What is a Smart Contract?

To put it simply, the transactions that take place spontaneously without the need for any intermediary as a result of the fulfillment of the conditions that the two parties have agreed upon within the framework of these rules, whose rules are determined in advance, are called “smart contracts” or, in other words, “smart contracts”. It has a transaction logic. It works with the logic of "If it happens - it will happen". In this way, there is no need for third parties. The process works and the contract is made on the basis of trust. This basis of trust is of great importance for the parties because both parties are in a situation where there are equal conditions It is out of the question for either of the two parties to dominate the other.For these reasons, it is a contract based on trust.

Release date

The idea of ​​a smart contract was first introduced by Nick Szabo in 1993. Because of this and the idea of ​​Bit Gold, Szabo is also considered by some to be Satoshi Nakamoto.

If we give more detailed information about smart contracts and their applications, we should mention Vitalik Buterin, the owner of the Ethereum platform. Buterin thinks that the use of blockchain should not be just crypto money, but should be used for a wide variety of tasks. When the software developers in the system create a contract that can work anywhere in the world, they are rewarded with a cryptocurrency called “ether”. To use smart contracts, users pay ether. The more efficiently the developers produce contracts, the less ether paid to the system.

How Smart Contracts Work

First, commodities, that is, the product or products that are considered valuable when the contract is realized, are determined.

Contract terms are determined and coded bilaterally.

Commodities and terms are entered as a new block on the permanent, unchangeable blockchain.

If the contract conditions are met bilaterally, it will be processed.

Commodity transfer determined at the beginning is performed according to the terms in the smart contract.