You might have heard Ethereum Blockchain is the most secure network where no one can steal your work. Have you ever wondered what made Ethereum blockchain secure? You guessed it right. It’s a smart contract. This post will discuss what is Smart Contract and how it is so secure.
Ethereum is the first platform that uses Smart Contracts. Smart Contract was first proposed in 1994 by Nick Szabo. It was in 2015 when Ethereum was launched with smart contracts. It provides users with two functions. It allowed users to mint ethers and run smart contracts. These smart contracts are digital contracts that get stored on the blockchain. Smart contracts are programmed in software called Solidity.
Reading this post will help you understand what a Smart Contract is, where they are used, and how they are stored and accessed. So, without wasting time, let’s start from the very basics of what is Smart Contract.
What Is Smart Contract?
A Smart Contract is just a program executed on the Ethereum Blockchain. It consists of lines of code and data that need to be stored at a specific address on the Ethereum blockchain. Smart Contracts are only run when their conditions are met.
In other words, Smart Contract is a contract between a seller and a buyer that is written into the lines of code. This self-executing contract, once made, is available across the decentralized blockchain network. It is because of this smart contract the transactions are trackable and irreversible. Smart Contracts allow the owners and developers to verify their artwork.
How Does A Smart Contract Work?
Smart Contracts are not just restricted to the blockchain network. They can be used in real-world businesses as well. In the end, we will give you examples of the businesses running Smart Contract. A Smart Contract is a self-executing agreement in which code algorithms specify terms and conditions.
The Smart Contract Code is distributed among all members of the network. No human factor is controlling or governing it. The code itself oversees the whole transaction. Smart contracts use cryptocurrency to power up transactions. In the case of Ethereum Smart Contract, ETH is used to work with transactions on the platform.
The Smart Contract can be developed on any cryptocurrency and the user signing the contract has to use the same cryptocurrency during Smart Contracts. Cryptocurrency can be exchanged for other cryptos, making Smart Contracts easy.
How Do Ethereum Smart Contracts Work?
Ethereum provides its network members access to its Ethereum virtual machine EVM. EVM is a decentralized blockchain computer that allows developers to create Smart Contracts and embed them into the application. In other words, it is a virtual computer where all Ethereum Smart Contracts are executed. As it is decentralized, the execution of the contract can take place on any computer connected to the network.
How To Create An Ethereum Smart Contract?
There are various stages in creating an Ethereum Smart Contract. We will go stage by stage.
Stage 1: Getting Ethereum Nodes Ready
Ethereum nodes are devices that use protocols for Ethereum mining. When you are connected to the Ethereum network, you run a node. Developers connect their existing projects to the blockchain. My Ethereum Wallet is an example of a platform used for development and management.
Stage 2: Softwares
Ethereum used two developer-friendly software for creating Smart Contracts.
- You have to create a contract.
- Create a state variable
- Then assign a function to initiate or block the contract.
Stage 3: Deploying The Smart Contract
Once the Smart Contract is ready, it needs to be deployed. You need tools to deploy that. Here are some commonly used deploying tools.
- Truffle and Embark – create, test, and deploy tool.
- Meteor – it is a web app. It allows writing, testing, and deploying smart contracts.
- Ethereum Studio – it is a web IDE.
- MyEthereumWallet – a free interface for interacting with Ethereum networks.
Examples Of Software Based On Ethereum Smart Contracts
CryptoKitties: CryptoKitties became the first game that uses Blockchain and Smart Contracts. In this software, you can purchase Kitties as NFTs.
AXA’s Flight Insurance: It is a French Insurance company that has started to use blockchain for simplifying insurance deals. They use Smart Contracts to provide compensation for flight delays.
Authenteq: This company uses Smart Contracts to identify personal data left online, passwords, codes, fingerprints, etc. this software protects users’ privacy.
What Are The Benefits Of Smart Contracts?
As you are aware of what is Smart Contract, let’s see about its benefits too. Here are some of the benefits of Smart Contracts.
So, that’s all for what is Smart Contract. Smart Contracts are changing the traditional contracts that we are even currently using. Smart Contracts are being accepted and implemented by a large number of companies for ensuring safety and security. Lifesaving medications are being promoted to a blockchain-based platform to increase transparency and reduce transport issues. Tell us in the comment below how Smart Contracts will help you.
Thank you for staying with us. Still, got doubts as to what is Smart Contracts? Reach out to us in the Comment section below.
Frequently Asked Questions
Q1. What Is The Purpose Of Smart Contract?
A smart contract aims to simplify business and trade between both anonymous and identified parties without the need for a middleman.
Q2. Are Smart Contracts Legal?
Smart Contracts are legally enforceable if they comply with contract law. However, Decentralized networks like Ethereum are not controlled or governed by any law.
Q3. Which Crypto Has Smart Contracts?
The most popular blockchain for running smart contracts is Ethereum. On Ethereum, smart contracts are typically written in a language called Solidity, and compiled into low-level bytecode to be executed by the Ethereum Virtual Machine.