A simple example of a Smart contract could be compared to vending machine.
Step 1 . individual inserts cash into the vending machine to make a certain purchaseStep 2. the money inserted triggers an event where the vending machine enablesthe individual to key in the code for the item they want to purchaseStep 3.
individual makes the selection for the desired item on the keypadStep 4. the vending machine then executes the selection and released the product with correct change if any is due Step 5. the individual collects the product and any owed change Step 6. The transaction is successfully completed Step 7 both parties benefited from automated transactionSmart contracts operate on the same principle – code is designed to trigger a response when certain agreed conditions are met, transaction rules are enforced and verified and the transaction is processed. Benefits of Smart contracts• Trust – no third-parties are needed and this ensures full control over the agreements• Accuracy – Terms and conditions are recorded in explicit detail• Transparency – all parties involved can view the details of the Smart contract at any time• Security – Smart contracts that run on the Blockchain can be executed instantaneously• Security – Smart contracts will use the same security that crypto currencies use • Paper free – no paper required for Smart contracts – very little impact on the environment