Smart contracts are self-executing contracts with predefined terms of the agreement directly written into lines of code, which are encoded on a blockchain.
Smart contracts are written in programming languages specifically designed for creating them, like Solidity for Ethereum. These contracts run on blockchain platforms like Ethereum, Binance Smart Chain, and others.
Smart contracts can receive and store digital assets (like cryptocurrency) and interact with other smart contracts or external data through specific functions and events.
Some specific details or features of smart contracts include:
Transparency: Smart Contracts are open books. Anyone can see their code and check if they’re fair. The codes and their execution are visible on the blockchain promoting transparency of the contract’s actions, although smart contracts promote transparency, beware of risks.
Oracles: Smart contracts use oracles, which are trusted sources of information that feed data into the blockchain for the smart contract to use, as they themselves are unable to directly access external data sources.
Gas Fees: Executing smart contracts on the blockchain requires computational resources. As a result, the users initiating smart contract transactions need to pay gas fees (in cryptocurrency) to incentivize miners or validators to process their transactions.
Use: Web3 and smart contracts enable a wide range of applications, including decentralized finance (DeFi), management of ownershio of non-fungible tokens (NFTs), decentralized marketplaces, decentralized governance, blockchain games and more.
Web3’s ecosystem revolves around smart contracts as they enable a new paradigm of decentralized applications and services, empowering users to participate in secure and transparent interactions by eliminating intermediaries.
Just like Blockchain, decentralization is also made possible by smart contracts and are core to web3.
Web3’s Future! Smart Contracts are just the beginning of a fantastic journey into a decentralized internet. They empower people to connect, exchange, and create without relying on big corporations. Imagine a world where everyone’s a part of the magic!
I hope this enlightens you in a way that you won’t be at lost when next you come across the term “SMART CONTRACTS”.