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What is Smart Contract? How smart contracts work

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What is Smart Contract? How smart contracts work

Dex, NFTs, Marketplace,… These are all applications created by smart contracts (or smart contracts) on the blockchain. In today’s article, we will learn what a Smart Contract is, its advantages and disadvantages as well as the applications of smart contracts in Crypto.

What is Smart Contract?

Smart Contracts (or Smart Contracts) are programs that run on the blockchain. A smart contract is like a digital contract that is enforced by a specific set of rules. These rules are predefined by a set of computer code that all nodes in the network must copy and enforce.

In essence, a Smart Contract is just a piece of code that runs on a distributed system ( blockchain ), allowing the creation of Permissionless (ie without authorization) protocols. It means:

  • Two parties to a contract can make commitments via the blockchain without having to know each other’s identities or trust each other.
  • They can ensure that if the conditions of the contract are not satisfied, the contract will not be enforced.

In addition, the use of smart contracts eliminates the need for intermediaries, which greatly reduces operational costs.

What is Smart Contract? How smart contracts work

Each blockchain has a different smart contract implementation method, for example on Cosmos has WASM, Polkadot has ink!,… The most prominent of which is still smart contract running on Ethereum’s virtual machine (Ethereum Virtual Machine – EVM) ).

How does Smart Contract work?

Simply put, Smart Contract acts like a deterministic program . Smart contracts will execute a specific task in case certain conditions are met. Therefore, a smart contract system usually follows “if…then…” statements.

On Ethereum , smart contracts are responsible for executing and managing the activities that take place on the blockchain when users (addresses) interact with each other. Any address that is not a smart contract is called an Externally Owned Account (EOA). Therefore, the smart contract will be controlled by the computer and the EOA controlled by the user .

Smart Contract Ethereum consists of a contract token and two public keys:

  • The first public key is the one provided by the contract creator.
  • The other key represents the contract itself, which acts as a unique digital identifier for each Smart Contract.

Smart Contracts are implemented via blockchain transactions and they are only activated when an Standalone Account (EOA) or other Smart Contracts call them. However, the first trigger is always from the EOA (user) side.

Pros & cons of Smart Contracts

Advantages

A smart contract is a set of programmable code that is highly customizable and can be designed in a variety of ways to provide a wide range of services and solutions.

In addition, smart contracts are decentralized and self-executing programs, which increase transparency and reduce operational costs . If implemented properly, they can also increase operational efficiency and reduce administrative costs.

Defect

Smart contracts are just pieces of code that run on a human-made Blockchain, they are not smart, they work the way the developer wrote them, not the way the developer thought they would. . So Smart Contracts are still risky because the code is vulnerable to attacks and bugs.

In addition, there is some opinion that centralized systems can also provide most of the solutions and functions that smart contracts offer. What is different, however, is that smart contracts run on a distributed peer-to-peer (P2P) network instead of on a centralized server.

At the same time, smart contracts are based on the blockchain system, so it is difficult or impossible to modify and interfere . Immutability is a great advantage, but in some cases can be a disadvantage.

Eg:

When a decentralized autonomous organization ( DAO ) called “The DAO” was hacked in 2016, millions of ETH were stolen due to a flaw in their smart contract code.

Since their Smart Contract is immutable, developers cannot edit the code. This eventually led to a hard fork, creating Ethereum Classic and Ethereum .

Application of Smart Contract in Crypto

Essentially, most applications powered by centralized systems can be similarly designed and powered by smart contracts on the blockchain.

Smart Contracts allow developers to design many different use cases. For example: Cryptocurrency wallet to store Coin & Token, decentralized exchanges ( DEX ), games (gaming), NFT ,…

Summary

Thus, we have learned what a smart contract is, as well as some of the pros & cons and applications of smart contracts in Crypto. If you have other questions related to the above topic, please comment below for Coin98 to support right away!

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Bitcoin

When will Bitcoin Rally Start? Technical Analysis:

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When will Bitcoin Rally Start? Technical Analysis:

Bitcoin dropped today after briefly kissing the $59900 and as the selling pressure rose it dropped swiftly and the slump continues. The question is when will the Bitcoin rally start?

When will Bitcoin Rally Start? Technical Analysis:

TradingView Bitcoin Chart

Bitcoin Rally: Technical Analysis

The Bitcoin price today is $54,346.67 USD with a 24-hour trading volume of $42,612,427,726 USD. Bitcoin is down 7.79% in the last 24 hours. The current CoinMarketCap ranking is #1, with market cap of $1,026,280,520,107 USD. It has a circulating supply of 18,883,962 BTC coins and a max. supply of 21,000,000 BTC coins.

Bitcoin has found its support at fib -0.65 and has an increased volatility today. Bitcoin is currently trading below EMA 20 on an hourly chart which indicates that the Bearish trend is volatile. The relative strength indicator shows that Bitcoin has entered an oversold situation. This means that now it should start getting the buyers in and the price should rise to the previous highs of yesterday.

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26 % of the Crypto investors are in NFTs

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26 % of the Crypto investors are in NFTs

The decentralized era of Blockchain assets – Cryptocurrencies and NFTs are revolutionizing the traditional centralized financial systems by rooting out almost all their problems straight away in a single solution. In this digital era, we face the problems of authenticity, origin, and verification of digital files which is not possible without being on blockchain.

Non-fungible tokens (NFTs) address such problems solely and transparently so that the idea could only belong to its origin through proof of ownership.

investors tired NFTs

26 % of the Crypto investors are in NFTs

In Japan there held a survey to check what percentage of people already in cryptocurrency holds NFTs. We will put here stress on the fact that the cryptocurrency traders and investors are the first in the line those who understand the NFTs and their potential profits. The report shows that one out of four people holds NFTs, 26% to be exact.

The survey was conducted by Major Japanese crypto exchange BitBank to estimate the mass adoption of NFTs by the people who completely understand the idea. Out of this 26% of people holding NFTs, 39% revealed that they never sold their NFTs and they are holding these digital assets and they are not aware of the actual value of their NFTs. 22% of these people holding the digital assets were aware of the actual price of what they own.

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Hackers using Google cloud accounts to Mine Cryptocurrency

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Hackers using Google cloud accounts to Mine Cryptocurrency

Google provides 2 giga bytes of free cloud storage to each Google account holder. Users can buy the premium access to more storage up to 100 giga bytes. Google provides two factor authentication to it user for added security. Hackers have found the vulnerabilities and used the Google Cloud accounts to install the third-party software for mining.

Hackers using Google cloud:

Hackers using Google cloud accounts to Mine Cryptocurrency

Due to poor customer security practices the hackers take up the control of their accounts to install the mining software under 30 seconds. This pirated software then uses the resources of computer including CPU, GPU and Storage to server for their mining on Chia Network. According to a report, the percentage of hacking for mining purposes in Google Cloud storage is 86% related to crypto mining and only 14% for other cases. According to cybersecurity the error is not at the end of Google side. The hacks are due to poor customer security practices.

Remember to always use Two factor authentication and not download any pirated software as anything that seems free comes at a greater cost.

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