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Smart contracts are an essential computer protocol in the blockchain field. They help users conduct trusted transactions without a third party, and these transactions under smart contracts are traceable and irreversible. . To put it simply, a smart contract is actually a kind of contract, but it is a digital version of the traditional contract we usually use. Its purpose is to provide a safer way than traditional contracts, and at the same time, it can reduce Transaction costs for users, it is a contract execution that does not rely on a third party. Many investors still don’t know what are the characteristics of smart contracts? Let the editor of the currency circle introduce the characteristics of this smart contract to you.

 What are the characteristics of smart contracts?

Smart contract
Contract) is a concept proposed by cryptologist Nick Szabo in the 1990s. Due to the lack of a trusted execution environment at that time, smart contracts were not applied and developed. It was not until the emergence of Ethereum that smart contracts were "resurrected".

So what exactly is a smart contract? Simply put, a smart contract is a contract that uses computer language instead of legal language to record terms and is automatically executed by a program. In other words, smart contracts are digital versions of traditional contracts that run on the blockchain network and are automatically executed by programs.

Vending machines and ATM cash machines can all be understood as machines that execute smart contracts to some extent, but these are not smart contracts in the true sense.

Compared with traditional contracts, smart contracts have three major characteristics:

1. The contract content is open and transparent

Smart contracts are deployed on the blockchain, and their contract contents are naturally open and transparent.

2. The content of the contract cannot be tampered with

Similarly, because it is deployed on the blockchain, the content of the smart contract cannot be modified.

3. Run permanently

Smart contracts running on the blockchain are also jointly maintained by network nodes on the blockchain. As long as the blockchain exists, smart contracts can run permanently. There is a sense of brotherhood that "the chain is as long as the contract is there".

Advantages of smart contracts

Smart contracts supported by the three major characteristics of blockchain have the following main advantages compared with traditional contracts:

1. To trust.

Since smart contracts are based on the blockchain, the contract contents are open, transparent and cannot be tampered with. Code is law
law), based on trust in the code, traders can trade with peace of mind and safety in a non-trusting environment.

2. Economical and efficient

Compared with traditional contracts, which often cause disputes due to differences in understanding of contract terms, smart contracts use computing language to avoid disagreements, rarely cause disputes, and the cost of reaching consensus is very low. In smart contracts, the arbitration results come out and are immediately executed. Therefore, compared with traditional contracts, smart contracts have the advantages of economy and efficiency.

3. No need for third-party arbitration

Suppose Xiong Da and Xiong Er bet on whether it will rain tomorrow. The loser needs to give the other party 100 yuan. If the loser denies it, the winner will not get the reward. For this reason, it is inefficient and time-consuming to find a third-party arbitration institution. But if the bet is written on the smart contract, when the bet is reached, each of them will put 100 yuan into the smart contract address. The smart contract will automatically execute based on the final result, and the winning party will take away all the rewards. It can be seen that smart contracts do not require third-party arbitration.

The above content is the specific explanation of the characteristics of smart contracts by the editor of the currency circle. In the above article we have talked about some of the advantages of smart contracts, so do smart contracts have no disadvantages? In fact, smart contracts also have obvious shortcomings, that is, smart contracts may have loopholes. Because smart contracts cannot be tampered with, once there are loopholes in smart contracts, there will be great risks. Some network hackers can also Smart contracts to make profits for themselves. In addition, the smart contract itself cannot obtain external information, so sometimes we need to write some external information into it before it can make a decision, so the smart contract is neither perfect nor smart.