When I tipped my toes into the wide stream of crypto’s, I was sucked right in. It was a black of hole of opportunities and loads of information. I usually came across tricky words like fork, HODL, mining, smart contracts, etc. Half the time I was clueless because I didn’t know the basic things that aid the crypto world.
So, I set out on a mission to make things easier for people just like me.
It took me more time and effort because I had to get into the incomprehensible tech lingo but don’t worry, folks, this millennial has got your back!
Smart contracts too are a millennial creation and were invented by Nick Szabo. They have existed longer than Bitcoin. In very simple terms, it’s just a digital contract. But safer because it cannot be toyed with. Their purpose in the blockchain is similar to a tiny computer that stores every contract made.
We all are quite familiar with GoFundMe. For those of you who don’t know, GoFundMe, is a site that where you can set a goal and collect funds for your project online. So, GoFundMe is responsible for keeping your money safe and in case you don’t meet that goal, it returns the funds to the people. Well, a smart contract is like GoFundMe. It’s the middleman that collects all your money, except that it isn’t run by one person instead of everyone is responsible for it.
It can be a little daunting to place your trust in a computer and who knows someone might screw with it. I do agree with all your worries but since a smart contract is stored on a blockchain it easily takes care of all these problems. It is immutable and distributed. Immutable means that once the contract is made it cannot be changed, no one can go behind your back and tamper with the code of your contract. So, say bye to tampering. The other advantage is that its distributed, every move is stored on to the concerning party’s device and no one person can change it. Any change is validated with other people for it to be applied. So fooling around with smart contracts is almost impossible.
Smart contracts are not only limited to crowdfunding but can also be used by other companies like the postal service for receiving payment on delivery. However, the guru of smart contracts in the cryptocurrency world is Ethereum. It was specifically designed to support smart contracts. The smart contract language can be coded and it Ethereum especially came up with a language that allows that.
Now you realize how transparency problems can be solved easily with smart contracts and quite frankly they sound a whole lot safer than physical, handwritten contracts. I mean, who hasn’t tried forging a signature in school anyway. We’re all guilty, right?