When it comes to crypto money, NFT or decentralized economy, probably everyone has their opinion more or less. In order for new technology products like these to emerge, more than one technology actually needs to come together. Blockchain is one of the most well-known technologies, but without the structures we call Smart Contract, the technologies we mentioned at the beginning would not exist.
What is Smart Contract?
Smart contracts, like any other contract we know today, determine the terms of the agreement, its parties and, in fact, everything that makes the agreement a deal. However, the feature that distinguishes smart contracts from others is actually the integration of cryptography and blockchain, which also enables technologies such as NFT and crypto money to exist today.
Smart contracts are not like papers on a desk or in a safe as we know and are familiar with. Instead, they are transactions that run on codes defined on the blockchain.
The most basic feature of Bitcoin is that it makes it possible to transfer money without an authoritative and self-determining “reliable intermediary”. Smart contracts not only support the foundation but also take it forward, securely automating and virtually decentralizing any contract between parties, no matter how complex. It also offers security, reliability and unlimited accessibility as it runs on cryptocurrency blockchains.
How Smart Contract Works
In fact, smart contracts that work with the If-then principle, which is a simple algorithmic logic, are prepared after the agreement of the parties, that is, a transfer transaction, signed cryptographically and added to the blockchain. Added contracts can interact with other components on the blockchain. This interaction can take the form of initiating, sending, or receiving a transaction.
When the specified conditions in the contract are prepared, smart contracts automatically enable the contract conditions defined in it to be executed.
Why Are Smart Contracts Important?
Smart contracts allow developers to create decentralized applications and tokens that are among the most important content of Web3.0 and today. It is used in many areas from the new financial tools and applications brought by Web3.0 to supply chain and gaming experiences.
With the help of blockchain technology, if records such as title deed, motor vehicle registry and brand registry are kept on the blockchain in the near future, it will be possible to transfer many property rights from one user to another through smart contracts without the need for a reliable third institution such as government institutions or banks.
Questions Answered by the Blog:
- What is Smart Contract?
- How Smart Contracts Work
- Why Are Smart Contracts Important?
- Is there a connection between cryptocurrencies and smart contracts?
- What is the link between blockchain and smart contract?