Smart Contracts are computer protocols that are smart enough to enforce, execute, verify and constrain… all by themselves. Smart contracts magnify the utility of blockchain technology. They help automate a lot of rigid processes, saving a lot of time and energy, and boosts efficiency.
Smart contracts might have attracted their well-deserved limelight only because of blockchain, but it precedes the technology by at least a decade. They strive to bring highly evolved practices of contract law to the design of modern protocols of an electronic transaction between strangers on the web.
Nick Szabo, who coined the term ‘smart contract’ defines it in this way: ‘A smart contract is a computerized transaction protocol that executes the terms of a contract. The general objectives are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries. Related economic goals include lowering fraud loss, arbitrations and enforcement costs, and other transaction costs’.
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