Whether you’re just getting into crypto, or are a seasoned “OG”, chances are high you’ve come across the term “smart contract.” Smart contracts play an incredibly important role in blockchain technology and crypto as a whole.
In this guide, we’ll cover everything you need to know about what a smart contract is, and why smart contracts play a critical role in the further adoption of cryptocurrency.
What is a smart contract? An inside look at the blockchain technology
Smart contracts are simply code stored on the blockchain that run when certain conditions occur. In general, the code is open and transparent, and functions without the need of approval from any additional party. Smart contracts can automate and verify a wide variety of tasks and functions, and help “decentralize” everything from finance, and to insurance, and more.
Smart contracts were first proposed in the early 1990s by Nick Szabo, who coined the term and continued play an essential role in crypto today.
Essentially, you can write a protocol (smart contract) that’ll execute an agreement or verify a piece of information without needing a third party like a lawyer or mediator.
By removing this third party, you actually increase levels of safety, security, and non-bias from an agreement; this is because smart contracts are trackable and irreversible and contain all of the information and terms of the agreement and execute all envisaged actions automatically. Smart contracts currently operate on every major blockchain network multiple different including Solana, Ethereum, and Cardano.
Smart contracts are important because they remove centralized middlemen in contexts that require trusted third parties to help facilitate value transfer.
How do smart contracts work?
Smart contracts are built from code that will automatically execute an order once the parameters of the agreement have been met. The terms of the contract are agreed upon by both parties involved in the transaction.…