Understanding Smart Contracts for Beginners

Understanding Smart Contracts for Beginners

With the advent of blockchain technology (Blockchain), many exchanges have emerged. Make transactions Decentralized finance (DeFi), decentralized applications (dApps), web3, and non-fungible tokens (NFTs), etc., all of which require blockchain to function and use Smart Contracts functions, which are sub-functions in the blockchain.

What is a Smart Contract?

It is the system or code within the blockchain. and will work automatically according to pre-determined conditions This must specify the terms of the agreement or transaction that the system would like to proceed with automatically. without using a third party such as banks or middlemen in exchanges

How do smart contracts work?

First, an agreement must be reached between the two parties on the terms of the transaction. Then the contract is drafted using code, e.g. Ethereum uses Solidity code, etc. Once the contract is written, The key is encrypted and stored on the blockchain network. which cannot change the conditions Upon delivery according to the terms of the Smart Contracts, the transaction is considered completed. You can check transactions at all times. There may be a fee for each transaction based on the size and complexity of the exchange.

Benefits of smart contracts

• -fast

When the transaction meets the contract conditions The system is automated, which is faster than traditional transactions that take a long time to process, review, and approve.

• Be reliable

Smart contracts are stored on the blockchain and can be verified. And it is difficult to change the contract if the transaction is successful.

• safe

Smart contracts are stored on the blockchain. Therefore, it is necessary to be encrypted and highly secure.

• Reduce costs

Smart contracts do not use middlemen to validate deals and process transactions, which reduces transaction-related costs.

Which blockchains support smart contracts?

Ethereum currently leads the way in using smart contracts, which are transacted via cryptocurrency. More than 3,000 decentralized applications (dApps) will be released by May 2022, and this year many new blockchains have emerged to compete with Ethereum. Some of them have been dubbed “Ethereum Killers,” including Solana (SOL), Cardano, and more. (ADA), Tezos (XTZ), Avalanche (AVAX), and Polkadot (DOT), among others. According to DeFi Llama, TVL aggregator, the network has the following amounts locked as of April 23: 2022

• Ethereum $114.81 billion
• Avalanche $10.73 billion
• Solsna $6.67 billion
• Cardano $215.65 billion
• Tezos $79.2 billion
• Polkadot $3.89 billion

Why are smart contracts important?

Smart contracts offer new functionality that comes with cryptocurrencies. Blockchain-based cryptocurrencies are primarily limited to a payment platform, with additional functionality enabled by smart contracts fueling the expansion of the industry.

smart contracts และ decentralized applications (dApps)

Decentralized applications (dApps) are software that is similar to applications on a smartphone, website, or laptop. Decentralized applications (dApps) act as a type of API connector that allows the dApp to connect to Basic blockchain They need to connect dApp developers and end users using smart contracts.

Investing in smart contracts

As there is no direct channel to invest in smart contracts at first, an investment must be made indirectly by investing in cryptocurrencies that use smart contracts, such as Ethereum and its competitors, or investing in stocks in companies that are developing smart products and services. contracts