A bidirectional contract allows for transactions or data exchanges to occur in two ways between parties. This means that both participants can initiate actions within the contract, facilitating more dynamic interactions.

In a typical bidirectional contract, each party has equal rights to modify or execute the contract’s terms. This could include actions such as payments, asset transfers, or any agreed-upon terms that depend on events or conditions met by either party.

The benefits include increased flexibility and trust, as both parties are actively involved in the contract’s lifecycle. By enabling mutual participation, it helps reduce the risk of unilateral changes or abuses that could disadvantage one side.

These contracts often rely on smart contracts, self-executing contracts with the terms of the agreement directly written into code. This automation ensures that conditions are met before any transactions take place, enhancing security and efficiency.