The history of smart contracts dates back to 1994, when Nick Szabo, an American cryptographer introduced the concept. The idea later gained momentum with the introduction of Ethereum, which embraces the Solidity language in programming the contracts. While Bitcoin also uses smart contracts, it uses the Opcode language of programming, which makes Bitcoin-based smart contracts quite limited, with fewer capabilities too.
What are smart contracts?
A smart contract is a decentralized, self-executing code that operates under certain conditions. For instance, all involved parties must sign the transaction; the 30-day limit must elapse for the tokens to be liquidated. In addition, the ICO must reach its soft cap.
Vitalik Buterin of Ethereum explains:
“In a smart contract approach, an asset of currency is transferred into a program and the program runs this code and at some point it automatically validates a condition and it automatically determines whether the asset should go to one person or back to the other person, or whether it should be immediately refunded to the person who sent it or some combination thereof.”
In summary, smart contracts are programmed in such a way that they ensure the terms and conditions of the agreement are met or unmet.
Smart contract benefits
#1. Accuracy—smart contracts ensure that all the requirements are met and the terms and conditions fulfilled and recorded clearly.
#2. Near-zero dispute cases—the Terms and Conditions of smart contracts are open and accessible to all participants. This drastically reduces the scope of disputes.
#3. High Speed—since smart contracts run on software codes, they execute transactions much faster compared to real-world contracts.
#4. Secure data storage—smart contracts pick every essential detail in every transaction and store them securely and permanently on the blockchain. This gives users the opportunity to refer to the details in future.
#5. A stamp of trust—smart contracts are glazed with features such as Transparency, security, and autonomy. This is to assure the users that no manipulation, bias, or error is bound to take place.
Ethereum blockchain popular for Smart Contracts
The Ethereum network has been quite popular for the development of smart contracts. This is because it allows projects to easily develop their own tokens on its blockchain. Many users are now inclined to the smart contracts owing to their open and decentralized nature. Besides, smart contracts are immune to malicious actors, are immutable, and fast compared to traditional contracts. Any third party cannot influence smart contract.
Smart Contract application
Smart contracts can transform many fields. A few examples include:
- Supply chains
- Real estate
In the net article, we will explain how smart contracts can revolutionize these industries. Smart contracts enable many parties to participate without any of them manipulating the system to suit personal interests. Everything is transparent and hack-proof, only allowing for innovation and cooperation between possible interested parties.
All the same, smart contracts also have their limitations, which is why various projects continue perfecting their systems. This eventually makes them relevant, secure, and responsive to the current needs of the market.