In traditional finance, a contract is a binding agreement between two parties. In cryptocurrencies, smart contracts execute functions on the blockchain.
Contracts have been a huge part of the interactions between people since the dawn of time. While centuries ago, contracts were predominantly agreed upon in speech only, today, this binding agreement often takes the form of a written or electronic document.
The main purpose of a contract is to denote that person or company A has agreed to have some form of financial dealing with person or company B. For example, if you want to purchase a new house, you will have to sign a contract with the current owner or the bank selling the home. In this case, the contract agreement will detail the purchase price for the property, as well as the time when ownership switches hands, and any other relevant details. When you start a new job, you also sign a contract detailing your work responsibilities and task and the remuneration you will receive for completing them.
Contracts are an integral part of the global economy. Whatever form they take, without the binding force contracts offer, agreements between parties would have been impossible. We interact with various forms of contracts on a daily basis. We’re essentially signing a contract even when we accept the terms and agreements to use a website or service.
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