Ethereum is an open source, public, blockchain based distributed computing platform featuring smart contracts. It was created by Vitalik Buterin, a Russian computer scientist and cryptocurrency developer, in 2013. Ethereum has become one of the most popular cryptocurrencies because it has a high level of functionality and it has a large community of developers who are constantly adding to its features.
There are two main components of Ethereum: the protocol and the software. The protocol defines the rules for transactions to be executed on the network. The software provides the tools to write smart contracts.
Smart Contracts
Smart contracts are self-executing computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or a set of related contracts. A smart contract is a set of instructions written in a programming language which can be used to automate the negotiation or performance of a contractual agreement. Smart contracts can be thought of as computer programs running on a blockchain. They can be programmed in any programming language and they are not limited to specific blockchains.
How do Smart Contracts work?
The process of creating a smart contract starts with writing a program in a programming language. Once the program is written, the code is then converted into a binary executable form. The next step is to put the program onto the blockchain. Once the program is put on the blockchain, the program becomes a smart contract. When the contract is executed, the program performs the task defined in the contract.
The benefits of using smart contracts
Smart contracts allow users to create decentralized applications (dApps) without having to rely on a third party. This means that dApps created using smart contracts are not controlled by a single entity. The user is in full control of the application and can change the terms of the contract if they want to. Smart contracts also eliminate the need for middlemen. Users don’t have to pay a third party to perform a service; instead, they can pay each other directly.
A few examples of smart contracts
There are many different types of smart contracts. Some examples include: