Today in this article we want to talk about Web3.0 and blockchain. The special thing that we will explain to you is smart contracts.

Smart contracts: Introduction

To illustrate what smart contracts are, let us give you an example.

Imagine you want to sell a house, it is very risky and requires a lot of paperwork and communication.

This is why many people turn to an intermediary and go to a realtor to sell the house.

The amount that a seller gets in return for selling a home is usually large and therefore a direct transaction with the buyer is relatively risky.

This is where the firm comes in as a third party and takes a commission in the middle of it. This commission is a loss to the seller.

It’s in such situations these smart contracts can be useful.

The smart contracts are based on the condition response mechanism.

In this example, if the buyer sends the agreed amount of the house price to the system, the house belongs to him/her.

Smart contracts act as a third-party service.

With these contracts, both ownership and money are stored within the system and once the money is transferred by the buyer, ownership will belong to him/her.

This contract is approving by hundreds of people and error-free delivery is guaranteed.

There is no need for trust between the parties and the seller and the buyer can save a considerable amount of money at the same time.

Smart contracts: what is it?

A smart contract is an automated protocol without interfaces that are managed under its specific terms and conditions and stores and executes contract clauses through blockchain.

Smart contracts allow you to make reliable transactions without the interaction of third parties.

This is a decentralized approach, meaning that intermediaries are not required at the time of transaction approval.

Smart contracts will be executed automatically according to the rules that have been planned if the predetermined terms and conditions are met.

 

Smart contracts: who invented Smart Contracts?

The concept of smart contracts was first introduced in 1996 by Nick Szabo, a computer scientist, and cryptographer.

Over the next few years, Szabo completed the idea and released more about it.

He described the concept of creating contract law about business practices through the design of e-commerce protocols between strangers on the Internet.

But the implementation of smart contracts and the idea of Szabo lasted until 2009.

It was after the invention of Bitcoin and the advent of blockchain technology that the environment for smart contracts was created.

Today, everyone knows about smart contracts about digital currencies, but in fact, this concept has long been the focus of computer scientists and digital currency protocols are essentially smart contracts with decentralized security and encryption.

What do smart contracts do?

The easiest way to explain what a smart contract is is through an example.

If you have ever bought a car at a dealership, you know that there are several steps and it can be a tedious process.

If you can’t pay for the car in full and cash, you will have to pay for it.

This requires verification and you will need to fill out several forms with your personal information to verify your identity.

In this way, you have to interact with different people including the seller, the finance broker, and the lender.

To compensate for their work, various commissions are adding the base price of your car.

What smart contracts in blockchain can do is simplify this complex process that involves several intermediaries but is simplified due to the lack of trust between the participants in the transaction.

While your identity is stored in a blockchain, lenders can quickly decide on your credit.

How do smart contracts work?

Simply put, smart contracts are like how vending machines work.

All you have to do is enter some digital currency into the contract, after which you will be the owner of the product.

The smart contract not only sets all the rules and regulations in advance but also implements these rules and regulations one by one.

What are the benefits of smart contracts?

The most important benefits of smart contracts in blockchain are:

• Speed and accuracy 

Smart contracts are digital and automated.

so you won’t have to spend time processing documents or correcting errors that are often will are filling in manually in documents.

Also, computer codes are much more accurate than traditional contracts with vague legal terms.

• The trust

Smart contracts automatically trade according to predefined rules, and encrypted records of those transactions are shared among participants.

• Security

Transaction records are encrypt in blockchain ,making them very difficult to hack.

Because each transaction is linked to previous and subsequent records in the distributed office.

the entire chain must be changed to a single transaction.

• Affordable

Smart contracts eliminate the need for intermediaries because participants can rely on visible data and technology to get the transaction right.

Platforms that use smart contracts

There are many platforms today that use smart contracts.

They can be divided by technology, end-user (bank, government, supply chain, real estate, insurance, etc.), and region (Europe, North America, Asia, or the rest of the world).

Ethereum

Ethereum is the main smart contract platform and still has the most use for dApps.

Also, given that Microsoft and AWS both offer Ethereum blockchain as a service, Ethereum is probably the most important platform for executing smart contracts.

RSK

RSK is an intelligent contract development platform is building as an ancillary chain is work with the bitcoin blockchain.

Cardano

Cardano is a decentralized blockchain project and like many crypto projects, Cardano is open source.

Examples of using smart contracts

While countries and regulators around the world have taken different approaches to digital currency.

They have embraced the technologies underlying those currencies.

the blockchain and the smart contract as revolutionary technologies and are use at different levels.

For example, some US banks have recently engaged in credit exchanges in a transparent environment using the blockchain and smart contracts.

The smart contract used here contained information such as individual trading details, counterparty risk standards, and more.

It was only recently that partnerships were reached between Japanese and South Korean banks to use the Ripple blockchain and send international payments.

Conclusion

The market potential for the smart contract is excellent.

Smart contracts can change agreements in different industries and they can be used to create tokens.

However, it will take some time before they can reach the point where they can work without any defects and need further development.

At the moment, it is not possible to implement smart contract technology on a large scale

it’s because more experiments we need to do at this stage.

Today, a smart contract is still a nascent technology and the challenges are many.

Legal and regulatory issues will resolve very soon.

If you have ever used a smart contract, you can share your thoughts with us and comment below.