Crypto Terms: Letter C

What is Contract?

Contract MEANING:
Contract - in traditional finance, a binding agreement between two or more parties. In crypto, smart contracts are self-executing computer programs.
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Let's find out Contract meaning, definition in crypto, what is Contract, and all other detailed facts.

Contracts, in traditional finance, are binding agreements between two or more parties. Historically, some contracts were agreed upon verbally. However, nowadays, it is more common to sign contracts in a written or electronic format.

Contracts are used to officially confirm that party A has agreed to financial dealings with party B, and, in some instances, party C or more co-signers. In the traditional sense, contracts are treated as binding agreements.

If a customer wishes to purchase property, they may have to sign a contract with the entity selling it. The contract would detail the transfer of ownership, property price, the date of signing, and other important details.

Another common model is job contracts. When starting a job or an internship, the employee and the employer sign a contract that details the job responsibilities, the start of employment, the employee’s wage, and other conditions.

Contracts play a vital role in the global economy, as they are required to manage financial processes on a daily basis. Online procedures like purchases, e-banking operations, or money transfers can also be recognized as financial contracts.

In the cryptocurrency industry, contracts have a different meaning, tied to the decentralized digital nature of blockchains. The existence of contracts is seen as one of the most fundamental components of blockchain technology, allowing users to take part in and further develop decentralized finance (DeFi).

Smart contracts are the core element of blockchain technology. They are self-executing computer programs. Smart contracts ensure that transactions and operations completed on the blockchain remain anonymous.

The details of the agreement between the buyer and the seller are recorded by the smart contract and embedded in the blockchain code. The agreement within the program is distributed to the nodes on the blockchain network.

Mining contracts are utilized by blockchain users who wish to mine cryptocurrency but do not have the software or hardware required to take part in the process. In that case, they can employ the services of cloud mining, which allows them to mine without owning physical storage themselves.