Alonzo hard fork will bring Smart Contracts to the Cardano blockchain. Announced launch date is 12.09.2021.
What are Smart Contracts?
Actually Smart Contract is not an innovation. Computer scientist Nick Szabo was the first, who used the term Smart Contracts in 1994. He used following description to Smart Contracts:
"A smart contract is a computerized transaction protocol that executes the terms of a contract. The general objectives of smart contract design 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, arbitration and enforcement costs, and other transaction costs" see full text here
Smart Contract used in blockchain have much more efficiency.
Normal contracts
Normal contract is an agreement between two or more parties. The know forms of standard contracts are : written, spoken forms. Normally Contracts are signed by parties.
Following disadvantages of contracts are known : Mistakes and Misrepresentation.
Smart Contracts
So Smart Contracts are just a code on Blockchain, which is distributed to the full blockchain. Every Smart Contract has conditions and states. States are changed during its execution Smart Contracts can not be changed by anybody, There is also no space for wrong interpretation of conditions.
Smart Contracts eliminate the possibility of human errors.
Smart Contracts can establish trust between parties in huge and complex contracts - because they are decentralized and not controlled by any party.
What will bring Smart Contracts to Cardano?
We expect the release of many new projects on the Cardano blockchain, which functionality is based on smart contracts.
The real adoption of Smart Contracts will probably start with launch of numerous DeFi projects and exchanges. As result - much more ADA will be needed for their liquidity. This can make a huge influence on the coin price.
The full potential of Smart Contracts has not yet been tested. In few years we will see many new projects on Cardano in different branches like insurance, logistics, payments etc.
It is very interesting for us to watch for the progress of Cardano development.
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