A Blockchain Smartcontract is just a digital contract that has blockchain security code. It contains certain instructions and permissions defined in code that need to happen in a specific order in order to for the smart contract's terms to be accepted.
In the contract, deadlines may be included due to time restrictions. Every smart contract has a blockchain address. The contract may be interacted with by using its address provided the contract has been broadcasted on the network.
Idea behind smart contracts:
Logic of the Blockchain Smartcontract is pretty simple. They are executed on a basis of simple programming logic, IF-THEN condition.
Example:
- IF you send object A, THEN the sum (of money, in cryptocurrency) will be transferred to you.
- IF you transfer a certain amount of digital assets (cryptocurrency, for example, ether, bitcoin), THEN the A object will be transferred to you.
- IF I finish the work, THEN the digital assets mentioned in the contract will be transferred to me.
Note: The WHEN constraint can be added to include the time factor in the smart contracts. It can be seen that these smart contracts help set conditions that have to be fulfilled for the terms of the contract agreement to be executed. There is no limit on how much IF or THEN you can include in your intelligent contract. [0]
Operation of a blockchain smartcontract:
Predefined Contract: Multiple parties identify the cooperative opportunity and desired outcomes and agreements could include business processes, asset swaps, etc.
Events:
Set conditions: Smart contracts could be initiated by parties themselves or when certain conditions are met like financial market indices, events like GPS locations, etc.
Code business logic: A computer program is written that will be executed automatically when the conditional parameters are met.
Encryption and blockchain technology: Encryption provides secure authentication and transfer of messages between parties relating to smart contracts.
Execution and Settlement: In blockchain iteration, whenever consensus is reached between the parties regarding authentication and verification then the code is executed and the outcomes are memorialized for compliance and verification.
Blockchain updates: After smart contracts are executed, all the nodes on the network update their digital ledger to reflect the new state. Once the record is posted and verified on the blockchain network, it cannot be modified, it is in append mode only.
Cited Source:
[0] - https://www.geeksforgeeks.org/smart-contracts-in-blockchain/
