Understanding Smart Contract

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Hi guys, welcome back to this space, I trust you missed me, anyway, am back in your faces. I trust you got value from the previous discussion. Today we will be looking at another interesting topic just as titled above. Just sit back and enjoy every bit of this piece.

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Introduction

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Smart contract has become an house hold name in the crypto and defi space as it is being used to make activities in this space seemless and effortless.
Smart contract gained prominence since it introduction in the 90's by a cryptographer and scientist named Nick Szabo. According to him, he defined it as...

a set of promises, specified in digital form, including protocols within which the parties perform on these promises.”

To make it more simpler, a smart contract are built on a blockchain via computer coding...it spells out terms and conditions just like a traditional contract should but the difference there is that you do not have to carry out contract signing paper before a law practioner before it can executed.

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Since it a computer coding, it automated everything using a peer-to-peer kind of approach when all conditions to validate the contract have been met.

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What Is Smart Contract?

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Smart contract are written computer codes that aids automation of transaction on a blockchain. They work when all conditions required for a transaction to take place have been met. Smart contract are actually designed in such a manner that middle men are not needed in the event of a transaction.

As long as the term of agreement and conditions are met, the programmed computer codes carries out the transaction seemlessly and effortlessly. In order word these are self-executing contract. In the case of buying and selling activities, a smart contract will execute buying and selling once the conditions for buying and selling programmed into it has been met by both the buyer and seller.

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The beautiful thing about this is that both party may not even know each other before transacting successfully.Moreso they don't need anyone to act as a middle man who monitors the process of the transaction. Smart contracts have been designed to handle that efficiently, hence the title Smart.

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How does it work?

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In this section I will love to discuss how smart contract works right from inception. Although we already have an overview of what it's about but then, we want to look at it process.

First, You as a business owner come up with your idea with which the smart contract will be built. Developers are the brain behind the building and configuration of a smart contract and how it should behave or respond to events.

The next thing that happens after the idea on how the smart contract should work,including the condition to be met before it can execute...the smart contract is then built..or permit me to say, it is then written, (since it's a computer based program) and subjected to security testing by other independent team or sometimes an internal expert who vet the written program.

Once the contract has been vetted and authorized, it is then deployed on a blockchain and then put to work to see how it would respond to event and circumstances in line with how it was programmed to work via Oracle.

Okay, I think I need to just explain Oracle shortly before I continue.. Now Oracle simple means a channel through which external things like information can be received by the blockchain. In other words, it means, interaction between a blockchain and an external source of information, activities or events.

Once the conditions from these external channels have been met just as it has been progammed on the smart contract, there will be execution.
It's also important to mention that smart contract apps are mostly referred to as Dapps which also captures financial tools like Defi which allows for financial transaction without any form of intermediary such as the financial institutions like banks, insurance companies and the likes.

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I will love to draw the curtain at this point in order not to make this post unnecessarily long, of course I would tidy up this topic in my next post where I will continue my discussion about the topic. I trust you're looking forward to it already.
Anyways feel free as usual to share your thoughts with me in the comment section. I would love to rub minds with you.

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Reference 1
Reference 2

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Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.

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Regards
@lhorgic♥️

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