In 1997, it was much earlier than the creation of Bitcoin. He was a computer scientist, lawyer, and coder.
He wanted to use distributed global code to store smart contracts. Now they are just like regular contracts. The only difference is that they are completely digital. In fact, a smart contract is a computer program that is stored inside the blockchain.
You are most likely familiar with Kickstarter – a platform to raise funds for the implementation of new ideas. The development team can go to Kickstarter, create a project, set the required amount and start collecting money. People who believe in their idea will be able to give money for its implementation. Kickstarter is a third party who sits between the development team and the people who financially support them. This means that both parties must trust Kickstar to manage the money.
If the project has successfully raised money, the development team expects Kickstarter to issue it to them. On the other hand, investors want their money to go to the development of the project if the amount is accumulated or a refund if the required amount has not been collected. We see that both teams have to trust Kickstarter. But with Smart contracts we can build a similar system that does not need a third party like Kickstarter.
We program the smart contract so that all the funds received are frozen until the moment the required number is collected. Investors can transfer money directly to a smart contract. If the project has successfully accumulated the necessary amount, then the smart contract automatically issues money to the project creator, if he could not collect the necessary amount – the money is automatically returned to investors. Very simple, isn’t it?
Also on the smart contract is the ForkDelta cryptocurrency exchange, created by the Ethereum team, it is considered to be the safest in the world. All tokens in the world are issued using the launch of a smart contracta, banks can use them for issuing loans, insurance companies – for automated payments in some cases. Even network business companies are beginning to use them for accounting and distribution of rewards, a prime example of BestROI.
Why should we trust smart contracts? Because they are based on the blockchain and they inherited interesting properties, they are immutable and decentralized. After creation, contracts cannot be edited or modified. No one can falsify the source code of a smart contract, every action or transaction is confirmed by all network nodes.
Huge advantages: they replace the database, most of the standard operations can be assigned to a smart contract, they can not be falsified or hacked.
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