How smart contracts work:
1. Contract terms. The smart contract records the terms of the transaction, such as the amount, deadline, parties, etc.
2. Fulfillment of the conditions. When the conditions of the smart contract are met (for example, payment occurs), it automatically performs the programmed actions.
3. Security. Smart contracts are stored on the blockchain, which ensures their security and transparency. Changes to the contract can only be made if certain conditions are met, which prevents fraud and unauthorized access.
4. Automation - smart contracts speed up processes and reduce the likelihood of human error.
5. Decentralization. Since smart contracts operate on the blockchain, they do not depend on a single control center. This makes them more reliable and resistant to cyberattacks.
6. Use case. For example, in the real estate industry, smart contracts can be used to automatically transfer property rights after pay