THE what they are Contracts Smart (Smart Contracts)?

Smart Contracts or Smart Contracts are agreements between two or more people or entities, recorded as computer commands in the so-called BlockChain, prepared to be self-executing, greatly simplifying the entire business involved and ensuring a great deal of security.

It can establish a series of rules, such as rights, duties and their respective consequences for the parties, without the need for third-party intermediaries, being self-executing.

BUT WHAT IS BLOCKCHAIN?

Blockchain It is a system, a shared database, that allows and guarantees the transaction of information, like a ledger, in a secure, reliable and immutable way.

It is a decentralized network, with no one person controlling it, bringing even more security to your data.

It was created to record virtual currency (bitcoin) transactions, documenting information such as: who sent and who received the currency, the amount sent, the date and time the transaction was made, and where in the system this information will be contained.

In a free translation, Blockchain means in Portuguese Block Chain, and directly refers to the way the database works.

The data is grouped into blockchains, in which each of these blocks contains information about the transactions carried out, with a unique and exclusive digital identifier, the so-called hash.

Every new block in the chain will store certain information from the previous block, forming a long and extensive chain, in which none of them can be changed without modifying the previous blocks in the chain.

Furthermore, Blockchain It can be used publicly, as in cryptocurrencies, without a controlling authority, so its reliability comes from the computing power generated by the thousands of servers connected to the chain.

And it can also be used privately, with a centralizing entity regulating the information and users who can enter.

PRACTICAL USE OF SMART CONTRACTS OR SMART CONTRACTS

Let's look at the practical uses of Blockchain in everyday life. Let's say a car manufacturer needs a certain amount of parts to assemble the cars.

Then she makes a smart contract with the supplier of these parts.

The manufacturer will deposit the amount corresponding to the contract into an account (predetermined in the contract), and if the parts are received within the agreed time, the money will be automatically released, without the presence of an intermediary, such as a bank, for example.

If the supplier does not fulfill the contract, the money will automatically be returned to the manufacturer.

This type of transaction, carried out through a smart contract, provides security, less bureaucracy, and greater agility throughout the process.

An important aspect to highlight is that smart contracts are software codes with self-executing rules, which may or may not translate into a traditional legal contract, since it is not yet possible to adopt smart contracts as a replacement for all traditional contracts, because not all terms of the law can be encoded in computer language (REVOREDO, 2021).

FINAL CONSIDERATIONS

Smart contracts open up a wide range of possibilities, simplifying and streamlining our daily lives.

This is an extremely relevant evolution in the use of Blockchain, in which we will see its developments and improvements in the coming years.

BIBLIOGRAPHICAL REFERENCES

REVOADA, Tatiana. How has the evolution of smart contracts on blockchain made the emergence of Decentralized Finance possible?. MIT Technology Review, [sl], 2021. Available at: https://mittechreview.com.br/como-a-evolucao-dos-contratos-inteligentes-em-blockchain-tornou-possivel-o-surgimento-das-financas-descentralizadas/. Accessed on: April 15, 2022.