What are smart contracts in the blockchain system and what is their importance for digital currencies?

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18 Nov, 2022

 What are smart contracts in the blockchain system and what is their importance for digital currencies?



1. What are smart contracts?

 2. How and when did smart contracts originate? 

3. The most prominent smart contract applications

 4. What are the most prominent smart contract platforms?



1. What are smart contracts?

Smart contracts are defined as programs stored on the blockchain, and operate according to their instructions when they are stimulated by another activity on the blockchain, and can be considered as implementation mechanism agreements between the various participating parties, including users, without the need for an intermediary to ensure the implementation of the agreement, as it automatically By taking the necessary step when certain conditions are met.


 2. How and when did smart contracts originate? 

Smart contracts are not a recent idea, as a design for them appeared in the work of Nick Szabo, a computer scientist, and cryptographer, during his graduation from the University of Washington in 1989 AD. The relationships that these institutions consist of, through a digital revolution, and I call these new contracts “smart” because they are more useful than their rigid paper predecessors. Digital allows smart contracts on the blockchain, and it provides two types of accounts, the first type is privately owned accounts, which are traditional addresses with a private key managed by users, and the second type is smart contract accounts, Which are accounts managed according to the rules written in them, and they have some characteristics of special accounts, such as their ability to receive and send digital currencies. Since that time, many digital currencies have appeared that allow the downloading of smart contracts on the blockchain, such as Solana, Polkadot, and Cardano.

3. The most prominent smart contract applications

They are applications that are loaded on the blockchain and are managed automatically through severalsendsseveral sends instructions placed within smart contracts.[4] Usually, the mother blockchain wallet receptors send and store tokens. [5] Web3 can be described as the Internet within the Internet and relies on decentralized applications to enable users to benefit from the Internet and obtain various services without the need to provide their data. Non-Fungible Tokens or NFTs are tokens that each have a distinct identity, and are used to sell artwork and preserve property rights.[7]



 4. What are the most prominent smart contract platforms?

Smart contracts can be taken advantage of and used across certain platforms, the most important of which are the following: Ethereum, which is the largest blockchain in the world of smart contracts in terms of several variables, such as the size of the total value locked (TVL) and the number of decentralized applications and smart contracts based on them, and this has led to high mining wages known as Fuel in Ethereum Due to the number of transactions that take place on the blockchain, many cryptocurrencies rely on the Ethereum blockchain, most notably Tether (USDT), Chainlink (LINK), Maker (MKR) and Chiba Inu (SHIB). Solana has tried to solve the speed and scalability problems of Ethereum and Bitcoin, launched in 2020l, and today more than 50 thousand transactions are taking place on it daily, taking advantage of the speed of creating blocks and thus certifying transactions, on which several decentralized applications and prominent currencies depend. It is based on Proof of Stake (PoS) mining and hosts many decentralized applications, and is focused on sustainability, scalability, and transparency.[8]

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