Smart Contracts 101: What Are They? And How Do They Work?

Simply put, a smart contract is a few lines of computer code that executes a sequence of steps according to pre-coded rules.

They’re ‘smart’ because they sit on a blockchain and require no human involvement. All a human has to do is create the initial computer code; then, all parties can step back and let the technology work its magic.

When necessary conditions are met, funds can transfer, rentals can happen, you can automate whatever you want. 

All according to pre-coded rules.

What Are The Benefits Of A Smart Contract?

Smart contracts work without human intervention. This results in three benefits:

• Cost-effective: no-one has to pay agent fees, unlocking savings

• Quick: no waiting for email responses or payments to clear

• Secure: blockchain is secure by design thanks to robust encryption

The above benefits apply to all industries. At Elitium, we’ve considered how we could deploy smart contracts to benefit our users and we’ve come up with one idea. 

— Yacht charters.

How To Use A Smart Contract To Charter A Yacht

You could automate most the yacht chartering process using a smart contract, meaning chartering a yacht could look something like the below:

1. Create a contract on the blockchain: mirroring the terms of a standard charter.
2. Customize the terms: reflecting any yacht-specific requirements (e.g., no pets).
3. Tweak the conditions: adding a surcharge for an onboard event, for example.
4. All parties sign: before storing an encrypted version on the blockchain.
5. Transfer funds into an Escrow account: per the contract’s terms.
6. Trigger disbursements: paying funds automatically upon pre-coded triggers.

The technology is complex. But once available, it offers groundbreaking efficiencies. We’re yet to release our yacht-centric solution, but if you join Elitium on Telegram…

You’ll be first to know when we do.

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