Imagine you want to sell a property to a friend. Typically, you would involve a government agency to draft a contract. Once you and your friend reach an agreement, the property is officially sold. In this scenario, the government handles the record-keeping.
Traditional contracts often require a third party, such as lawyers or government officials, to facilitate and validate the agreement. Smart contracts, on the other hand, eliminate the need for such intermediaries.
A smart contract is a computer program that runs on a blockchain. It can be thought of as a secure stored procedure because its execution and outcomes cannot be altered.
Writing a Smart Contract
Smart contracts are typically written in programming languages like Solidity, though platforms like Agoric now allow writing smart contracts in JavaScript. A smart contract is essentially a piece of code that defines conditions and rules for automatic transactions on the blockchain. When writing the contract, you set its initial state and specify the functions it will perform.
Testing the Smart Contract
Testing smart contracts is crucial because they often handle financial transactions. Ensuring that all edge cases are covered is essential to write reliable smart contracts. Since transactions on the blockchain are irreversible, there is no room for error.
Deploying the Smart Contract
After writing and testing the smart contract, the next step is deployment. Deploying a smart contract involves adding it to the blockchain, which creates a new block containing the initial state of the contract. Once deployed, any changes to the contract’s state will be recorded in subsequent blocks. This process underscores the blockchain’s nature as a state machine, where each block represents a new state.
Interacting with the Smart Contract
Once the smart contract is deployed, you can interact with it using a web3 interface or a frontend application. To interact with the contract, you’ll need its ABI (Application Binary Interface) and contract address. The ABI defines the contract’s available functions and events, while the contract address tells where to find the deployed contract on the blockchain.