A to Z About Smart Contract in Brief
Smart contracts are just like the normal contracts we do in normal walks of our lives, but the only difference it carries is that they are a digital form of contract. They are also called self-executing contracts that need no outside execution. Many online platforms in the digital world are using the smart contract feature for smooth functioning.
The concept of a smart contract is not new, the first mention of the word smart contract was seen in the year 1997 by a computer scientist named, Nick Szabo. Smart contracts came into application much before the cryptocurrency was founded. The computer scientist wanted to make a public distributed ledger where he could store contracts. These contracts can be carried out in a small computer program. They are also called dApps. For secured smart contracts Blockchain technology is used to store these contracts.
WHAT PROBLEM DOES IT SOLVE?
The smart contract application enables uncontrolled usage, which means that it does not involve any mediator between the parties. The two parties are directly negotiating and making smart agreements without involving any middlemen. For example: if we see the money that we deposit in our banks, or the FDs that we make are a kind of contract that we and the bank are agreeing to. Here the money that we deposit is based on a trust relationship and ultimately the central bank is the third party on whose behalf banks are facilitating its workings. We do not have control over our money because there is no smart contract existing, we have to rely on banks for monetary transactions. If you want to invest in bitcoin, then you can visit the official trading site and get start your journey.
In a smart contract, there is no such party who exercises this hegemony over our money.
WHY SMART CONTRACTS ARE MORE TRUSTWORTHY?
The smart contracts are based on blockchain technology, which means your data is fully protected through this process. Blockchain protects your data that is kept inside a block, these blocks are formed through the formation of certain codes which includes high mathematical computational skills. These mathematical algorithms are way too complex to hack that is why there is no space left for any online fraud.
Further, the blockchain uses two kinds of keys for the encryption of data, one is the symmetric key which is the same for both parties, the second one is the asymmetric key where the key is different for both parties.This is how blockchain technology helps in encoding your data from online frauds.
CRYPTOCURRENCIES THAT ARE USING SMART CONTRACT:
Ethereum is the first cryptocurrency that introduced the smart contract feature in its cryptocurrency. After Bitcoin, it is called the 2nd generation cryptocurrency. It is called 2nd generation because it is more advanced than the 1st generation cryptocurrency. It has enabled this feature so that without involving any third-party online contracts are fulfilled.
Cardano is called the 3rd generation cryptocurrency because it is more advanced than the other two cryptocurrencies. It also uses the smart contract feature; the best part of this currency is that it does not mine coins but rather mint which means there is less energy consumption resulting in a pollution free environment.
OTHER SUCH CURRENCIES THAT USES SMART CONTRACTS ARE:
- STELLAR etc.
The bottom line
Therefore, I hope the brief piece of information provided above would enhance your knowledge concerning smart contracts and their application. I have tried to explain things in the most lucid way possible. I hope I will have added this piece of information to your knowledge. Good luck with your crypto journey!
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