What is a smart contract? | Cardano Docs (2024)

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What is a smart contract? | Cardano Docs? ›

Smart contracts on Cardano are simple programs often referred to as validator scripts in which users define custom logic. They are automatically executed by each Cardano node validating the transaction when the transaction attempts to move funds from the script's address.

Smart contracts are typically used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss. They can also automate a workflow, triggering the next action when predetermined conditions are met.

What Are the Four Major Parts of a Smart Contract? It depends on the blockchain and how it is programmed. Generally speaking, smart contracts have state variables (data), functions (what can be done), events (messages in and out), and modifiers (special rules for specific users).

Smart contracts are decentralized, de-trusted, autonomous and self-sufficient, tamper-evident, allowing contract parties to complete transactions without any trust. or third-party trusted authority, while their embeddable digital form is expected to.

Smart contracts eliminate intermediaries by automatically enforcing terms once conditions are met. Think of a smart contract like a vending machine. When you insert a dollar, you get a co*ke. The machine follows built-in rules, similar to if-then statements in code.

A smart contract is an agreement between various parties just as any traditional written contract except that smart contracts are written in computer code and are usually embedded in a blockchain where many of the stages of the transaction are self-executing.

A smart contract is a self-executing program based on if-then logic. Vending machines provide a good analogy. If someone inserts $2 and presses B4, then the machine dispenses the cookies in the B4 slot. In other words, if the vending machine receives the required item of value, then it performs the requested action.

The top 10 best smart contract platforms in 2024 are Ethereum, Binance Smart Chain (BSC), TRON, Arbitrum, Cardano, Solana, Polygon, Algorand, Avalanche, and Tezos.

The basic elements of the proposed Contract Managing Model are cost, contracts, claims and communication as shown in Diagram 2.

Benefits of Smart Contracts

Smart contracts do not need brokers or other intermediaries to confirm the agreement; thus, they eliminate the risk of manipulation by third parties. Moreover, the absence of an intermediary in smart contracts results in cost savings.

How do I create a simple smart contract? ›

The idea behind smart contracts is to automate the execution of agreements, cutting out the need for intermediaries such as lawyers, notaries, or banks. This automation is expected to reduce costs and minimise the potential for human error, making transactions more efficient and trustworthy.

Etymology. By 1996, Nick Szabo was using the term "smart contract" to refer to contracts which would be enforced by physical property (such as hardware or software) instead of by law. Szabo described vending machines as an example of this concept.

A smart contract is an agreement between two people or entities in the form of computer code programmed to execute automatically. The idea was proposed in the 1990s by Nick Szabo, a pioneer of modern computer science, who defined them as a set of virtual promises with associated protocols to enforce them.

Blockchain smart contract use cases permeate various industries and domains, including but not limited to FinTech & banking, healthcare, supply chain, insurance, real estate, digital identity, IP protection, gaming, retail & eCommerce, and human resource management.

But while a smart contract can be a legally binding agreement, it isn't necessarily always legally binding. A smart contract still has to meet all the legal requirements of a contract, such as intent to form a contract. And these legal requirements might also vary by jurisdiction.

A smart contract is computer code working as part of a blockchain that can execute the terms of a contract or agreement when predetermined conditions are met.

Smart contracts are not legal agreements, but instead transactions which are executed automatically by a computer program or a transaction protocol, such as technological means for the automation of payment obligations such as by transferring cryptocurrencies or other tokens.