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Smart contract: what it is, how it works and its advantages!

O que é um contrato inteligente?

Smart contract: what it is, how it works and its advantages!

When we talk about the cryptoworld and asset tokenization , one item arouses curiosity and some fear on the part of people interested in using new technologies in their business: the smart contract .

This is a natural mistrust in a country where bureaucracy is sold as a security shield in social and commercial relations – and with little practical result. However, smart contracts are in our daily lives.

When using the overdraft limit, the system charges interest the following month for the time of use, right? This charge is part of a smart contract : the overdraft limit usage rules.

Blockchain technology puts the smart contract at the service of social, consumer and business relationships at all levels and not just as a security instrument for banks and large companies.

And with the advantage of being contracts executed electronically, without people making schedules, tracking and executing tasks.

We can say that the smart contract is the brain of blockchain and cryptocurrency and asset token operations.

Want to know more about this revolution in the way of managing rights and obligations? BLOCKBR prepared this article about smart contracts !


Smart contracts are contracts developed in a program on the blockchain to execute one-time or recurring transactions without the control and interference of people. Everything is automatic, from the clauses and rules present in the contract.

From the legal point of view and the fulfillment of rights and obligations, smart contracts do not differ from traditional documents, they are a digital representation of the commitment made between the parties.

  • A programmer uses the blockchain to create an electronic document containing all the previously agreed clauses and the conditions for their execution;
  • Once consented by the parties, the contract on the blockchain starts to function without the possibility of being changed and performs the established actions, in the defined times and conditions.

A smart contract can have an executing event, such as the collection of a debt, or several, as in the tokenization of a company’s shares , scheduling the payment of monthly remuneration to investors/shareholders.


Smart contracts may seem very complex because they involve programming and using the blockchain , but we can take an example and demonstrate how the smart contract works in practice.

A person decides to dispose of part of their assets while still alive and can place a donation contract on the blockchain and put as a condition:

  • A beneficiary must reach the age of majority to be entitled to one of the assets;
  • Another beneficiary must complete university to be entitled to the assets;
  • The others must receive immediately after the creation of the contract.

In general terms, the process would work as follows:

  1. A lawyer draws up the will with all the conditions;
  2. A developer transcribes the document with a programming language onto a blockchain , where each clause becomes a variable;
  3. The donation becomes a smart contract and is published on the blockchain ;
  4. With each condition met, the blockchain automatically executes the established action, such as transferring the goods already with the prior payment of taxes and the required official regularizations.

The final costs for executing the will will be much lower than the normal process, as the execution of future acts will be done electronically over the network.

Imagine what this technology can do in commodity contracts or in real estate consortia ?


Did you know that, right now, farmers are remunerating those who bought crop rights using smart contracts , without involving the finance department, banks or brokers?

Due to the versatility and security they provide, smart contracts can be used in all activities in which there is a need to agree on contracts for the immediate transfer of goods, rights or obligations or guarantee and payment of future rights.

And with a little-known advantage: there is no limit to the number of members. If a mining company tokenizes gold reserves into 10,000 fractions, the blockchain contract will manage them all.

Vantagens - Contrato Inteligente




This is the direct benefit of putting a contractual relationship on the blockchain ; all human work comes down to building it. Once validated, the machines do all the work.

This reduces and even eliminates the human errors that can occur in contract management – controlling events and making payments, asset transfers and other processes.

This advantage is even greater in the case of paying taxes, which always requires special care in the manual process (and causes inconvenience when errors occur).


All processes arising from contractual clauses on the blockchain are carried out electronically, without the need to involve third parties (and their costs) for the contract to be fulfilled.

This is especially advantageous in recurring operations – paying rents, for example.


The blockchain processes the conditions of a smart contract electronically and according to what was programmed, without the possibility of tampering after it is made available on the network.

All conditions will be met during its term. This eliminates the possibility of document or process fraud that can occur in the physical process, ensuring the full credibility of the smart contract .

Each smart contract has a unique access key known only to the issuer of the contract and the network points (the machines) and the conditions of the digital contract must be validated by all computers on the network.


Blockchains are a technology environment with the highest level of security, created to generate and transact cryptocurrencies around the world and which today are designed for the most diverse purposes, including generating asset tokens.

There is no known successful cyber attack on one of these networks.


Tokenization is an operation increasingly used by people who want to generate capital with high-value assets such as works of art and collectibles, and by companies that need to raise funds for their projects .

A mining company, for example, can finance the opening of a new mine by offering tokens from a mining project – a fractionation similar to the use in selling shares.

Smart contracts play a key role in this process.

They enable highly complex operations, which physically involve people, entities and a series of tasks, costs and risks, which ends up making the operation unfeasible or very expensive.

In long-term contracts and compensation commitments, transparency and credibility are fundamental aspects for success.

With all the benefits we showed you earlier, the chances of successful tokenization are much higher!

BLOCKBR Digital Assets is a fintech that combines technological innovation and digital knowledge to transform physical assets into digital ones, in the asset tokenization process.

The offer of tokenized physical and financial assets, both current and new, is democratic and decentralized, which makes investing safer, simpler and more efficient.

We enable, structure, issue and offer tokens on our platform and beyond. Be aware that tokens depend on feasibility and regulatory factors.

Do you want to tokenize your business or part of it? Do you have a business solution and does it make sense to issue your own token ?

BLOCKBR : digital assets driving results and dreams!

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