Smart contracts work by following simple “if/when…then…” statements that are written into code on a blockchain. These statements represent conditions and the action to take regarding a given issue.
A network of computers executes the actions when predetermined conditions have been met and verified. The blockchain is then updated when the transaction is completed.
For example, a smart contract can be programmed to release a new character in a video game once the player achieves a certain milestone. Another example would be the release of funds to a wallet once a particular condition is met etc.
These are just some of the ways smart contract technology is being applied in the DeFi and GameFi communities today.
The contracts are also being used in decision making whereby DAOs are coding their rules so that they execute when certain conditions are met – removing human interference from the decision-making process.
However, as the blockchain industry evolves, smart contracts are expected to get easier to create even for non-developers.