Smart contracts are automatically executed commands written in the form of "if" statement code, running on the blockchain, including the terms and outcomes of the contract. They are an advanced and secure version of traditional contracts, capable of automatic design and execution without human intervention. Once the terms are met, the smart contract automatically fulfills the contract and allocates the determined results to the relevant parties.
In simple terms, smart contracts are deterministic programs that execute specific tasks when certain conditions are met. They are neither legal contracts nor intelligent; they are just pieces of code running in a blockchain distributed system.
Features#
Automation: Smart contracts automatically execute corresponding operations once the triggering conditions are met.
Immutable: Once deployed on the blockchain, the code and state of smart contracts cannot be changed, ensuring transparency and security of transactions.
Transparency: All transactions and execution processes are recorded on the blockchain, visible to anyone, increasing trust.
Reduced intermediaries: Smart contracts reduce reliance on intermediary institutions, lowering costs and transaction times.
Example#
A simple smart contract could be as follows: Suppose there is a smart contract for house rental based on the Ethereum blockchain. When the tenant pays the rent, the smart contract automatically sends the digital key code to the tenant. The entire process does not require intermediaries, and transaction records are permanently stored on the blockchain, ensuring transparency and security.