Beginners Guide to Smart Contracts

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Everything You Need to Know About Smart Contracts: A Beginner’s Guide   Introducing Smart Contracts and its features in an efficient way  By Mayank Pratap  in Hackernoon

One of the most unique features of blockchain is its quality of acting as a decentralized which is shared between all the parties of the network thus, eliminating the involvement of middlemen or third-party intermediaries. This feature is particularly useful because it saves you from the chances of any process conflict and saves time too. Though Blockchains have their own set of issues that are yet to be resolved, they offer faster, cheaper and more efficient options as compared to the traditional systems. Due to this, even the banks and governmental organizations are turning to blockchains these days.

Smart contracts can be termed as the most utilized application of blockchain technology in the current times. The concept of smart contracts was introduced by Nick Szabo, a legal scholar, and cryptographer in the year 1994. He came to a conclusion that any decentralized ledger can be used as self-executable contracts which, later on, were termed as Smart Contracts. These digital contracts could be converted into codes and allowed to be run on a blockchain.

Though the idea of smart contracts came into existence long back, the current world that we live in works on paper-based contracts. Even if digital contracts are used, the involvement of a trusted third-party from the system cannot be eliminated. While we have defined a system of functioning with this method; we cannot say for sure if it is always smooth. The involvement of third-party might lead to security issues or fraudulent activities along with an increased transactional fee.

With the introduction of blockchain in the digital technology space, such issues can be addressed efficiently. A blockchain based system allows all the entities in the network to interact with each other in a distributed manner thus, eliminating the requirement of any trusted third-party. In simple terms, Blockchain is a technology that stores data on a distributed ledger. The stored data of records and transactions are available to all the parties in the network in real-time. Blockchain technology gained attention with the introduction of the Bitcoin, the first and most established cryptocurrency so far. Other than the application of cryptocurrency, Blockchain has evolved and its use cases are coming forward in different industries.

Smart contracts are one of the most successful applications of the blockchain technology. Using smart contracts in place of traditional ones can reduce the transaction costs significantly. Ethereum is the most popular blockchain platform for creating smart contracts. It supports a feature called Turing-completeness that allows the creation of more customized smart contracts. Smart contracts can be applied in different industries and fields such as smart homes, e-commerce, real-estate and asset management etc.  ....




What are Smart Contracts?

A smart contract is a set of computer code between two or more parties that run on the top of a blockchain and constitutes of a set of rules which are agreed upon by the involved parties. Upon execution, if these set of pre-defined rules are met, the smart contract executes itself to produce the output. This piece of code allows decentralized automation by facilitating, verifying, and enforcing the conditions of an underlying agreement. Smart contracts allow you to exchange anything of value including money, shares, property etc, in a transparent manner eliminating the need for a middleman and keeping the system conflict-free.

In a normal world process for getting a court-registered document as a proof, you would need to go to a lawyer or notary first, give them money in turn of their services and wait till you get the document that you need. However, the scenario changes completely with smart contracts. When you run this process with smart contracts, you’d simply get the document of your need by paying just for that and this will be done without the involvement of any third-party such as the lawyer in this case. Moreover, smart contracts are not limited to only defining the rules around any agreement but they are also responsible for automatically executing those rules and obligations.  ..... "   (Much more here, including explanatory diagrams)  .... "