InstaForex

August 23, 2021

What is a Smart Contract?

 Smart contracts or smart contracts can be considered one of the most important features of a blockchain network to remain relevant.


Although the Bitcoin network protocol supports smart contracts, it was first introduced and popularized by Ethereum founder Vitalik Buterin through the introduction of several crypto projects such as decentralized financial applications (DeFi) on the Ethereum network.


Cardano will also be launching a smart contract on September 12, 2021 and will be a competitor to Ethereum!


Smart contracts were introduced by Nick Szabo, a cryptographer in 1994.


Szabo describes smart contracts as tools that streamline and protect computer networks through the integration of protocols with user interfaces.


However in the crypto sector, a smart contract is easily understood as an application or program that operates automatically if the specified conditions have been met.


Probably better understood by paying for parking tickets at the machine, without having to go to the counter:



Your parking ticket is put into the machine. A sum of money has to be paid. You enter the money and the scanned ticket allows you to exit the parking area.


Now imagine that the processing is encoded into complex numbers and characters, and stored in a blockchain.


Easy isn't it? That is why it is known as a smart contract because it has similarities like a contract in the real world is only digitized.


In conclusion, smart contracts have proven to save time with fast verification and even be able to run their operations accurately.


Since it does not involve a third party who can manipulate, then it can be said that smart contracts are very transparent and reliable.


Transactions and related activities are also safer than hacking as all records in the blockchain are in encryption mode.


Smart contracts often evolve with improvements over time. It is proven to be applicable in various fields whether management, health, real estate, finance including in the national government voting system and supply chain.