Advantages of Smart Contract-Based Transfers

Smart-Contract

There are several advantages to using smart contracts to transact cryptocurrency. Before we get into those, let’s first talk about the disadvantages of current cryptocurrency transaction methods.

When we make financial transactions with banks or credit cards, they verify and process the payment. However, when we make cryptocurrency transactions, the network verifies and approves the exchange.

Sergey Nazarov and Lex Fridman discuss the applications of Smart Contracts

This means that both parties have to wait for the network to process the payment before they can access the funds.

For example, if someone sends you $100 worth of cryptocurrency and the transaction is unconfirmed, you won’t be able to access the funds immediately.

Instead, the transaction has to first be added to the blockchain by miners and verified by the network. Most cryptocurrency transactions can take up to 10 minutes to go through.

This is because miners verify and add each transaction to the blockchain in exchange for new coins. But with smart contracts, the blockchain verifies and approves the exchange immediately because the transaction is programmed to go through once certain conditions are met.

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Related:  How Does Smart Contracts Work
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