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What are Smart Contracts by Tim Enneking

Smart Contracts

Just like enterprises and organizations – regardless of how big or small they are – require written contracts, so do transactions that take place online. According to Tim Enneking, a major concern for many people when it comes to cryptocurrencies is the security aspect. How can you be sure you’re not being scammed out of your money? Smart contracts provide an answer.

Tim Enneking Explains Smart Contracts

A smart contract is pretty much just a program that is stored on a blockchain. In regular, written contracts like the ones we are used to, specific conditions have to be met before any action is taken, and if the conditions are not met then the contract becomes invalid. However, this is cumbersome, and also goes against the idea of a decentralized financial system.

That’s why smart contracts are used on blockchain technology. These contracts are stored on the blockchain, and run when the conditions are met. Usually, they are used so that any agreement between participants will result in an automated execution without the need for an intermediary. This makes everyone certain that they are not being scammed, and also helps save time.

Advantages of Smart Contracts by Tim Enneking

There are a number of advantages smart contracts can have.

Security

Tim Enneking explains that the number one benefit they offer is that of security. Because the contract is automated and does not allow for external meddling, smart contracts can provide a greater level of security than regular contracts.

Lack of Middlemen

Because they are automated, smart contracts allow both parties to enter into the agreement without having to rely on an unbiased third person to make sure that the agreement is carried out. Unfortunately, humans will always come with bias, so this can be tricky. That’s why, Tim Enneking explains, with the middle man removed in smart contracts, the process becomes a lot more reliable.

Real Time Execution

Unlike people, machines don’t need a lot of time to carry out complex tasks. In fact, tedious and time consuming tasks can be carried out almost instantaneously. The real time execution of the contract allows for all parties to get what they have agreed on, once the necessary conditions have been fulfilled.

Transparency

One of the major benefits of smart contracts that ties in somewhat with security is that the technology is very transparent. It is clear about what’s happening because the logic and any required information on the contract is visible to all the people participating in the contract itself. This makes it clear to anyone that they will get exactly what they agreed on.

However, according to Tim Enneking, despite the many advantages, smart contracts also have their challenges. For one thing, the transparency results in a lack of confidentiality that reveals private information to all participants. It also requires every aspect of the contract to be coded in accurately, which can sometimes cause problems if the coder is unable to interpret it correctly, or if there end up being any loopholes.

Still, smart contracts have the potential to change the way we do things by speeding up process and reducing the costs associated with transactions.