In 2009, the inventor(s) of the famous cryptocurrency bitcoin proved that there was a way to exchange money online without having to go through banks, online payment services, or other centralized authorities.
Bitcoin also popularized blockchain, its underlying technology
In 2009, the inventor(s) of the famous cryptocurrency bitcoin proved that there was a way to exchange money online without having to go through banks, online payment services, or other centralized authorities.
Bitcoin also popularized blockchain, its underlying technology. Blockchain is a distributed ledger that enables parties to register and transfer the ownership of any digital asset without the need for intermediaries.
Soon developers wanted to create all sorts of applications on the blockchain beyond cryptocurrencies and the simple transfer of monetary value.
In 2015, Ethereum, the second-largest blockchain and cryptocurrency, launched. One of the major differences between Ethereum and Bitcoin was that it enabled developers to publish and run smart contracts on its decentralized network, thus earning the name “World Computer.”
Smart contracts are bits of code that execute on the blockchain, without the need for a server. They’re called “smart” because they run autonomously, and “contracts” because they’re mainly meant to fulfill complex forms of asset transfer between multiple parties.
Smart contracts take on the characteristics of blockchain transactions, which means they’re transparent, immutable and auditable. No single party can tamper with them and modify them to their own benefit and everyone has equal access to them.
Still in its infancy, smart contract technology has paved the way for many different kinds of decentralized applications. It’s not without flaws and limits, but it certainly is promising.
How do smart contracts work?
Smart contracts add layers of information and logic to blockchain transactions. Developers can use smart contracts to set conditions for transactions. When these conditions are met, the transaction automatically executes and, based on the smart contract’s logic, distributes tokens or digital assets between different involved parties.
Developers write smart contracts in the Solidity programming language, compile it, and publish it on the Ethereum network. There are other programming languages, but Solidity is by far the most popular one.
Published smart contracts have a public address. Users can trigger them by sending ETH to their address, just as they would if they wanted to send funds to someone else, along with some ex