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Though this overview is largely about Ethereum, practically all the concepts apply to smart-contract enabled blockchains!
Smart contracts are the primary reason that the field of blockchain development exists.
Ethereum's core innovation in 2013 was to allow developers to write small chunks of code, known as smart contracts, that could be deployed to the Ethereum network to run independently of their creators. In Ethereum, smart contracts are written in Solidity, a high-level programming language designed to run on the Ethereum Virtual Machine.
A smart contract is a program that defines a set of rules, or "contract" that automatically executes the encoded rules when called by a user on the blockchain. In particular, once a smart contract is deployed, it will always function identically - it cannot be modified or taken control of by a bad actor.
As a result, smart contracts are ideal candidates to run financial applications - they can receive or send cryptocurrencies as independent actors in a guaranteed, repeatable fashion.
Okay, but what are some real-world examples of tools that can be replaced by smart contracts?
And many, many more. In fact, we're likely still just scratching the surface of what systems can be eventually redesigned with blockchain.
What traits give smart contracts the ability to revolutionize or replace existing technical models? Unlike traditional programming languages, smart contracts have the following properties:
Once deployed, these smart contracts behave as independent actors that are fully transparent but can contain complex logic. Therefore, instead of only human users owning accounts on Ethereum, there are two types of accounts:
Impressively enough, these two types of accounts can do basically the same things! Both of these account types can:
However, there are a few limitations of contract accounts:
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