How does a smart contract work? And in what cases can it be used?

Why do we need to know more about smart contracts?

It’s 2021 – even those unfamiliar with blockchain have probably heard of Atrium. Atrium is the second most cryptocurrency with more than $ 44 billion in total market value. To fully understand Atrium , one must understand what a smart contract is.

Atrium is not just a currency. Atrium is actually a platform that allows other blockchain applications to be built on it. The Atrium operating system uses a currency called Ether, which is used to pay for transactions.

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Atrium Blockchain works like Bitcoin Blockchain. A network of computers (or nodes) run software that verifies transactions on the network.

Ether works like a fuel rather than a regular cryptocurrency. Just as you need gasoline or diesel for your car, you also need Ether to execute smart contracts and applications in the Atrium blockchain.

As Atrium grows in popularity (as evidenced by any digital currency exchange platform), the question is, “What is a smart contract?” It has recently become one of the most frequently asked questions in cryptography.

Note: If you happen to have large amounts of ETH coins, you need to make sure you keep them in encrypted currency wallets. Suggested options include Ledger Nano S, Coinbase and Trezor Model T.

However, if you do not already have it and want to buy it, it is recommended that you do so through Simplex – a fast and secure way to buy cryptocurrencies with your credit card.

So, what is a smart contract? Well, let’s take a deeper look.

General introduction of smart contract

The purpose of this guide is to help you understand what a smart contract is and how smart contracts work.

We know that “smart contracts” seem confusing at first. We believe that when we explain them, they are simpler than you think.

At the end of this article, you will find out how and why smart contracts started, what code they use, how it can be used, and why it can change society forever!

Before we get into more technical issues, it is important to talk about the history of smart contracts. Knowing why and how to create smart contracts makes it easy to understand its goals in the blockchain world.

When were smart contracts invented?

In 1994, Nick Sabo (a cryptographer) came up with the idea that he could create contracts in the form of computer code. This contract will be activated automatically if certain conditions are met. This idea could potentially address the need for trusted third-party companies (such as banks).

But why? The answer is simple – because you no longer need a trusted third party when making a transaction. Instead, contracts (or transactions) run automatically on a trusted network that is completely controlled by computers.

That’s an interesting idea, right? Sabo worked on the idea for years and even wrote a book called Smart Contracts: Creating Blocks for Free Digital Markets . The problem was that in 1994, there was no blockchain technology.

But now the situation is different!

In 2009, Bitcoin introduced the first use of blockchain technology. In 2015, Atrium was founded by a smart young man named Vitalik Buterin and introduced the first application of smart contracts.

What is a smart contract?

We not only want to teach you what a smart contract is, we actually expect you to remember the information given. So, to do this, we have highlighted three key points that you should read and try to remember what a smart contract is:

A smart contract is an agreement between two people in the form of computer code. They run on blockchain, so they are stored in a public database and cannot be changed.
Transactions that occur in a smart contract are processed by blockchain, meaning that they can be sent automatically without a third party. This means that he is not someone to be trusted!
Transactions are made only if the terms of the agreement are met – there is no third party, so there is no problem with trust.

How does a smart contract work?

Yes, now is the time to address this important question. So how do smart contracts work?

To find the answer, let’s start by looking at how to use a smart contract:

Let’s say John wants to buy Mike’s house. This agreement is formed using a smart contract in the Atrium blockchain. This smart contract contains an agreement between John and Mike.

In the simplest terms, the agreement would be: “ When John pays 300’s to Mike, then John will own the house.”

Once this smart contract is entered into, it cannot be changed. This means that John can feel safe paying Mike 300 ether for the house.

Without using a smart contract in this scenario, Mike and John would have to pay a lot of money to third-party companies. Including a bank, a lawyer and a home broker.

That’s great, right? There are no more commissions and delays waiting for a lawyer and broker to review the agreement! This is just one of the many examples of smart contracts that can be used.

Smart contracts are executed automatically after the terms of the agreement are met. This means that there is no need for a third party such as a bank, broker or government.

How is that possible?

As mentioned earlier, we have blockchain technology that we should be thankful for. Because of blockchain technology, we can decentralize smart contracts to be fair and unreliable. Decentralization means that they are not controlled by a central party (such as a bank, broker or government, etc.).

Blockchain is a shared database that is operated by many computers (called “nodes”) owned by different people. Because of this, no individual or company can control it.

This means that it is almost impossible to hack – if a hacker wants to attack the blockchain or smart contracts on it, he has to hack more than half of the nodes.

Therefore, smart contracts can be executed safely and automatically, without anyone being able to change them! Now you know even more about what a smart contract is!

What are the current smart contracts generally used for?

As we said before, selling Mike and John’s house is not the only scenario in which smart contracts can be used. Smart contracts can be used for any type of transaction – they do not have to be financial.

This is possible for endless smart contracts. They are now used for business and financial services, insurance, credit licenses, legal procedures and even for financing agreements.

Let’s look at how smart contracts have already benefited some industries and what others will benefit others .

Insurance Companies

Two insurance companies, Atlas Insurance in Malta and AXA in France, tested smart contracts in 2017. They tested prototypes of these contracts that would pay fines to airline customers if their customers’ flights were delayed.

Let’s look at an example:

John is about to fly from NYC to Los Angeles. He sends the $ 5 cryptocurrency to Axa Insurance’s smart contract and provides his flight number. Axa also sends $ 95 for a smart contract. So, there is $ 100 in a smart contract.

If the flight is on time, $ 100 of the smart contract will be sent to AXA. But if the plane is late, $ 100 will be sent to John through a smart contract. Everything is automatic.

This saves a lot of time and money. It also means that John does not need to trust that AXA will pay him the agreed amount in the event of a flight delay – he knows that if it’s too late, the smart contract will immediately send him compensation ($ 100).

Health systems

Health systems use smart contracts to securely record and transmit data.

We can already see examples of smart contracts being used in the medical industry by people like EncrypGen. This is an application that uses smart contracts to transfer patient data securely and does not allow access to third parties.

In this way, patients control their information. If researchers want to use patient data, they have to pay for it. Not only that, but the patient has to choose whether to sell it to them or not.

governments

For governments, smart contracts running in the blockchain can make voting systems completely untrustworthy and much more secure.

Apps like FollowMyVote use smart contracts and blockchain technology to protect votes against fraud. When a voting transaction is written in the blockchain, it cannot be changed. When the voting is over, the smart contract sends the token to an address that indicates the winner of the vote.

As such, voting is always fair, meaning that the winner is always right.

business management

Businesses can benefit greatly from smart contracts. They can use smart contracts instead of paying employees to pay salaries.

Businesses can only sign a smart contract that says it will send the 2-ether business to John when a certain date arrives. This means that John always receives his salary on time and will never receive a lower salary.

The benefits for the employer are also due to the fact that everything is automatic and saves their time and money!

ICOs

If you want to start your own project that uses blockchain, as we saw before, you can build your project on Atrium China blockchain. However, you will need some money!

How do you want to get the money you need? Welcome to ICO

ICO (initial coin offering) is a collective investment system for new applications that use blockchain technology. You create a smart contract and a token for that smart contract. Let’s say your currency password is ABC.

You want to save $ 100,000 to start your project and build your program – let’s say $ 100,000 equals $ 10,000 Ether. You decide to contract 100,000 ABC tokens and the value of each ABC code is 0.1 ether.

That way, if you sell all 100,000 ABC tokens, you will have the 10,000 ethers you need.

Now, in the smart contract code, you will write something like this: If 0.1 ETH is sent to the smart contract, then send the smart contract 1 ABC to the address that sent the 0.1 ETH. That way, people who help the ICO always get the right amount of ABC tokens.

Note: It is very important to keep your cryptocurrencies in safe wallets. The best options offered are Ledger Nano S Coinbase and Trezor.

Why do people want to buy an ABC password?

Two common reasons for buying tokens from ICOs :

You can use it when the token is made.
Token prices may increase as the project becomes more popular.

You can consider ICOs as a blockchain version of Kickstarter. The main difference is that it automates the entire bulk sales process in a secure way.

How are smart contracts created?

Smart contracts can be concluded on several blockchain operating systems, including Atrium and NEO. As Atrium is the most popular choice for developers, we tell you about Atrium Smart Contracts.

Intelligent contracts with the main programming language atrium , called Solidity , are created.

If you want to learn Solidity, you can use this link: https://www.bitdegree.org/course/learn-solidity-space-doggos

Result

From the examples we mentioned, you can see that smart contracts have now replaced intermediaries. We also saw the potential of this app for future applications – Remember the sale of John and Mike’s house? They did not need a real estate agency, lawyer or bank. It is true?

So, if smart contracts meet their purpose, we may one day live in a world free of intermediaries.

So what happens?

The best thing about not having an intermediary is the fact that we save a lot of money. Not only that, but we will no longer need to trust anyone.

There is also a potential drawback: people may lose their jobs. He is the mediator of a real person, just like you and me. Why pay an employee to do something he or she can do for free using a smart contract? It certainly does not.

Surely, no one knows what the future holds for them. All we can do is guess and predict, but we must be prepared for all possible consequences.

So, as you can see, smart contracts can make the world a better place for free. This can reduce fraud, latency and the overall cost of many items. However, with further advancement in technology, we are eliminating the need for specific occupations. Now that you have read this guide, you need to answer the golden question, “What is a smart contract?” Feel comfortable.

If, after reading this guide, you decide to buy ETH coins, it is recommended that you do so through Simplex – fraud-free payment processing. Allows you to purchase cryptography with your credit card in a few easy steps.

Also, make sure you choose a trusted encryption wallet such as Ledger Nano S, Coinbase and Trezor.