smart contract instruction

What is a Smart Contract

A smart contract is essentially code. It is a computer program running on a replicated and shared ledger that can process information, receive, store, and send value.

A smart contract program is not just an automated computer program; it is more like a participant in a system. It can be thought of as a highly trusted individual responsible for temporarily safeguarding your assets and executing operations strictly according to pre-agreed rules.

Features

• Autonomy: You, as the parties involved in the agreement, do not need to rely on intermediaries such as brokers, lawyers, or other middlemen for confirmation. Execution is managed automatically by the network, eliminating potential biases or human errors.
• Trust: Documents are encrypted on the shared ledger.
• Redundancy: On the blockchain, your documents are duplicated multiple times.
• Security: Cryptography and website encryption ensure the security of your files.
• Speed: Smart contracts use software code to automate tasks, reducing the time required for various business processes.
• Cost Savings: Smart contracts can save you money by eliminating intermediaries.
• Accuracy: Automated contracts are not only faster and cheaper, but also avoid errors associated with manual form filling.

How It Works

Build → Store → Execute

• Smart contracts are developed collaboratively by multiple users within the blockchain and can be used for any transactional behavior between users. The protocol defines the rights and obligations of the parties involved, and developers program these rights and obligations in an electronic format. The code contains conditions that trigger the automatic execution of the contract.
• Once the code is completed, the smart contract is uploaded to the blockchain network.
• The smart contract periodically checks for relevant events and trigger conditions. Events that meet the conditions are pushed to a queue for verification.
• Validating nodes on the blockchain first sign and verify the event to ensure its validity. Once a majority of validating nodes reach consensus on the event, the smart contract executes successfully and notifies the users.
• Successfully executed contracts are removed from the block, while unexecuted contracts continue to wait for the next round of processing until they are successfully executed.

Future Outlook

Smart contracts are the fundamental building blocks of the global economy, enabling anyone to participate without the need for pre-approval and high upfront costs. They remove the need for trust in third parties in many economic transactions and shift trust to individuals and institutions that can be trusted.