Hi friends! We’re here with the new installment of the educational hub, where we look into various blockchain concepts. This week, smart contracts are on the roster.
In this post, we’ll discuss:
- What are smart contracts?
- What are they used for?
What smart contracts are
The name “smart contract” is a bit misleading because smart contracts are not, in fact, contracts.
A smart contract is a self-executing program running on the blockchain. It is often compared to the if-then statement in code: If a set of conditions for the transactions is fulfilled, then a smart contract automatically executes, and the resulting transaction is immediately published on the blockchain.
Let’s say Tom wants to buy an NFT from Tim for 10 TON. If Tom pays 10 TON, then the smart contract executes. As a result, Tom is the new owner of the NFT and is 10 TON lighter, while Tim receives the payment for his NFT.
The advantages of smart contracts:
- Fast – a smart contract self-executes as soon as all conditions are met.
- No intermediary required – no third party is required as everything is automated.
- Immutable and secure – the original smart contract cannot be altered once published on the blockchain.
What are smart contracts used for?
tl;dr: for pretty much everything.
Smart contracts can have extensive use cases and are ubiquitous on the blockchain. They are at the heart of every decentralized application (dApp). Companies across multiple industries have also adopted smart contracts, including JPMorgan Chase, Walmart, Maersk, and Microsoft.
Just to give you the overall scope of how common smart contracts are, here is the breakdown of the most common use cases:
1.Decentralized Finance (DeFi). Smart contracts power decentralized exchanges and facilitate lending and borrowing services as well as staking and yield farming.
2. Non-Fungible Tokens (NFTs). Smart contracts are used for minting NFTs and trading them on marketplaces. They can also be used to enforce royalties when an NFT is resold.
3. Decentralized Autonomous Organizations (DAOs). DAOs use smart contracts to manage voting processes, treasury management, and decision-making without centralized control.
4. Token Issuance, Management, and Token Standards.
5. Payment Channels. Smart contracts can be used for micropayments and recurring payments.
6. Gaming and Virtual Goods. Smart contracts are used to manage in-game assets and play-to-earn game mechanics.
7. Decentralized identity management and authentication.
8. Supply chain management. Smart contracts can facilitate tracking and verification of the movement of goods through a supply chain.
What other topics would you like us to cover next?
Download Tonkeeper: tonkeeper.com
Follow: en · ru · فارسی · 中文 · uz · twitter · discord