Smart contracts are protocols used to facilitate, verify, and enforce contracts on a digital medium. These self-executing contracts can be safely executed and authenticated without third parties and cannot be reversed. Each transaction is documented on a blockchain or distributed ledger system, increasing traceability and transparency.
Companies use smart contracts to improve the security of transactions. Smart contracts are heavily encrypted and provide superior protection over standard encryption technology. Their self-executing nature can speed up transactions and increase accuracy as well. Smart contracts also improve transparency since requirements are well-defined and transactions are documented and irreversible.
Some blockchain platforms and blockchain payment solutions offer smart contracts or allow users to create, manage, and execute transactions digitally. Additionally, smart contract audit service providers help businesses assess the security and reliability of smart contracts.
To qualify for inclusion in the Smart Contracts category, a product must:
Be built upon a blockchain-based platform or distributed ledger technology (DLT) system
Allow users to predefine contract terms and events
Create digital, self-executing contracts
Settle transactions without third parties