Today we are diving into the topic of Smart Contracts. If you never heard of smart contracts or don't understand what they are I'm here to help you with that today. Smart contracts is associated with Web3 and thats why I picked it for the #100DaysOfWeb3 challenge. Don't worry I'll try to keep things as simple as possible for both of us to understand!
What is a Smart Contract
The definition of a smart contract is: a self-administering digital agreement that enables two or more parties to exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the need for a central authority. This means you can put the terms of an agreement you have with somebody right into lines of precious code. The code exist & is kept safe across a decentralized blockchain network. Remember anything on the blockchain is trackable, irreversible & can't be manipulated.
To put things extra simple you can compare smarts contracts to a vending machine for intricate transactions.
For example, say you have a complicated transaction involving a huge sum of cash, you would normally have to meet with a lawyer or a notary. Then you have to take time out of your day to have them set up an escrow account, wait while they do the work to ensure the contract terms are correct & pay them on top of that! Then once your lawyer goes over everything & verifies the contract is executed correctly you'll finally receive your goods/money/documents etc.
With smart contracts, you can use bitcoin to send to the ledger & your contract, deed, goods, money almost instantly ends up in your account. Essentially, smart contracts automatically does all the work to determine if the conditions of the order are satisfied. Now we're cutting out the middle man & saving us a whole lotta time & energy along the way!
Since your smart contract is stored & encrypted on a shared ledger no one can say they misplaced it. The best part is smart contracts offer security on the blockchain network. You'd have to be an extremely smart hacker to ever crack the code & even than your heist will still get tracked back to you.
Now I'm not here to say that smart contracts are the holy grail & will solve all our problems. This tech is far from perfect. There are several flaws that should be brought to attention such as reliability. Ethereum has proved to be pretty reliable but Solana who also uses smart contracts has gone down a few times. They need highly skilled people to create these contracts & that can get costly to hire someone as well. Also, smart contracts are not reversible meaning if something within the contract needs to be changed it will be extremely difficult to do so & even impossible to fix.
Is Smart Contracts A New Concept?
Honestly, I was under the impression smart contracts was a new concept. The term smart contract emerged into my reality only about 2 years ago when I first started dabbling in crypto. Believe it or not, this concept is far from new.
Nick Szabo created a proposal for smart contracts all the way back in 1994! He is a computer scientist who actually invented a digital currency "Bit Gold" in 1998. This was a whole 10 years before Bitcoin was created! People speculated that he could be the mysterious "Satoshi Nakamoto" but Szabo denied all claims. Sheesh, will we ever find out who Satoshi is?
In conclusion, we are still extremely early to the show. Smart contracts will only get better from here on out. It'll be interesting to see how the next 10 years will go down within the blockchain space. Smart contracts play a huge role in the development of web3!
