Smart contract cryptocurrency

Let's take a closer look at the concept of " Smart Contract".

What Is a Smart Contract?

Most likely, in most articles, materials and blogs on the topic of cryptocurrencies, you have met the concept of "Smart Contract". For those who have not delved into the topic, it is quite difficult to understand what smart contracts are and how they function.

But if you delve a little into the question, it will seem to you extremely simple and understandable. We will try to explain in detail the essence and purpose of smart contracts.

The principle of smart contracts was described by the American cryptographer and programmer Nick Szabo back in 1996, long before the advent of blockchain technology. According to Szabo's concept, smart contracts are digital protocols for transmitting information that use mathematical algorithms to automatically execute a transaction after the specified conditions are met and fully control the process. This definition, which was more than a decade ahead of its time, remains accurate to this day. However, in 1996, this concept could not be implemented: at that time, the necessary technologies did not exist, in particular, the distributed ledger.

The creation of the Bitcoin Blockchain changed everything. Although it does not allow you to set the conditions for making a transaction in a new block, since it only contains information about the transaction itself. Nevertheless, the emergence of the technology served as an impetus for the development of smart contracts. Five years later, the Ethereum blockchain platform made it possible to use smart contracts in practice. Today, the market offers many platforms that allow the use of smart contracts, but Ethereum remains the leader.

Crypto contracts

As you understand, Bitcoin, like many other cryptocurrencies – are Smart Contracts. At the same time, there are many cryptocurrencies that are nothing but a Smart Contract.

It is thanks to Smart Contract technologies that you can quickly exchange, buy and sell digital coins. Imagine how long the operations would take if all the conditions had to be checked manually! We think that these could be queues of several months for the purchase of Bitcoin or any other cryptocurrency.

Smart contract cryptocurrency list

For several years of the technology's existence, several dozen cryptocurrencies have been created, which are based on the use of Smart Contracts. It doesn't make sense to list them all, so here's a list of the 6 largest and potentially most interesting coins.

Ethereum

The largest, most well-known and the very first system of Smart Contracts. He became the founder for all other projects of this kind. And the first of the crypto contracts.

Ethereum is one of the largest digital currencies in terms of application, and not only the blockchain community, but also ordinary Internet users and multibillion-dollar corporations are interested in its development.

RSK

The RSC was created in order to upgrade the Bitcoin network and add to it the functionality of smart contracts, which was absolutely not provided at the beginning. And it was not even accepted for a long time, despite all the efforts of the founder of Ethereum. It is worth noting that at the moment the project is most popular in South America. Much more than in the rest of the world.

Ardor

Initially, Ardor's task was also to eliminate the shortcomings of the traditional linear blockchain architecture. What are its disadvantages? For example, limited or impossible configuration, too much network bloat due to the same processing and storage of each token, the use of only one token.

Ardor adds child chains that are customizable and with the ability to use your own personal token.

Telos

Telos has become a breakthrough in the world of blockchain. From the very first day, it attracted a powerful stream of attention, including from major partners. This is not surprising, the system combines flexible management and high transaction speed with the use of EOSIO software.

The versatility of the network and the commitment to management can give the Telos project a huge advantage in the long run.

EOS

The platform can be called one of the main favorites in the system. The EOS blockchain protocol reproduces the functions of computing resources, including the CPU, GPU, and RAM. And they are provided by EOS users.

The gaming industry is the main "client" of EOS, but not the only one. It is often called the fastest growing blockchain in the world, as well as the most potentially applicable. The possibilities for developers are endless.

Algorand

Algorand has a capacity of transactions, comparable to global payment networks. The network can serve a huge number of users at the same time. The scalability, speed of operations and the degree of security of the site is amazing, which undoubtedly attracts such active attention to the project.

How Smart Contracts Work

Smart Contracts are computer protocols or, more simply, computer code.

The code is used to enter all the terms of the contract concluded between the parties to the transaction into the blockchain. The obligations of the participants are provided in the intellectual contract in the form of "if-then" (for example: "if Party A transfers money, then Party B transfers the rights to the apartment"). There can be two or more participants, and they can be individuals or organizations. Once these conditions are met, the smart contract independently executes the transaction and guarantees that the agreement will be respected.

Smart contracts allow you to exchange money, goods, real estate, securities and other assets. The contract is stored and repeated in a decentralized ledger in which the information cannot be falsified or deleted. At the same time, data encryption ensures the incognito of the parties to the agreement. An important feature of smart contracts is that they can only work with assets located in their digital ecosystem. How to connect the virtual and real world is currently one of the main difficulties of working with smart contracts.

Understanding tokens and smart contracts cryptocurrency

Tokens are a digital asset that an investor receives from a company in exchange for money.

A Smart Contract is a computer program that monitors and enforces the obligations of two parties.

It is worth considering the difference in more detail and explaining them with examples. First of all, as you understand, it is not the same thing. Tokens can be smart contracts, but they are not mandatory-it all depends on how they were created. Also, they may not be valuable from the point of view of finance, but only provide the owner with the right to vote.

Smart Contracts are a program that automatically monitors the conditions for the execution of a bilateral contract. This may include the transfer of cryptocurrencies from one user to another. Let's look at an example to better understand the essence of Smart Contracts.

Let's say supply chain management. When using a Smart Contract, it is easy to track the chain of delivery of goods: from shipment from production to receipt of the goods by the buyer. They will store all the information and keep financial records, automatic payments and account statements.

Potential problems with smart contract data

The technology is constantly being updated, new solutions are emerging, which almost daily expand the boundaries of possibilities in the blockchain. So Smart Contracts are constantly being improved, leaving less and less reason for doubt.

Combining the achievements in the field of Smart Contracts will eventually lead to the fact that each participant of the network will use one version of Smart Contracts, which will eliminate the variations of errors, shortcomings and failures. That's why the technology is getting the most criticism right now. At the moment, there is still a possibility of errors in the performance of obligations or control with the use of Smart Contracts.

There are also risks of deliberate deception of one of the participants in the transaction. But as we wrote above, they are continuously declining due to the continuous improvement of technology.