What is a Smart Contract?
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Loading... - Shandra Abeng
- 01 Sep 2022
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Smart contracts are often mentioned in conjunction with blockchain. With the advent of blockchain 2.0 (which is when blockchain gained its first use case aside from Bitcoin in 2014), smart contracts have been an invaluable addition to the technology. While highly technical in nature, they do not have to be difficult to understand.
In this guide, we will take you through the basics of smart contracts. You will learn what they are, how they work, where they’re applicable, and even the basics of writing one.
What Is a Smart Contract
In the simplest sense, smart contracts are just a programmed version of your usual contract. Its purpose is to automatically trigger a previously settled-upon contract when all the preconditions have been met. Since every condition has to be manually programmed to execute, this can significantly reduce the amount of fine print designed to favor one party, even at the expense of the other.
Although smart contracts, as we refer to them now, rose to prominence with programmable blockchain implementations, they are much older than that. Computer scientist, lawyer, and cryptographer Nick Szabo first proposed smart contracts as a concept in the 90s. He described them as “a set of promises, specified in digital form, including protocols within which the parties perform on these promises.” Outside of their current implementations, smart contracts are present elsewhere: vending machines are considered a rudimentary version of the technology, as they follow the general principle that with the right input, a certain output is guaranteed.
Despite their name, smart contracts are not necessarily a valid, binding agreement in the eyes of the law, the way traditional contracts tend to be. Read More...
