How to Create a Smart Contract: A Comprehensive Tutorial on Deploying Smart Contracts  - Webisoft Blog (2024)

Interested in exploring the blockchain world by creating a smart contract? Well, you’re on the right track. A smart contract, a term that’s been making waves in the digital space, is a virtual agreement where terms are written directly into code. But how to create a smart contract?

Creating a smart contract may seem complex, but it’s surprisingly straightforward. It’s all about encoding an agreement, which then executes itself. This eliminates the need for intermediaries, providing a secure, transparent, and efficient method of carrying out transactions or agreements.

Ready to dive deeper? Stick around as we guide you through each step of smart contract creation. We promise, by the end of this journey, you’ll be well-equipped to navigate the dynamic landscape of blockchain and make the most out of smart contracts. Your blockchain adventure is just getting started!

So, without further ado, let’s commence our journey towards the captivating domain of smart contracts.

What is a Smart Contract?

A smart contract is a self-executing digital agreement stored on a blockchain. It autonomously carries out specified tasks when certain conditions are met.

These contracts work as digital agreements, upholding the terms settled upon by different parties without any intermediary’s necessity.

These smart contracts are crafted in programming languages tailored for specific blockchain platforms, such as Solidity for Ethereum. They operate based on “if-then” logic, encapsulating the rules and stipulations for any particular deal or transaction.

As soon as the defined conditions are satisfied, the smart contract triggers the prearranged actions, reducing the need for manual intervention, limiting potential human error, and boosting efficiency.

One of the remarkable benefits of smart contracts is their transparency. Once initiated on a blockchain, the code and execution history of a smart contract become unalterable and open to the public.

This transparency enables every involved party to validate the contract’s integrity and its activities. It also promotes trust among participants due to the contract’s predetermined and immutable nature of execution.

Smart contracts are versatile and find use in several industries. They can simplify and automate processes in sectors like finance, supply chain management, real estate, insurance, and more.

By facilitating secure and incorruptible transactions, smart contracts hold the potential to optimize operations, cut costs, and bolster trust in business dealings.

How Does Smart Contract Really Work?

Let’s consider an explanation of how smart contracts work through a real-world scenario.

Suppose Party X wishes to purchase a property from Party Y. Normally, they would draft a legal agreement outlining the terms and conditions of the sale. Upon payment from X, Y hands over the keys to the property.

Should X fail to meet the agreed payment, Y could take legal action, and a court would enforce the contract, compelling X to pay the agreed amount. This is a traditional contract scenario.

However, smart contracts operate differently, removing the need for a third party. Let’s consider how X and Y could execute their transaction using a smart contract.

Instead of a traditional payment, X can use cryptocurrency to pay Y. Once X initiates a payment, a digital receipt is generated and stored within the smart contract.

Y is obligated to send a digital access key for the property to X within a specific time frame. If X doesn’t receive the key in time, the smart contract triggers a refund. Conversely, once X receives the key, the smart contract ensures Y receives the payment automatically. If X attempts to pay less than the agreed amount, they won’t receive the property key.

Therefore, the smart contract facilitates three potential scenarios, based on how the parties comply with the contract’s terms and conditions:

• If all terms are fulfilled, X and Y smoothly exchange the property key and payment.
• If X tries to pay less than the agreed amount, the smart contract will not deliver the key.
• If Y fails to deliver the key within the specified time, the smart contract automatically refunds X.

Smart contracts are also designed to expire after a certain period. The coding cannot be altered by either party without the other’s knowledge, ensuring full transparency.

Types of Smart Contracts Based on Application

When it comes to smart contracts, they aren’t all created equal. Depending on their use case, we can categorize them into three main types:

1. Digital Legal Contracts

Think of these as your standard legal contracts, but with a digital twist. They are legally enforceable agreements, drafted in code. If parties fail to fulfill their obligations, they could face real-world legal implications.

While there’s a lot of potential here to streamline cumbersome transactions, we’re still navigating through the legal uncertainties around these contracts.

The laws vary by country and many places still lack the appropriate legal framework to support such automation fully. But once that’s sorted out, these contracts could save a whole lot of time and paper.

2. DAOs (Decentralized Autonomous Organizations)

DAOs are essentially digital communities built on a blockchain network. What binds these communities together are rules established by its members and coded into smart contracts.

Every action within a DAO is subject to these coded rules. If anyone steps out of line, they face consequences. Thus, a DAO is shaped and governed by a multitude of smart contracts, each contributing to the overall rule set.

3. Application Logic Contracts (ALCs)

We’re stepping into the new era of the Internet of Things (IoT), thanks in part to blockchain technology. A key player in this space is the Application Logic Contract.

These smart contracts house codes tailored for specific applications. They work alongside other programs and contracts on the blockchain. Together, they interact with devices and verify the data those devices collect.

So there you have it: Digital Legal Contracts, DAOs, and ALCs. Each plays its own unique role in the expansive world of smart contracts.

How to Create a Smart Contract: The In-General Approach

This comprehensive guide delineates each step to incorporate blockchain-based smart contracts in your business operations efficiently.

Step 1: Project Planning

Project planning is a crucial first step. Start with assembling a dedicated team comprising a project manager, a technical architect, and a group of business analysts, each with significant blockchain implementation experience.

The planning phase should include:

• Requirements and Business Logic Definition: Clearly state the needs, objectives, and expected results of your project. Define the business operations that the smart contracts will automate.
• Blockchain Type Selection: Depending on the nature of your business and its needs, choose the type of blockchain. You might consider permissionless (public), permissioned (private), or consortium blockchains.
• Hosting Plan: Figure out where your blockchain network will be hosted. It could be on-premise, cloud-based, or a hybrid model.
• Technology Stack Identification: Identify the programming languages, tools, platforms, and frameworks that will be used to create, deploy, and maintain your blockchain network and smart contracts.
• Budgeting: Estimate the financial requirements for the project. This includes development costs, hosting expenses, and potential ongoing maintenance costs.

Step 2: Engage a Competent Development Team

Post strategizing, the next phase is to recruit a skilled development team. This team will be responsible for creating and maintaining the blockchain network and smart contracts.

The team composition can vary but typically includes blockchain developers, frontend and backend developers, a database expert, a network architect, and a security expert.

Step 3: Development and Review of Network and Contracts

After establishing the team, the focus shifts to the actual development of the blockchain network and smart contracts.

Following the development, it’s essential to perform an in-depth code review to identify any potential issues or areas of improvement.

Step 4: Launching Smart Contracts and Blockchain Application

The final step in the setup phase is deploying the developed smart contracts and the blockchain application. This denotes the successful integration of blockchain technology into your enterprise operations.

Step 5: Opt for a Suitable Blockchain Type

Your project likely won’t involve creating a new cryptocurrency, so choosing an appropriate blockchain type is essential.

Public blockchain networks like Bitcoin and Ether aren’t suitable due to their open nature, lack of data privacy, and limited scalability.

Thus, an enterprise blockchain, which allows for permissioned networks, and access control, and is scalable and efficient, would be a better fit.

Step 6: Seek a Hosting Provider

Enterprise blockchain networks are not pre-existing public networks, they need to be created and hosted. Numerous established cloud computing service providers offer hosting for enterprise blockchains.

AWS, Microsoft, and IBM are among the leading providers offering dedicated services for blockchain hosting.

Step 7: Select Appropriate Tech Stack

The selection of an appropriate technology stack is vital for the successful execution of your project.

You can choose from several enterprise blockchain frameworks such as Hyperledger Fabric, R3 Corda, and Quorum.

Hyperledger Fabric is often recommended due to its adaptability, modularity, scalability, performance, and security features.

Step 8: Allocate Project Budget

Accurate cost estimation is vital for successful project completion. You’ll need to factor in blockchain infrastructure setup costs, frameworks, and tools licensing (if applicable), hiring a skilled workforce, and other administrative costs.

Step 9: Form a Complete Development Team

After establishing a budget, the next essential step is to assemble a comprehensive development team. This team’s expertise and collaborative ability will directly influence the project’s success.

The team must include UI/UX designers for creating a user-friendly design, front-end, and back-end developers for handling user interface and server operations, and blockchain developers specializing in your selected framework, such as Hyperledger Fabric, for managing the nuances of the blockchain network.

In addition, quality assurance experts play a pivotal role in thorough testing to identify bugs and potential enhancements, ensuring the final product meets project requirements and performs optimally.

Lastly, the inclusion of DevOps engineers is crucial for seamless application deployment and maintenance.

They integrate development and operations functions, manage infrastructure, and facilitate effective team communication and collaboration, a role that becomes even more vital post-launch for ongoing support and maintenance.

Step 10: Research Existing Projects

As most smart contracts are open source, you can learn significantly from studying existing ones similar to your project.

Organizations that allow others to view their smart contracts typically store them on repositories like GitHub. Microsoft Azure, for instance, offers access to many of their smart contracts on GitHub.

Step 11: Develop Blockchain Network

With a proficient team and well-researched plan in place, it’s time to develop your blockchain network.

If you opt for the IBM Blockchain Platform and Node.js to build your network using Hyperledger Fabric, you can leverage the robust APIs provided by the Hyperledger Fabric Client (HFC) SDK for Node.js.

Step 12: Create Chaincodes

After setting up your network, the subsequent step is to code your chaincodes, i.e., smart contracts in Fabric. Each chaincode should encapsulate the business logic related to a specific function or process in your operations.

Step 13: Review Chaincodes

Thoroughly review the coded chaincodes as smart contracts become tamper-proof once deployed. The review should focus on the source code, static code analysis, code quality, known vulnerabilities, and alignment with functional requirements.

Step 14: Test and Deploy Chaincodes and Application

Lastly, test your chaincodes and application to ensure they operate as expected. Use Docker containers for deployment and a tool like Jenkins for continuous integration. Ensure your smart contracts are functioning as expected, and finally, proceed with the release.

Now, the famous blockchain out of all chains out there to create smart contracts is Ethereum. Now, we’ll take a closer look at how to use Ethereum to create smart contracts. Let’s check out.

How Smart Contracts Operate on the Ethereum Blockchain Platform

When you place a smart contract on the Ethereum blockchain, it’s a bit like setting a piece of machinery into a well-oiled assembly line. The Ethereum platform is ready to put it to work, with each component playing its role in bringing your contract to life.

Your contract becomes part of the Ethereum network, and it’s set into motion by the network’s participants. Think of these participants as the workers on our assembly line. In the world of blockchain, we call these workers ‘nodes’.

Here’s where the Ethereum Virtual Machine (EVM) comes into play. Imagine the EVM as the powerhouse running our assembly line:

• The EVM is present on every node, working tirelessly to bring your smart contracts to life.
• It’s a secure space that allows your contract to function without interfering with any others. This maintains the safety and efficiency of the entire network.
• When you want your contract to do something specific, you send a transaction. This transaction is your set of instructions for the contract.

Once you’ve sent your transaction, it’s like sending a work order down the assembly line.

• Your work order is first checked and approved by the miners, who use a system called proof-of-work to make sure everything’s in order (although, keep in mind, Ethereum is planning to change to a system called proof-of-stake in its new 2.0 version).
• After your order is approved, it’s included in a block and then it’s off to the races.
• Each node’s EVM gets to work, processing your instructions in a decentralized manner.

The end result? Your contract’s state gets updated on the blockchain. This could include anything from changes made to the contract’s variables or its stored data during the transaction.

And, just like that, your updated contract is recorded on the blockchain, where everyone on the network can see and agree on the new state of affairs. And that is how the Ethereum blockchain platform executes smart contracts.

What is Solidity?

Solidity is the go-to language for crafting smart contracts on the Ethereum blockchain. Think of it as a toolbox for developers to build decentralized applications (dApps) with rules and behaviors defined by them. It’s a blend of familiar languages like C++, Python, and JavaScript, tailored for blockchain development.

Using Solidity, developers can:

• Define variables, functions, and events within smart contracts.
• Set conditions for contract actions, enabling automated execution.
• Leverage object-oriented concepts for reusability and design.

Once a Solidity code is written, it’s compiled into bytecode, which the Ethereum Virtual Machine (EVM) understands. The EVM is where the magic happens – where smart contracts come to life on the Ethereum network.

After deployment, these smart contracts become part of the Ethereum’s decentralized world, interacting with users and other contracts based on the set rules. Thanks to Solidity, developers can bring automation, transparency, and decentralization to Ethereum applications, fueling the growth of the Ethereum ecosystem.

How To Create A Smart Contract: Steps to Develop An Ethereum Smart Contract

Developing an Ethereum smart contract involves several steps, which are the following:

Define the Requirements

Take the time to thoroughly understand the problem you want to solve and outline the requirements of your smart contract.

Identify the data that needs to be stored, the operations that need to be performed, and any specific conditions or rules to which the contract should adhere.

Consider the desired inputs, outputs, and interactions with other contracts or external systems.

Choose a Development Environment

Consider the available development environments that support Solidity, such as Remix IDE or Truffle Suite. Remix IDE is a web-based tool that provides a user-friendly interface for writing, compiling, and testing smart contracts.

Truffle Suite offers a comprehensive development framework, including a development environment, testing framework, and asset management tools, providing a more integrated and robust development experience.

Write the Smart Contract

Start by defining the state variables that will store the contract’s data. Determine the functions that the contract should have, specifying their parameters, return types, and access modifiers.

Implement the logic within each function, including conditionals, loops, and any necessary calculations or data manipulations.

Consider event logging to emit important information during the execution of the contract, which can be useful for monitoring and debugging.

Test the Smart Contract

Create comprehensive test cases to ensure that your smart contract functions as expected. Utilize testing frameworks like Truffle or the built-in testing capabilities of Remix IDE.

Write unit tests to validate the behavior of individual functions, and integration tests to ensure proper interaction between different parts of the contract.

Test various scenarios, including edge cases and potential vulnerabilities, to identify and address any bugs or issues.

Compile the Smart Contract

Solidity code needs to be compiled into bytecode that the Ethereum Virtual Machine (EVM) can understand and execute. The Solidity compiler, solc, converts the human-readable Solidity code into EVM bytecode.

During the compilation process, an Application Binary Interface (ABI) file is also generated. The ABI provides a standardized interface description of the contract, allowing other applications to interact with it.

Deploy the Smart Contract

Deploying a smart contract involves creating a deployment transaction and broadcasting it to the Ethereum network.

Remix IDE provides a simple deployment interface where you can specify deployment parameters, such as the constructor arguments, and deploy the contract directly from the IDE.

Truffle offers deployment scripts and configuration files to enable more advanced deployment scenarios, such as deploying to different networks or using deployment frameworks like Infura.

Interact with the Smart Contract

Once the smart contract is deployed, users and other applications can interact with it. Use Ethereum wallets or build custom user interfaces to send transactions and call the contract’s functions.

Ensure that the contract’s input parameters are properly validated and handle any error conditions or exceptions that may arise during execution.

Consider adding appropriate event logging to notify external applications about important contract events.

Audit and Security Considerations

Conduct a thorough security audit of your smart contract’s code to identify and mitigate potential vulnerabilities.

Review common security best practices, such as input validation, proper handling of external calls, and protection against reentrancy attacks.

Engage external auditors or leverage automated security tools to ensure the robustness and integrity of your smart contract.

Steps to Test an Ethereum Smart Contract

Testing Ethereum smart contracts are crucial to ensure their proper functionality and identify any bugs or vulnerabilities. Here are the steps involved in testing an Ethereum smart contract:

Set up a Testing Environment

Prepare the necessary tools and frameworks for smart contract testing to create a suitable testing environment.

Write Comprehensive Test Cases

Develop test cases that cover various scenarios, edge cases, and potential error conditions to ensure thorough testing.

Deploy and Validate the Contract

Deploy the contract to a local blockchain or test network and execute the test cases to verify its behavior and functionality.

Assess Results and Ensure Correctness

Compare the actual results obtained from contract execution with the expected outcomes using assertions to validate the correctness of the contract’s behavior.

Test Interactions, Gas Consumption, and Security

Validate contract interactions with other contracts or external systems, measure and analyze gas consumption, and perform security audits to identify and address vulnerabilities.

Iterate and Refine

Continuously refine test cases, address any issues or failures, and repeat the testing process to enhance the quality, functionality, and security of the contract until it meets the desired standards.

Steps to Deploy Ethereum Smart Contracts

Deploying Ethereum smart contracts involves several steps. Here are the key steps to deploy an Ethereum smart contract:

Set up a Development Environment

Set up a development environment that supports Ethereum smart contract deployment. Popular options include Remix IDE, Truffle Suite, or development frameworks like Hardhat.

Write and Compile the Smart Contract

Write the smart contract code using Solidity, the programming language for Ethereum smart contracts. Define the contract’s variables, functions, and events.

Once the code is written, compile it into bytecode that can be understood by the Ethereum Virtual Machine (EVM). The Solidity compiler (solc) is commonly used for this step.

Choose a Deployment Network

Decide which Ethereum network you want to deploy your smart contract to. Options include the mainnet (production network) or various test networks like Ropsten, Rinkeby, or Kovan.

For initial testing and development, it’s recommended to deploy to a test network.

Connect to an Ethereum Node

Connect your development environment to an Ethereum node. You can either run a local node using tools like Ganache or connect to a remote node using services like Infura.

This connection enables communication with the Ethereum network for deployment and interaction with the smart contract.

Create a Deployment Transaction

Create a deployment transaction that includes the compiled bytecode of the smart contract. The transaction specifies the gas limit, gas price, and any constructor arguments required by the contract.

The gas limit determines the maximum amount of computational resources the deployment can consume.

Sign and Broadcast the Transaction

Sign the deployment transaction using your Ethereum account’s private key. Then, broadcast the signed transaction to the connected Ethereum network.

Miners on the network will validate and include the transaction in a block, ultimately deploying the smart contract.

Verify the Contract Deployment

Once the transaction is confirmed and included in a block, the smart contract is deployed to the Ethereum network.

You can verify the deployment by checking the transaction receipt, which contains information about the deployment status and the contract’s address.

Interact with the Deployed Contract

After deployment, you can interact with the deployed contract using its address. Use Ethereum wallets or custom user interfaces to send transactions, call the contract’s functions, and read its state.

Ensure proper handling of gas fees for transaction execution and any necessary authentication or access control mechanisms within the contract.

Tools and Technologies Required for Implementing Ethereum Smart Contracts

Implementing Ethereum smart contracts require specific tools and technologies. Here are some essential tools and technologies you would need:

Solidity

Solidity is the primary programming language used for writing Ethereum smart contracts. It is a statically-typed, contract-oriented language specifically designed for Ethereum.

Ethereum Development Frameworks

Frameworks like Truffle, Hardhat, and Embark provide a development environment for Ethereum smart contracts. They offer features like automated testing, contract compilation, deployment management, and debugging tools.

Remix IDE

Remix is a web-based integrated development environment (IDE) specifically designed for developing and testing smart contracts.

It provides a user-friendly interface with built-in compilation, deployment, and debugging capabilities.

Ethereum Virtual Machine (EVM)

The EVM is the runtime environment where Ethereum smart contracts are executed. Understanding the EVM’s principles, opcodes, and gas mechanics is crucial for developing efficient and secure contracts.

MetaMask

MetaMask is a popular Ethereum wallet and browser extension that allows developers to interact with Ethereum networks.

It provides a user-friendly interface for managing accounts, signing transactions, and deploying and interacting with smart contracts.

Web3.js

Web3.js is a JavaScript library that allows developers to interact with Ethereum networks through the JSON-RPC interface.

It provides functions for connecting to Ethereum nodes, sending transactions, and calling smart contract functions from JavaScript applications.

Infura

Infura is a cloud-based Ethereum infrastructure provider that allows developers to connect to the Ethereum network without running their own node. It provides a reliable and scalable API for deploying and interacting with smart contracts.

Ganache

Ganache is a local development blockchain that simulates an Ethereum network.

It enables developers to deploy and test smart contracts locally in a controlled environment, allowing for rapid iteration and debugging.

Testing Frameworks

Frameworks like Truffle and Hardhat come with built-in testing frameworks for writing automated tests for smart contracts.

These frameworks provide utilities for writing unit tests, integration tests, and testing contract interactions.

Security Tools

Various security tools and frameworks, such as MythX and Solhint, help identify potential vulnerabilities and security risks in smart contracts.

They provide static analysis, code scanning, and vulnerability detection to ensure contract security. These tools and technologies form the foundation for developing, testing and deploying Ethereum smart contracts.

Familiarizing yourself with these tools will greatly assist in efficiently and securely implementing smart contracts on the Ethereum blockchain.

Exploring the Application of Smart Contracts Across Various Industries

Smart contracts are transforming multiple industries with their unique capabilities. Let’s explore the top five sectors that are benefitting from this innovative technology:

1. Healthcare Sector

Healthcare is one industry that greatly benefits from smart contracts. Blockchain has already made its mark by improving patient record management. However, the advent of smart contracts amplifies this security and confidentiality further.

• Sharing of Health Records

Distributed ledger systems used by blockchain secure patient data. Smart contracts streamline the sharing of this data among authorized individuals during medical treatment.

For instance, during surgery, the hospital can relay information to the smart contract, which connects the patient with their health insurance provider.

This process triggers the automatic release of payment for the surgery, reducing paperwork and time traditionally required for health insurance claims.

• Pharmaceutical Supply Chain

The pharmaceutical industry, a close ally of healthcare, can also gain from smart contracts in their supply chains.

These contracts enable drug companies to trace their products, monitor conditions during transport, and even detect counterfeit drugs. They also simplify the tracking and ordering of essential medicines.

• Tracking of Medical Equipment

The combination of blockchain, smart contracts, and the Internet of Things (IoT) revolutionizes inventory management in healthcare. It allows hospital staff to track and locate crucial equipment in hospitals easily.

2. Insurance Industry

The insurance industry is ripe for disruption with smart contracts. Traditionally, claiming insurance involves jumping through hoops, filling out mounds of paperwork, and waiting extended periods for payout.

With smart contracts, the insurer provides a unique key at the time of insurance purchase, storing all the insurance details on the blockchain.

When a client claims their money, they simply send this unique key to the insurance company, triggering an automatic payout.

3. Real Estate Sector

Whether it’s renting or buying property, real estate transactions can significantly benefit from smart contracts. They automate rent payments and make property buying a breeze by eliminating paperwork and middlemen such as real estate agents.

4. Banking and Finance

Smart contracts play a pivotal role in banking and finance. They fast-track processes and bring simplicity to the table.

Through digital contracts, the accuracy of information transfer is guaranteed, and contract terms are enforced. This setup results in fewer errors during execution and creates a transparent transaction environment.

Many banks, seeking to improve their processes and customer experiences, are already implementing blockchain technology and smart contracts.

5. Legal Industry

Considering that almost 90% of businesses are involved in legal proceedings at any given time, smart contracts offer a reliable safeguard.

In the legal domain, these contracts minimize human oversight, ambiguities, and contract drafting and compliance errors. Moreover, they maintain a blockchain-based data record that serves as a reference in case of disputes.

Frequently Asked Questions

Who owns a smart contract?

In the context of a decentralized blockchain network like Ethereum, a smart contract is owned by the network itself. It operates autonomously and executes predefined actions based on the coded instructions within the contract.

Who builds smart contracts?

Smart contracts are typically built by developers who have expertise in programming languages such as Solidity, specifically for Ethereum. These developers create the contract code, define its functionality, and deploy it onto the blockchain network for execution.

How much ETH is required to deploy a smart contract?

The amount of ETH required to deploy a smart contract varies depending on the complexity and size of the contract code and the current gas prices on the Ethereum network. Deploying a simple contract may cost a few dollars worth of ETH, while more complex contracts can cost significantly more.

Conclusion

This guide has provided a detailed roadmap on how to create a smart contract. It highlights crucial concepts, tools, and methodologies that are indispensable for this task. By following this guide, you can confidently write, compile, and deploy smart contracts on the Ethereum network.

This tutorial lays emphasis on Solidity, Ethereum’s programming language, and stresses the importance of thorough testing for ensuring optimal functionality and security. Developers can employ tools like Remix IDE, Truffle, and Infura to expedite the development process and tap into Ethereum’s capabilities.

As Ethereum continues to evolve, it’s crucial to stay updated with the latest developments and adhere to best practices. Mastering these skills can significantly augment your capacity to build decentralized applications, thus fueling innovation within the Ethereum ecosystem.

To delve deeper and truly harness the power of smart contracts, consider visiting Webisoft. Our expert team stands ready to guide you, providing comprehensive solutions that suit your needs. Let’s journey together toward transformative blockchain development.