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According to Google's trend chart, programmers are now very interested in smart contract programming, and China ranks first in the world. The development of smart contracts is actually inseparable from blockchain technology, and smart contracts will also be closely related to our lives in the future. The concept of smart contracts was actually proposed as early as the 1990s. It was proposed by the interdisciplinary legal scholar Nick Szabo. However, smart contracts were not applied to real life at that time. Now due to the development of blockchain technology, Therefore, smart contracts have been brought into everyone’s field of vision again. So what is the purpose of this smart contract? Let the editor of the currency circle explain the purpose of smart contracts to everyone.

 What is the purpose of smart contracts?

Generally speaking, the main purpose of smart contracts is to simplify business transactions between parties by removing the intermediaries involved in traditional business processes. These contracts are designed to reduce payment delays, risk of errors and complexity of traditional contracts without compromising authenticity and credibility.

Smart contract (English: Smart
contract) is a computer protocol designed to disseminate, verify or execute contracts in an information-based manner. Smart contracts allow trusted transactions to be made without third parties, which are traceable and irreversible. The concept of smart contracts was introduced in 1994 by Nick
First proposed by Szabo. The purpose of smart contracts is to provide security methods that are superior to traditional contracts and to reduce other transaction costs associated with contracts.

I believe many people have the same experience as me. When I first came into contact with Ethereum, I encountered a lot of inexplicable concepts. Among these concepts, “smart contracts” are the most impressive. After all, it contains the common keyword "contract", so many people easily misunderstand the meaning of smart contracts.

 Introduction to the uses of smart contracts

To deeply understand the use and value of smart contracts, the simplest and most accurate way is to make analogies to the most familiar things around us.

Buying a house should be one of the major events for our ordinary families, right?

Usually, if you buy a house through the traditional process, you need to go to the sales center to view the house, and then spend the whole afternoon haggling with the salesperson. After that, you pay a deposit, down payment or full payment, and finally you can get the real estate certificate. This process will take at least about a month. In addition, for insurance purposes, it is necessary to ask a lawyer to verify the property, including the property certificate.

Once the house is obtained, not to mention the excessive expense, just in terms of time and efficiency, it is already intolerable. If we encounter any special circumstances, time will be pushed back.

What would it be like to use smart contracts?

Since smart contracts are based on the blockchain, the seller of the house can transfer all information to the smart contract on the blockchain. Including a series of required information such as house price, owner, property rights confirmation, etc.

Since the blockchain is a public ledger, all information can be seen by everyone. And the seller can set up corresponding terms through smart contracts, and the buyer only needs to execute each step on the contract.

Suppose the seller sets the price of the house at 2 million yuan and discloses all information on the blockchain. The seller only needs to send the corresponding digital currency to the corresponding contract address, and the smart contract will begin execution. The buyer no longer needs to hire a lawyer or third-party agency for verification and appraisal. Because the information is stored on the blockchain, the information on the blockchain will be automatically updated after the transaction is successful. And each node on the blockchain will update the total bill, so that everyone on the blockchain knows that this house is now your property.

Isn’t it amazing! ! !

In addition, smart contracts can also allow multiple people to bind the same property. For example, if you want to sell a house, because you have a smart contract established by three people before, it cannot be sold by just one person. Only if three of you sign and agree at the same time can the system pass the transaction. For us, this approach better ensures the safety of our property.

The value of smart contracts lies in reducing transaction costs, making transactions more efficient and ensuring security. All the previously troublesome programs are handed over to the code for processing, and the error probability of the code is much lower than that of human beings.

Ethereum’s achievements are inseparable from smart contracts and blockchain. Mr. Latang firmly believes that there will be many application platforms as successful as Ethereum in the future.

A Google keyword search shows that smart contracts are receiving more and more attention, and we need a clearer definition. Currently, the excitement about smart contracts is accompanied by confusion about what the term means. Peter
Todd – one of the developers of Bitcoin Core – summed up the current state of smart contracts quite accurately:

“The takeaway from the smart contract discussion: no one understands what smart contracts actually are, and if we are going to implement smart contracts, we should need oracles.”

The above article is a simple science popularization by the editor of the currency circle about the purpose of smart contracts. I hope it can be helpful to everyone. Smart contracts differ from other forms of financial transactions precisely because they have some distinctive characteristics. The first is that users have full control over their protocols, and a fundamental purpose of smart contracts is to ensure the security of transactions. Second, smart contracts minimize personal involvement and increase overall efficiency. The decentralized network also provides no issues or delays. environment; and finally it can even eliminate excessive transaction costs because it removes the middleman from the process and protocol support.