What Are Hybrid Smart Contracts?
Hybrid smart contracts combine the benefits of traditional contracts with the capabilities of blockchain technology, offering a versatile solution for various use cases.
Definition
Hybrid smart contracts are agreements that incorporate both on-chain and off-chain components. This means that certain parts of the contract are executed and stored on the blockchain, while others may rely on external data sources or traditional systems.
How They Work
Typically, a hybrid smart contract will utilize an oracle to fetch real-world data and feed it into the blockchain environment. This allows the contract to trigger actions based on real-time information, enhancing its functionality beyond the constraints of the blockchain alone.
Use Cases
- Insurance: Automating claims processing based on verified external conditions.
- Supply Chain: Tracking product conditions and events through IoT devices.
- Finance: Enabling complex financial transactions that require real-time market data.
Advantages
Hybrid smart contracts provide a more comprehensive solution by bridging the gap between digital and real-world elements. This adaptability makes them highly effective for industries prone to rapid changes, where both security and flexibility are essential.