Cointelegraph’s Jackson DuMont tackles smart contracts within the latest episode of Cryptopedia. He explains how smart contracts work in the basics and offers types of how they may be applied in tangible-world scenarios.
DuMont describes smart contracts as code inside the blockchain that “execute when specific the weather is met.” They’re self-executing contracts built on blockchain technology and also have the capacity to complete transactions without middlemen.
For example, DuMont described the main difference between transacting inside a centralized exchange like Binance and doing exactly the same transactions having a decentralized exchange (DEX) like Uniswap, that is operated by smart contracts.
With Binance, a person needs to think that Binance will complete their transaction, and also the execution from the transaction depends on anyone’s rely upon the 3rd party, which within this situation is Binance. However, DuMont explains that:
“Smart contracts eliminate the requirement for an intermediary because rather to be operate on a business server, they are operate on a decentralized blockchain network.”
Which means that the likelihood of a good contract being performed are greater, because the network isn’t controlled with a single company. Rather, a blockchain network operates by various anonymous nodes distributed around the world.
“If you need to communicate with another person via a smart contract, it’s not necessary to know who they really are. You do not even need to have confidence in them.”
To put it simply, nodes are small servers that ping one another constantly to make certain the data inside the blockchain is coherent with one another. Including smart contracts, that are “replicated and given to all nodes within the network,” described DuMont.
Lastly, DuMont explains there are many use cases for smart contracts within various sectors like investing, gaming, voting, crowdfunding payments, insurance, and much more. DuMont notes that applications for smart contracts are restricted only by people’s creativeness.