The Smart Contract is perhaps the most important piece of Blockchain Technology currently around. But what is it, and how does it function? Today we delve into the topic.
Table of Contents
WHAT IS A SMART CONTRACT?
A Smart contract, as the name suggests, is a contract built and stored on the blockchain. They protect the conditions which the parties agree upon through the technology; first proposed in the early 1990’s, they were introduced on the Ethereum platform through its coding language, Solidity, and have been fundamental for sectors such as Decentralized Finance. They are mostly used for Decentralized Lending and any action that requires unmodifiable conditions to be respected.
THE TECHNOLOGY
A smart contract is compiled in the specific platform’s language, and is to be without errors. It is initiated through a transaction from a user to the Blockchain, which assures its storage on the latter. Once deployed, it cannot be modified,and all its conditions are to be respected. It usually presents an automatization of a process, with fixed reactions to certain conditions.
Credit: PMI.IT
SECTOR GROWTH AND NEW HORIZONS
Smart Contracts are already the bedrock to many Blockchain functions, and practically the entirety of De-Fi (see our article regarding the subject to learn more). Ethereum, Bitcoin, Cardano and more support smart contracts. While an NFT specifically guarantees non fungibility, traditional smart contracts guarantee implementation of desired condition. This could be implemented in many fields, from salary payment to wills and the next generation of bonds and futures. A smart contract, when comiled correctly, cuts out any intermediary parties; this could signify a new age of notary functions and the simplification of the world’s economy to a world-scale peer to peer market, with the only intermediaries being the decentralized platform’s developers, though as is typical in the Blockchain sector, their control would end once their technology is deployed.
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