Review Understanding What A Smart Contract Is

Discussion in 'Crypto Learning Center (Library)' started by philipj, Nov 1, 2017.

  1. philipj

    philipj GrandMaster Crypto Guardian

    You have heard the word smart contracts. Ethereum made it popular because it is most time associated with it. It is one of the power house of ethereum. So what is a smart contract?

    A smart contract is a special protocol intended to contribute, verify or implement the negotiation or performance of a contract. A Smart contract allows you to perform credible transactions without third parties. These transactions are trackable and irreversible. A Smart contract contain all the information about the contract terms and execute all envisaged actions automatically.

    Bitcoin laid the basis for contracting on the Blockchain. However, its tools couldn't meet all needs. The appearance of Ethereum put smart contracts into operation for everyone, giving further impetus to dealmaking.

    As seen from various projects that have been developed using the Ethereum platform, smart contracts can be used in variety of fields;

    Voting, Logistics, management, bank system, insurance, estate, IoT, and others.

    How smart contracts work

    The main principle can be compared to the work of vending machines. They execute only the instructions given to them automatically.

    At first, assets and contract terms are coded and put into the block of a Blockchain. This contract is distributed and copied multiple times between the nodes of the platform. After the trigger happens, the contract is performed in accordance with the contract terms. The program checks the implementation of the commitments automatically.

    What is needed to create a smart contract

    Subject of the contract. The program must have access to goods or services under contract to lock and unlock them automatically.

    Digital signatures. All the participants initiate an agreement by signing the contract with their private keys.

    Contract terms. Terms of a smart contract take the form of an exact sequence of operations. All participants must sign these terms.

    Decentralized platform. The smart contract is deployed to the Blockchain of this platform and distributed among the nodes of the platform.


    Benefits of Smart contracts.

    Security. The smart contract is encrypted and distributed among nodes. This guarantees that it will not be lost or changed without your permission.

    Economy and speed. Most processes are automated, and most intermediaries are eliminated.

    Standardization.There is a wide range of different types of smart contracts . You can choose one and change it according to your needs.
     
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  3. Prezzy

    Prezzy Leader Protector

    Smart contracts will eliminate the problem of trusting someone to live up to agreement.

    Decentralizing the trust system in the world