What is a smart contract for on the blockchain ?

A smart contract (intelligent contract) is a kind ofautomated agreement between the creator of the contract and its users. Coded around the blockchain, intelligent contracts are integrated into it, which makes them immutable and irreversible. They are used to automate the execution of an agreement so that all parties can be sure of the conclusion immediately. They also allowAvoid intermediaries And can also automate a work process, starting when certain characteristics are filled. In this new opus of Feel summerwe return with you to the history of smart contracts, their importance and their operation.

The smart contract in the history of the blockchain

The web 1.0 was the internet as a window. Then web 2.0 introduced the presence of centralized platforms. Finally, the web 3.0 is the trusted third party version, automated and supplied by the user (therefore decentralized). In this context, the blockchain could be The keystone of decentralization. The concept of smart contract existed long before Blockchain technology. Although Ethereum, the famous blockchain launched in 2014, in the best known playground, cryptographer Nick Szabo had already launched the idea in the 1990s.

At the time, Nick Szabo conceptualized a digital currency called Bit Gold. This asset has never been really launched, however this Bitcoin predecessor already highlighted use cases for smart contracts. Intelligent contracts have evolved well over time. Indeed, they started with simple instructions (if, then) that a novice programmer can program and deploy.

Since then, developers have even made it possible that intelligent contracts can be deployed without any particular knowledge in coding. Security, thanks to various programming languages, has increased considerably. Programmers have even developed means to automatically store Smart Contracts in a format readable by humans.

What is an intelligent contract?

A smart contract is a contract signed on the blockchain which establishes a contractual link between two or more parties. Smart contracts have experienced great expansion thanks to the second most popular blockchain in the world, Ethereum (ETH). Of these were born Decentralized applications (DAPPS) who have introduced a whole bunch of new use cases.

One of the main advantages of blockchain networks is Automation of tasks which traditionally require an intermediary. For example, instead of needing a bank to approve a customer transfer to a professional, the process can be done automatically. Especially thanks to an intelligent contract. It is only necessary that the two parties manage to agree on the terms of the contract.

How does a smart contract work?

A smart contract is like A digital declaration between several parties. There are many use cases so here is an example among many others. Let us admit that a butcher's shop orders 3 animals to a farmer. The first can lock the funds in an intelligent contract which can then be approved when the second will deliver the animals. When the farmer pays for his obligation, the funds will be immediately released. However, the contract is canceled and the funds are donated to the customer if the farmer does not respect his deadline.

Intelligent contracts can be programmed to replace government mandates and retail systems, among others. In addition, they could potentially eliminate the need to bring certain disagreements before the courts. This would allow the different parts ofsave time and money.

On Ethereum, for example, contracts are written in its programming language, Solidey. This language is Turing-Complete. This means that the rules and limits of intelligent contracts are integrated into the code and thatNo malicious actor can manipulate these rules. Smart contracts can only be implemented if all participants agree and sign them. Then it is settled for life.

In more technical terms, the implementation of an intelligent contract can be broken down into a few steps. First, it requires an agreement between two or more parties. Once established, the two may agree with the conditions under which the intelligent contract will be considered complete. The decision would be written in the intelligent contract, which is then encrypted and stored on the blockchain. Once the contract is completed, the transaction is recorded on the blockchain like any other transaction.

What about other blockchains?

Perhaps you wonder if Bitcoin and other networks can use smart contracts? Up to a certain point, yes. Each BTC transaction is technically a simplified version of an intelligent contract. In addition, second -laying solutions such as Lightning Network have been developed for extend network features. That said, the use of smart contracts by Ethereum is still a special case.

Unlike most blockchains, Ethereum blockchain contains what is called The Ethereum virtual machine (EVM) . The EVM stores the intelligent contract code and the rules to which these contracts must comply.

In addition, more than 200 intelligent contracts were listed on the Explorer of Blockchain Cardano (ADA) in September 2021 for example. Intelligent Cardano contracts are deployed using Marlowe, Plutus and Glow programming languages.

There are various potential implementations of intelligent contracts that could Automate the world And make it an easier place to live. Smart contracts based on requirements are undoubtedly the way for relatively basic contracts which can be written and executed automatically whenever the prerequisites are met.

Smart contracts are already used by many banks and insurances in their daily operations. Therefore, they have already been Tested in real scenarios. It will therefore not take long before they are part of our lives and our daily routines even if the path to go is still long and strewn with pitfalls.