Smart contracts are self-executing contracts based on the terms written within them. They can facilitate, verify or enforce the terms of a contract without the need of a third party like traditional contracts. As a result, they can automate and solve many problems in the real world for any industry.
What are smart contracts?
A smart contract is computer code that follows coded instructions and is self-executing. Once the input for the smart contract is made, then the output will happen.
You can think of a smart contract as a vending machine. When you put money in and choose what you want, the vending machine will give you that item.
Smart contracts are no different. They do exactly what is defined in them. That means they can solve many real-world problems by automating processes like applying for a loan
Advantages of smart contracts
Smart contracts offer a wide range of advantages, and this will likely increase as the technology improves.
Here are just a few examples:
- Accuracy: The terms of the smart contract are outlined in the code. They will do exactly what they have been programmed to do.
- Speed of transaction: Once a smart contract gets triggered, the output will always happen. This removes the back and forth associated with traditional contracts making smart contracts incredibly fast to use.
- Immutable: By design, smart contracts can’t be changed or tampered with once they’re created.
Disadvantages of smart contracts
While smart contracts are promising and can revolutionize almost every industry, they are not without their challenges.
Some examples are:
- Irreversible: Once a smart contract is triggered, it can’t be reversed. This can be a benefit. But if a smart contract is rogue or triggered accidentally, this can result in you losing your money.
- Inflexible: Unlike the law, which is very flexible, smart contracts are not. Judges set precedents, take special circumstances into account and reverse contracts all the time. Right now, this can’t be done with smart contracts.
How does Argent use smart contracts?
At Argent, we have created a non-custodial crypto wallet that utilizes smart contracts for extra functionality compared to alternative wallets.
One of these features is social recovery. Rather than writing down the dreaded recovery phrase that could get lost, Argent users can recover their wallet using Guardians. Guardians are people and wallets that you own or trust to help keep your wallet secure. At no point do guardians have access to your funds. They are simply another layer of protection.
Guardians are there to recover your wallet when needed. To do this, you make a request, and your Guardians will give you approval. Once this happens, your wallet gets recovered. Guardians can also lock your account if you lose access to your phone and approve transactions to an untrusted party.
Listen to Argent co-founder Itamar Lesuisse on the Bankless Podcast discussing the Argent wallet in depth.
An explanation of smart contracts by Andreas Antonopoulos
Nick Szabo -- Smart Contracts: Building Blocks for Digital Markets
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