. Commonly an attorney should involve the transaction in order to ensure legal coverage. In that case, it leads to an extra cost. But smart contracts do not require a middleman. Since the smart contracts are generated by the blockchain, there are no additional costs required.