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Smart Contracts
Smart Contracts
INTRODUCTION - Smart Contract is a term defining one or more computer program instructions that automatically execute and optionally enforce performance of an agreement (contract) using blockchain technology. Terrms of the smart contract are recorded in a computer language as a set of instructions.
Smart contracts (also called self-executing contracts, blockchain contracts, or digital contracts) are simply computer programs that act as agreements where the terms of the agreement can be preprogrammed with the ability to self-execute and self-enforce itself.
The main goal of a smart contract is to enable two anonymous parties to trade and do business with each other, usually over the internet, without the need for a middleman.
Smart contracts, often created by computer programmers through the help of smart contract development tools, are entirely digital and written using programming code languages such as C++, Go, Python, Java.
This code defines the rules and consequences in the same way that a traditional legal document would, stating the obligations, benefits and penalties which may be due to either party in various different circumstances. This code can then be automatically executed by a distributed ledger system
In the context of blockchains and cryptocurrencies, smart contracts are:
- - executable logic (computer code)
- – stored and replicated on a distributed storage platform (blockchain)
- – executed/run by a network of computers (blockchain nodes)
- – performs updates to distributed ledger (cryptocurrency transactions)
A simple way to see it work is how CoinDesk describes the process:
Blockchains can run code. While the first blockchains performed a small set of operations as transactions of a currency-like token, newer blockchains can support complex operations using programming languages.
The program itself is recorded on the blockchain, which gives it permanence and censorship resistance. The program can control blockchain assets – and also store and transfer amounts of cryptocurrency. Being part of a blockchain, it will always execute as written and no one can interfere or modify its operation.
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Smart Contracts