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In the past decade, blockchain technology has begun to take the world by storm. Starting with Bitcoin, which introduced the blockchain as a public ledger that records all transactions of cryptocurrency, this technology has exploded in popularity and use cases over the past few years. It has also introduced many new terms, one of which being smart contracts — automated contracts that are executed when certain requirements have been met. If you are a newby in Cryptocurrency, here is the things to consider before Traveling With Cryptocurrencies.
Smart contracts have many practical applications and uses within the blockchain, such as in agreements, legal documents and financial instruments. The implications of smart contracts will be further explored in the following article. Read on to know more in detail to have an overall better understanding!
Brief History of Blockchain Technology
The blockchain is an immutable, public ledger where every transaction is recorded chronologically and publicly. The blockchain is fully decentralized and there are no central servers or personal data involved in any transaction. It has been designed to eliminate any chance of manipulation, fraud or third-party interference. It was originally invented for Bitcoin, but it can be used to record other types of transactions as well.
Before we talk about smart contracts, let’s define what a blockchain is. A blockchain is a distributed database in which data (typically transactions) are stored in chronological order. There are two main types of blockchains – public and private. Public blockchains allow anyone to participate while private blockchains require permission to join. They both follow some pre-determined set of rules which can be viewed by all participating parties.
Introduction to Smart Contracts
Before we get into what smart contracts are and how they work, it’s important to lay some groundwork. With that in mind, let’s take a moment to talk about what blockchain technology is and why you should care about it. To begin with, blockchain is often misunderstood as being synonymous with Bitcoin. While those two things are clearly related (after all, blockchain underlies Bitcoin), they aren’t identical by any means—there is more than one kind of blockchain out there and they can be used for a variety of different things.
How Do Smart Contracts Work?
The use of smart contracts in Ethereum goes far beyond currency transactions. One common way to use smart contracts is to create a bet on any event. For instance, a user can place a bet on who will win an election, who will win a sports game or even whether or not it will rain in 48 hours. All bets are denominated in Ether; users pay and receive Ether when they win their bet according to predefined terms and conditions that cannot be modified once they have been agreed upon by both parties involved in the contract.
No third party has access to information about wagers besides for one side of each bet and no personal information about anyone taking part in that bet ever leaves the blockchain because it’s stored completely anonymously.
How can smart contracts be useful in my life?
Smart contracts have a lot of potential to streamline your everyday life. For instance, you could use a smart contract with your cable provider. The cable company would set a limit on how many channels you can watch per month before they start charging you an overage fee; that way, you don’t have to worry about ever going over and getting charged extra.
On top of that, there are plenty more ways smart contracts can help make your life easier. When combined with connected devices (like Amazon Echo or Google Home), they could allow you to lock and unlock doors, control energy consumption in your home, call an Uber car (or any ride-sharing service) and more—all just by speaking out loud.
Conclusion
If you’re interested in blockchain, smart contracts are likely on your mind. Blockchain technology is poised to revolutionize a wide range of industries, from banking and finance to real estate and supply chain management, with smart contracts playing a vital role. Startups and financial institutions are working hard to integrate smart contract capabilities into their platforms, as these contracts offer transparency, reliability and convenience like never before.
If you’re considering adopting blockchain technologies in your company or would like to learn more about smart contracts in particular.
