A smart contract may include as many stipulations as necessary to ensure that the task will be successfully completed. A blockchain network requires its participants to decide how transactions and their data are represented, to agree on the rules governing such transactions, to discuss any possible exceptions, and to define a dispute resolution procedure. Developers and business stakeholders are typically involved in an iterative process. A smart contract is defined by a series of "if / when ... then ..." statements inscribed in a blockchain language. When predetermined conditions are met and checked, a network of computers carries out the actions (releasing funds to the appropriate parties; registering a vehicle; sending notifications; issuing a ticket).

Imagine a future where smart contracts are the norm, and you can purchase a property by taking out a loan from a bank. You will be able to verify your identity using your digital identity saved on the blockchain. From the loan acceptance to the transfer of ownership, any successful transaction would be completed in a matter of minutes, and registered on the blockchain. This is how smart contracts remove the need for faith and make transfers faster and simpler. After learning what a smart contract is and how it works, the first question that comes to mind is why we still need them.

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. Built on blockchain technology, they automatically enforce and execute the agreed-upon terms when predefined conditions are met. Smart contracts eliminate the need for intermediaries, reducing costs, ensuring transparency, and minimizing the risk of fraud.

One significant use of smart contracts is in decentralized finance (DeFi), where they facilitate various financial services like lending, borrowing, and decentralized exchanges. These contracts also find applications in supply chain management, ensuring transparency and efficiency by automating contractual agreements between multiple parties.

The importance of smart contracts lies in their ability to streamline processes, enhance security, and foster trust in various industries. By automating and self-executing agreements, smart contracts contribute to a more efficient and tamper-resistant digital ecosystem. As blockchain technology continues to evolve, the adoption and importance of smart contracts are likely to grow across diverse sectors, transforming traditional business practices.