Article published in: https://www.miethereum.com/en/smart-contracts-guide/#toc2

A smart contract is a computer program that executes agreements established between two or more parties causing certain actions to happen as a result of a series of specific conditions being met.

That is, when a pre-programmed condition is met, the smart contract automatically executes the corresponding clause.

They are contracts that execute and enforce themselves automatically and autonomously.

Smart contracts have been in development since 1993 when the famous cryptographer Nick Szabo first introduced the term. Nick proposed this system of contracts at the time, but the technological infrastructure of the time made it unfeasible. There was a need for a payment system that could put them into practice and that situation did not appear on the scene until the creation of Bitcoin in 2009.

However, Bitcoin was not intended to be anything more than a financial tool: a cryptocurrency -the coin- and a platform for exchanging value -its blockchain-.

On the other hand, the technology with which it worked – the blockchain- did make these smart contracts possible and it was at the beginning of 2014, with the creation of Ethereum, when they finally became a reality.

These smart contracts “live” in an atmosphere not controlled by any of the parties involved in the contract, in a decentralized system.

This means that:

1. The conditions are programmed,

2. Signed by both parties involved

3. And it is ‘placed’ in a blockchain so that it cannot be modified.

These evolved contracts have as the main purposes:

• To implement a state of security greater than that of the traditional contract

• Reduce costs

• Reduce the time associated with this type of interactions

In other words, they seek to improve current contracts by being safer, cheaper, saving us time and avoiding fraud.