A SIMPLE GUIDE TO SMART CONTRACTS
This article was originally published on
on August 20th, 2018.
A smart contract (otherwise known as self-executing contracts, blockchain contracts, or digital contracts) is an automated contract. While a standard contract outlines the terms of a relationship (usually enforced by law), smart contracts are executions enforced by code. They are self-executing with specific instructions written on their code which get executed when certain conditions are met. In this form, contracts can be converted to computer code, stored and replicated on the system, and supervised by the network of computers that run the particular blockchain. This can also result in ledger feedback such as transferring money or receiving a product or service. A good way to look at smart contracts is to compare them to a vending machine. Put in your bitcoin, get out your driver’s license. In layman’s terms, at least. Speaking of bitcoin, it is worth noting that bitcoin was the first blockchain to execute a smart contract. Bitcoin’s network of nodes can transfer value but only when certain conditions are met. Although technically the first mover in smart contracts, Bitcoin is limited to value transactions. Ethereum, on the other hand, is a platform specifically made for creating smart contracts.