What is the principle of smart contracts under blockchain technology?

Chongqing Jinwowo analyzes the principle of smart contracts under blockchain technology as follows:

The principle of smart contracts is that the link between the dots exists in the physical and digital spaces, in the real world and the virtual world, it may exist in a certain space, or in two different spaces, these two spaces have a natural link, are distributed, and have no centralized existence.

Let's take a look at how smart contracts work with an example. Maybe you're familiar with Kickstarter, a massive crowdfunding platform, where product teams can create projects, set funding goals, and raise money from people who believe in the idea.

A kickstarter is essentially a third party between the product team and supporters. This means that both parties need to trust Kickstarter to handle their funds properly.

If the project is successful in obtaining funding, the project team hopes to receive their funding from Kickstarter. Supporters, on the other hand, hope that their funds will go to the project after fundraising, or get a refund if they don't meet their goals. The product team, as well as its backers, need to trust Kickstarter.

But with smart contracts, we are able to build similar systems without having to trust a third party like Kickstarter.

So let's build a smart contract.

We can make a smart contract so that it can hold all the funds received until a certain goal is reached. Now the proponents of the project can transfer funds to the smart contract, and if the project receives sufficient funds, the smart contract automatically transfers the money to the creator of the project; If the project fails to meet its fundraising goals, the money will be automatically returned to the project supporters.

The principle of smart contract is the link between points, existing in physical and digital space, in the real world and in the virtual world, it may exist in a certain space, or exist in two different spaces, there is a natural link between the two empty chain numbers, is distributed, and there is no centralized existence.

A smart contract is a computer protocol designed to disseminate, verify, or enforce a contract in an informational manner. Smart contracts allow for trusted transactions without a third party, which are traceable and irreversible. The concept of smart contracts was first proposed by Nickszabo in 1995.

The purpose of smart contracts is to provide a secure approach that is superior to traditional contracts and to reduce other transaction costs associated with contracts.

A smart contract is a type of contract that does not require a third party such as a notary public or public official to verify, facilitate, or enforce!

Literally means that you can make fast, reliable, and trustworthy transactions with any third party, without the constraints of ordinary contracts.

Advantages of smart contracts

1. Trust

Thanks to the blockchainA unique way of storing information, where many computers share information and verify it independently, can use a so-called "distributed ledger", which is valid and cannot be lost.

2. Backup. There are many copies in the network due to the mechanism of storing information in a distributed ledger. This ensures that all created files and all executed contracts are backed up.

3. Autonomy. The network handles handovers and contract terms, and it is completely autonomous.

4. Speed. Traditional contracts require verification to communicate with third parties, and blockchain-based networks can speed up this process to a few hours or real-time transactions.

5. Automation.

Smart contracts are their "smart", which means that you can also be sure to meet the complex structure of the contract. You have not only the traceability of documents, but also the traceability of goods.

6. Encryption and security.

An important role is, of course, to secure the transaction. This not only means that documents and contracts are stored in their original form, but it also means that information can only be accessed when it is allowed. Use very secure network protocols and cryptography and other layers of security to ensure that only interested parties can access information.

Smart contract use cases

**Chain. For large enterprises that have a global network of chains, it is very beneficial to have a digital tracking record of every transaction. Not only can the process be automated, but it is also possible to trace every stage of the product.

This will increase transparency, can help identify bottlenecks, and will also help to manage a large number of contracts.

Another situation is when the goods arrive, the payment is being processed. This provides contractual security to both the sender and receiver. Because the transfer of goods is only possible if the payment is processed, it also means that this transaction does not need to be financed.

Real estate. The transfer of the property to the buyer is the granting of the right to use the property. Every real estate transaction involves a contract. Smart contracts can help limit the associated risks and costs.

In real estate transactions, the property can only be transferred after the payment has been received. With smart contracts, you don't need to go back and forth to a bank or notary office, you can do it directly without waiting time.

Healthcare. Who has access to my patient data? Are my digital patient files secure?

And many other issues arise from having a digital patient file. As we've learned, if only a limited number of people need access for a limited time, your file is always with you, and only if you allow the doctor to access.

Highly regulated, such as drug storage and distribution.

A smart contract can be simply understood as a piece of information written on the blockchain, which is event-driven, has a dynamic state, is recognized by multiple parties, and can automatically process on-chain information according to preset conditions. Once an event triggers the terms of the contract, it will be automatically executed, and the biggest advantage of smart contracts is that they use procedural algorithms to arbitrate and enforce the contract instead.

A smart contract is a contract that uses computer language instead of legal language to record the terms, and once it is written, it can be trusted by users, and the terms of the contract cannot be changed, so the contract cannot be changed. The procedure will be carried out when the conditions are met, and there can be no human interference, ensuring absolute fairness and fairness.

3 technical features of smart contracts.

Data transparency. All the data on the blockchain is open and transparent, so the data processing of the smart contract is also open and transparent, and any party can view its ** and data when the source town is running.

Cannot be tampered with. All the data of the blockchain itself cannot be tampered with, so the smart contract deployed on the blockchain and the data generated by the operation are also tamper-proof.

Permanent operation. The nodes that support the blockchain network often reach hundreds or even thousands, and the failure of some nodes will not lead to the cessation of the smart contract, and its reliability is theoretically close to permanent operation, which ensures that the smart contract can be valid at all times like a paper contract.

This is a contract that does not require third-party verification, you can trade quickly, without restrictions, and it is also very safe to talk about, basically there are a lot of backups in turn, and there are basically few mistakes.

Summary. Hello, about the content of "Blockchain and Smart Contracts" The current defects of traditional contracts are:1At present, the application method is still limited.

Due to the current reality and the blockchain is not yet connected, so many contracts related to the real world can not be executed accurately, and smart contracts can only be used in applications on the blockchain, compared to all contracts in the world, smart contracts are still very few applications.

2.There is a chance that the rate is misleading.

Because the smart contract is set so that it will be automatically executed and irreversible as long as the conditions are met, in the near future, the liquidation mechanism on the compound is misleading, because the exchange is inaccurate about the currency price, and the smart contract automatically liquidates the borrower's collateral, resulting in a total of about 90 million US dollars of collateral being wrongly liquidated.

According to the content of "Blockchain and Smart Contracts", what are the defects of traditional contracts.

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Hello, about the content of "Blockchain and Smart Contracts" The current defects of traditional contracts are:1At present, the application method is still limited, because the current reality and the blockchain are not yet connected, so many contracts related to the real world are not accurately executed, and only the application of smart contracts on the blockchain can be used, compared with all the contracts in the world, the application of smart contracts is still very few.

2.The probability is misled by misinformation, because the smart contract is set so that it will automatically execute as long as the conditions are met and irreversible, in the near future, the liquidation mechanism on compound is misleading, because the exchange is inaccurate about the currency price, and the smart contract will automatically liquidate the borrower's collateral, resulting in a total of about 90 million US dollars of collateral being wrongly liquidated, if there is a loophole in some places, the hacker can still find an opportunity to mislead the smart contract, and then his advantages become disadvantages. The contract was executed in full and irreversibly according to the error message.

OK Blockchain 60 Lectures is a blockchain science popularization animation jointly produced by OKEX Sina Technology, aiming at blockchain zero-based users from the perspective of empty concept, technology, application, etc., vividly popularizing the concept of blockchain. The content of this episode is guided by a black tutor in charge of Bitpie China.