## Can smart contracts really eliminate intermediaries? Unveiling the revolution of automated execution on the Blockchain

Many people have heard of **smart contracts** (смарт-контракт), but do not quite understand what problems it actually solves. Simply put, traditional contracts require intermediaries like lawyers, notaries, and banks to ensure execution, which is time-consuming and costly. **Smart contracts** are like having a vending machine on the Blockchain — when conditions are met, the contract executes automatically, and no one can change it.

This concept was actually proposed by Nick Szabo as early as 1994, but it didn't really become a reality until the emergence of Ethereum. Now, more and more blockchain platforms support this technology, and **smart contracts** are wielding their magic wand in various fields, from financial transactions to supply chain management.

## **Three Core Features of Smart Contracts**

To understand how **smart contracts** work, you need to grasp three key concepts: decentralization, immutability, and transparency.

Once the code is deployed to the Blockchain, the **smart contracts** become part of the distributed ledger, with the entire network witnessing its execution process together. Each participant can see the contract terms and execution results, ensuring they are not deceived. Furthermore, once deployed, the code is fixed; hackers cannot alter it—even though this "immutability" may seem like a drawback at first glance, it actually becomes the greatest guarantee of security.

## **Five Steps from Creation to Implementation of Smart Contracts**

1. **Write Rules**: Developers write the contract conditions using a specific programming language.
2. **Network Deployment**: The contract takes effect immediately after being deployed on-chain.
3. **Automatic Execution**: Conditions trigger, code runs automatically
4. **Distributed Confirmation**: Nodes across the network verify the validity of transactions.
5. **Permanent Record**: Transactions are written to the Blockchain and are irreversible.

The beauty of this process is that no one can intervene midway. Imagine you signed a contract for selling a house, where the condition is that payment automatically transfers ownership, so you no longer have to worry about the other party backing out or intermediaries playing tricks.

## **Which Industries are Being Consumed by Smart Contracts**

**In the financial sector**: Insurance claims, lending agreements, and futures trading all use **smart contracts** for automatic settlement, with funds arriving in seconds.

**On-chain**: From goods shipment, logistics tracking to automated payment, the entire chain can be driven by **smart contracts**, transparent and efficient.

**In governance applications**: Decentralized applications (DApp), voting systems, NFT transactions, **smart contracts** are the underlying engine.

**In Intellectual Property Protection**: Licensing of digital creative items, distribution of royalties - all automated.

This is why it is said that **smart contracts** are the true killer application of Blockchain, not cryptocurrency speculation, but a tool for transforming the entire economic system.

## **Five Major Advantages (Advantages of smart contracts)**

**1. Automation liberates manpower**
No manual review, no processes to follow, no waiting for approval; it triggers as soon as the conditions are met. What fees, what business days, all disappear.

**2. Information Symmetry**
All participants can see the contract code and execution status. Fraud caused by information asymmetry? It does not exist here.

**3. Significant decrease in costs**
Eliminating lawyer fees, notarization fees, and intermediary fees, **smart contracts** can reduce transaction costs by over 50%. Financial institutions may have a tough time, but users are happy.

**4. Security is off the charts**
Cryptography + distributed storage = unpreventable. Even changing a single character will be detected by the entire network, making hacking exponentially more difficult.

**5. Completed in seconds**
Traditional contracts take a month to take effect, **smart contracts** can be completed in seconds. Cross-border transfers and cross-chain transactions can be compressed from hours to seconds.

## **But smart contracts are not perfect**

The reality is quite harsh. First, **smart contracts** rely on external data sources (the Oracle problem). If the information fed in is tampered with, even the most reliable contracts will execute incorrect instructions.

Secondly, there are code vulnerabilities. No matter how skilled the person writing the smart contracts is, they may still leave hidden dangers. Once on-chain, there is no way to roll back, and one can only watch helplessly as user assets evaporate—there have been many such tragedies in history.

There is also an awkward question: immutability also means that corrections cannot be made. Did you write the contract terms wrong? There's no way out, either redeploy a new contract or wait for the problem to evolve into a disaster.

The blockchain community is working on solutions. Security experts have established a vulnerability bounty program, auditing firms conduct strict evaluations, and developers are creating better development frameworks and detection tools. Standardization efforts are also underway, so that smart contracts on different chains can collaborate more effectively.

## **The Future Has Arrived**

**smart contracts** are transitioning from a technical novelty to a commercial infrastructure. Automated execution, transparency, and low cost—these features are transforming one industry after another, including finance, supply chain, governance, and insurance.

With every advancement in Blockchain technology, **smart contracts** can perform better, faster, and more securely. Perhaps in 10 years, people will wonder why contracts used to rely on intermediaries, just as we look back at checks now.