So, How do smart contracts work?
In this example we’ll be using Kickstarter – The large fundraising platform
Product teams can go to Kickstarter, create a project, set a funding goal and start collecting funds from others who believe in the idea.
Kickstarter is essentially a third party that sits between product teams and supporters, meaning both supporters and teams need to trust Kickstarter to handle their money correctly. Once a project meets its funding goal the project team expects Kickstarter to give them the funds raised.
On the other hand, supporters want their money to go to the project if it was funded or to get a refund if the project did not meet their goal.
Both the product team and its supporters have to trust Kickstarter but with a smart contract we can build a similar system that doesn’t require a third-party like Kickstarter.