How Do Ethereum Smart Contracts Work?
A Simple Guide to Smart Contracts
A smart contract is a kind of program that runs on Ethereum. It is set in such a way that at some future date, it will validate that all conditions have been met. These conditions are stored on the blockchain, which means someone cannot just deny or delete the existence of the contract. This creates a degree of immutability that was previously difficult to achieve without a third party such as a lawyer or bank.
Gas in a Smart Contract
Each line of code in a smart contract costs Ether. This is dependent on how process-intensive the contract was. Thus, developers are encouraged to create simple smart contracts. However, it also ensures that they create smart contracts that are financially prohibitive to intensive attacks.
“Gas” is the term used to refer to the Ether price needed to execute the smart contract. It may also refer to the Ether needed to execute transactions. This helps to differentiate currency used to power blockchain transactions from that which is used for payments in cryptocurrency.
Solidity on Ethereum
This is a truing-complete language created for use in the Ethereum blockchain smart contracts. The language can be used to resolve any computation problems and has support for functions such as the infinite loop.
The syntax of Solidity is similar to that of JavaSrcipt. There are numerous tutorials created to help developers understand this language. When creating smart contracts for use on Ethereum, it is essential that they keep the code as simple as possible. Otherwise, it will invoke high gas costs and may thus deter others from utilizing their application.
Potential Real Life Application of Smart Contracts
One area where these contracts could be applied is in housing. Today if you needed an apartment, you would have to pay a newspaper or middleman and then pay someone else to confirm rent has been paid. With a smart contract, you can cut out the middlemen, saving money and time.
Another example is the health industry. The smart contracts may be used to ensure researchers follow privacy laws. It could also be used to send receipts to insurers after treatment. In addition, it can be used for general office management such as ensuring drugs are being supplied.
The Downsides to Smart Contracts
These contracts are great but not perfect. Since human beings write them, there is always the risk of failure. Some unintended bugs in the code could lead to severe consequences for those using them. Thus, it is important to take certain precautions when developing with the code.
Take time and go through as many guides on the Internet as possible. That way, you do not end up making any costly mistakes.
Do Smart Contracts have a future? Could they potentially replace lawyers? Leave us your thoughts below.