In other words, smart contracts are basically lines of code that execute a specific function once certain conditions are met. The code usually follows "if... then..." statements that trigger predetermined and predictable actions.
For example, an online shop may implement a smart contract that ensures that “if payment is received, then products are delivered” - which would make the whole process more efficient and less prone to human error.
Although smart contracts became popular in the context of blockchain and cryptocurrencies, the concept was first described by American cryptographer Nick Szabo in 1994, many years before the creation of Bitcoin.
Another area in which smart contracts are suitable is the financial services industry. For instance, the technology may be used to automate the clearing and settlement of trades, the payment of bond coupons, or even the calculation and payout of insurance claims.
Despite their obvious applications in finance, smart contracts are versatile enough to apply to practically any industry in which funds, digital assets, or any kind of digital information need to be transferred between parties. The equipment leasing industry, for instance, has made extensive real-world use of these contracts to make lease agreements more efficient.
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