Smart Contract Development tutorial for beginners
Ethereum has captured the cryptocurrency market like crazy with its market cap soaring over $70 billion. Apart from being a cryptocurrency, Ethereum provides a platform for building decentralized apps (dApps) to implement business logic & applications. No wonder why everybody in the crypto space are turning towards Ethereum for building their Blockchain based apps.
The foundation of Ethereum blockchain upon which it stands firmly is however, the smart contracts. Smart Contract development is an integral part of Ethereum, rather any blockchain in general.
But what are these smart contracts and what is their purpose? In this article, we will read in depth about the need for smart contracts and why smart contract development is essential.
Before proceeding to know why there is a need for smart contract development, let us first understand what exactly is a smart contract and how do smart contracts work?
“A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.”
-On a higher level, Smart contract is an agreement between two parties that enforces certain rules or terms of negotiation when a certain condition is met.
-Similarly, in computer language, smart contracts are software programs that contain codes that apply business logic to impose terms of agreement between the involved parties.
-Stored on the Ethereum blockchain(or any blockchain), smart contracts are self-executing programs that are triggered automatically when certain pre-composed conditions are met.
The smart contract development process has been introduced to facilitate the execution of terms of agreements between negotiating parties in the form of a software program.
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To understand the working of smart contracts, let us consider a simple but regular scenario for any business i.e. running the payroll cycle every month to distribute salary to employees. Since ages, this task has been executed manually with staff employed to process salaries, taking into account holidays and leaves, computing tax cuts, maintaining a ledger to register these entries, make necessary calculations etc. This, of course, is a redundant task that happens every month and involves a lot of manpower, time and effort. Businesses spend volumes of money to appoint people carrying out this task and as they say ‘To err is human’, humans are bound to make errors or mistakes. What if this task was automated using smart contract development?
A smart contract development for generating and processing payrolls for business is definitely the solution over here. Let us see how. Smart contracts basically run on the “if..then” principle. A smart contract that is programmed to execute on every 28th of the month is created. The smart contract contains code that enforces the business to transfer the salary amount to say person ‘A’s account. Similarly, codes for each and every employee is contained by the smart contract. Business logic for deducting amounts for holidays, tax cuts etc are all programmed in the smart contract. Once the system clocks 28th of every month, the smart contract is triggered automatically and the payroll cycle is processed. No manual staff, no extra efforts and within a matter of seconds! Needless to mention, no forging of data and no errors!
This of course, is a very basic application of smart contract development. Smart contracts can be used for possibly any business transaction to implement trading of cryptocurrency between clients, transfer of digital assets, managing tokenized assets etc in the crypto space. The smart contract development application not only benefits the finance sector but can be extended to any sector be it government, healthcare, insurance and even . The possibilities are endless.
Since Blockchain is the underlying technology of smart contract development, smart contracts exhibit all the features that Blockchain possesses.
Trust & Transparency
Smart contract development starts with both the parties agreeing to every condition mentioned in the smart contracts that is triggered at some point. Once smart contracts are implemented, there is no way that it can be altered or manipulated by anyone since it resides on the Blockchain. Due to Blockchain’s immutability & transparency, data once stored cannot be tampered with by anyone at any point throughout the life of the application. Hence, a smart contract is always trustworthy since all the transactions are transparent and every event is recorded on the Blockchain.
Safety & Security
A smart contract development on Blockchain ensures complete security in terms of data protection. Blockchain’s cryptography mechanisms store the data in encrypted format which makes it impossible to hack or manipulate with. Since data is distributed over the Blockchain, it’s practically inconceivable for any hacker to hack.
Decentralization & Independence
The independence of any manual intermediary or third party authority is what makes smart contract development necessary. While Blockchain assures decentralization, smart contracts eliminate manual intervention by automating redundant and complex processes, thus getting rid of manual errors and mistakes.
Speed & Efficiency
Smart contracts are automated and significantly reduce manual efforts and time involved in processing transactions. This automatically enhances system performance and efficiency which is why a smart contract development is essential.
Go through this guide on smart contract development on Ethereum to know more about it in depth.
Now that we know why a smart contract development is needed, hire a smart contract development company like Blockchain Simplified to assist you with your smart contract and Blockchain related requirements. To know more about Blockchain simplified, read below or visit https://blockchainsimplified.com
Blockchain Simplified is a Top blockchain development company in Pune - India which works on all major Blockchain requirements. We specialise in Blockchain, Web and Mobile development (One Stop Shop for all technology development needs).
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Multinational Bank - The company helped one of the top 3 ranking Multinational Banks to integrate various cryptocurrencies into their banking application.
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