Smart Contracts
Oct 17, 2024
Definition of Smart Contracts
Smart contracts are programs stored on the blockchain that execute predefined actions based on "if this then that" logic. Once created, their code cannot be changed, ensuring they follow the rules exactly. This concept, coined by Nick Szabo in 1994, enables secure, automatic transactions without intermediaries.
Benefits and Use Cases
A smart contract works like a digital vending machine: you input a specific amount of money, and you get a product. Similarly, smart contracts automatically execute actions when specific conditions are met. This eliminates the need for trusted intermediaries and ensures predictable outcomes. Applications include:
DeFi protocols: Swap, bridge, borrow and lend, staking, liquidity pool.
NFTs: The creation, transfer, and ownership verification of NFTs.
Legal agreements: Automating contract execution.