Feedback

  • Name *

  • Company

  • Email *

  • IM (Skype)

  • Message *

Thank you for contacting us !

What is Ethereum Smart Contract?

 

Introduction
Since the introduction of the blockchain, we have discovered a decentralized system that allows all permitted parties transact without having to pay intermediaries, thus saving time and legal hassles. Blockchains are reliable, fast, cheaper and much more secure than traditional systems but are by no means perfect, and that is why in 1994, Nick Szabo a legal scholar and cryptographer came up with the concept of ‘Smart Contracts’ which allows contracts to be converted to computer code, stored and replicated on system and executes the terms of a contract once the common contractual conditions have been met.

What is Ethereum Smart Contract?

The Ethereum Smart Contract is a mechanism that uses smart contract technology to remove intermediaries and escrow services in an Ethereum blockchain. It is a piece of software containing a programmed set of rules and regulations guiding contract negotiations, verifying the contract automatically and enforcing the terms upon which the contract was set.
The native language of Ethereum called Solidity is used in writing the code of smart contracts. These codes self-execute the terms of the contract once the conditions in which they are set to have been met. The codes are uploaded on the EVM- Ethereum Virtual Machine. Once in the EVM, the code becomes the same across all Ethereum nodes and each node will run and see whether the conditions are met. An Ethereum Smart Contract will involve two or more parties and the digital asset for exchange is the Ether (ETH). Once the contract is successfully executed, the digital asset is distributed according to the logic defined in the code.
How smart contract works

To explain in simple terms, liken it to the technology of a vending machine, the most primitive form of smart contracts. Normally, you would seek a lawyer and pay them before you get your document. With Ethereum smart contracts, you simply drop Ether in a vending machine which in this case is the ledger and your escrow, document or whatever drops into your account. The Ethereum smart contract not only defines the rules and penalties based on the agreement in the way a traditional contract does, it enforces those rules automatically.

Problems and Solutions using Ethereum Smart Contract

Suppose you rent an apartment from someone by paying in Ethers. You get a receipt that is held in a virtual contract. The Ethereum blockchain holds the fund pending when the digital entry key sent by the seller gets to you at a specified date. If the key doesn’t come on time, the blockchain issues a refund. However, if the key is received before the rental date, the function triggers the release of the fee and key to the buyer and seller on the agreed date.
The system works on a contract that self-executes the “if-this-then-that” conditions which have been coded onto it and witnessed by hundreds of people. Because the Ethereum Smart Contracts is deployed and running independently on all nodes, no one party can be said to ‘own’ it or recall it.
Relationships between people, institutions and the assets they own can be formalized with an Ethereum smart contract.

Why use Ethereum Smart Contract?

Consider this scenario:
James has given a $1000 contract to Allen for a web development project. James has hardcoded the requirements and conditions about what he expects from the project onto the Ethereum blockchain. The blockchain then evaluates Allen’s finished project when Allen submits the website on the blockchain. If the project meets the conditions set by James, then the contract worth is self-executed and payment in equivalent Ether (ETH) is released to Allen. But should Allen not get his payment or James not get his work, the blockchain’s smart contract enforces trust by default to resolve this conflict of interest.
This example explains basically why Ethereum smart contract is important now more than ever. Along with the protection and reliability it guarantees, it stores every executed code on the blockchain so you can verify anything if need be. In James’ smart contract, it is impossible for Allen to be cheated on because once Allen supplies the work, it is verified and recorded by the blockchain. Anybody including James can inspect the blockchain and neither James nor Allen can stop and manipulate the contract’s execution as it is no longer dependent on any party or node. The contract runs on the EVM and cannot be damaged by a single point of failure. Should the conditions of the smart contract not be met, Allen will have to continue the work until the specified website is created. This is the reason why you can trust and use Ethereum Smart Contracts.

Features of Ethereum Smart Contract

Ethereum smart contract has a lot of features which include:
Independence: You do not need to rely on a broker, a lawyer or any other intermediary before making the agreement. In addition, this knocks out the fear and likelihood of manipulation by a third party, since the network automatically manages the execution, rather than one or several individuals who are prone to erring.
Trust: No one can say they have lost your documents or have one excuse or another for the state of your documents as they are encrypted on a shared ledger.
Security: Your websites are encrypted, keeping your documents safe. It’s virtually impossible to hack, in fact, it would an exceptionally skilled hacker to crack the code and infiltrate.
Speed: Normally, processing documents would take much of your time and manual paperwork, however, smart contracts automate tasks with software code, thereby shaving hours off business processes.
Savings: You save more money with Ethereum smart contract since they knock out the intermediaries’ presence. A notary is usually paid to witness your transactions, but not anymore.
Accuracy: Not only are automated contracts faster and cheaper, but they also help you avoid errors that come from filling out forms manually.

 

Ask about smart contract development

 

 

close

Enjoy page content? Please spread the word :)

RSS
Follow by Email
Facebook
Google+
Twitter
LinkedIn
Instagram
WHATSAPP
Skype