Created in 1993, the idea of smart contract is described by cryptographer Nick Szabo. He explained Ethereum smart contracts as digital vending machine. By making use of smart contract, Ethereum users can send 10 Ethers to receivers.
Firstly, Bitcoin supported smart contracts and it can help in transferring the value in between two users with no involvement of third party, whether it is government or central bank. The nodes will confirm the transactions on the network only when certain terms are met. However, Bitcoin focused only on becoming a payment mode.
Therefore, Ethereum became more competitive and replaced Bitcoin with a scripting language, known as ‘Turing-complete’. This language helps developers or programmers to develop their own business models or programs. It favors a wide set of computational instructions.
Ethereum smart contracts can do multiple things, such as –
• Manage the agreements in between two users • Works as ‘multi-signature’ accounts • Provides utility to different contracts • Records information of the application like membership records and information of domain registration
Running a smart contract needs Ether transaction fees and that depends on the computational power amount. Ethereum works on smart contract code, when a contract or users send the message to it with transaction fees. Post that, Ethereum Virtual Machine implement ‘bytecode’ (a series of zeroes and ones) as smart contracts that can be interpreted and read by the Ethereum Network.
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