What is a Smart Contract and What Does It Do?
Today, technological advancements are no longer followed only by those working in the tech industry. To keep up with the times, it is essential to follow innovations in business life as well. One of the most popular concepts currently is Smart Contracts. Let’s explore the historical development of smart contracts and where we stand today. A smart contract is a digital code provider that allows people to achieve their goals without third-party intervention.
The History of Smart Contracts
The term "Smart Contract" was first introduced by computer scientist Nick Szabo in early 1994. The historical development of smart contracts, which can be described as self-executing protocols without human intervention, gained momentum with the introduction of Bitcoin, the well-known cryptocurrency, in 2009. Ethereum, developed by Vitalik Buterin as a next-generation blockchain in 2013, expanded the use of contracts, which had been a staple of commerce for years, into many fields, including e-commerce, thanks to modern technological opportunities.
A smart contract can typically be defined as a digitalized form of software-supported protocols that aim to trigger contract terms using blockchain technology. Simply put, specific contracts traditionally prepared on paper and then mass-produced are now transmitted and recorded as encrypted data on a shared ledger system called the blockchain, offering much greater security.
What is a Smart Contract?
Like all other contracts, a smart contract defines the terms of an agreement or contract. Smart contracts allow collaboration between parties through the exchange of assets within a set of legal and technical rules. What makes them unique is that instead of being written on paper at a lawyer's desk, they are executed as codes running on a blockchain. While Bitcoin enables money transfers without the need for a trusted financial institution, smart contracts take this a step further by enabling transfer transactions bound to more complex agreements with conditions and terms. These contracts are immutable, meaning no one can change them without permission, ensuring that the parties' expectations are met from the start.
Smart contracts are electronic agreements that use blockchain to execute their terms. They offer an efficient and consistent solution for secure transactions or agreements.
In the context of smart contracts, nodes can be used to facilitate secure traffic between public and private networks, preventing data from being monitored by others. As long as both parties approve, blockchain allows transactions and agreements to be carried out securely.
What Are the Functions of Smart Contracts?
Smart contracts are custom software products for everyone. They enable developers to create many decentralized applications. In addition to bringing fundamental changes to finance and financial instruments, smart contracts are used in areas like logistics and gaming. Often known as “Decentralized Applications” (DApps), these solutions offer significant transformation opportunities for the banking sector, allowing users to perform transactions like insurance, loans, and investments from anywhere in the world without paying transaction fees.
In addition to payment and transfer processes, smart contracts can be used for trading transactions, where decentralized applications can find the best exchange rate and complete the trade, providing one of the current examples of smart contracts.
What Are Smart Contract Coins?
2022 was a major year for smart contract cryptocurrencies. All the big trends of 2022—ranging from the metaverse to gaming tokens, decentralized finance (DeFi), and Web3 applications—were built on smart contract platforms.
The cryptocurrencies of networks that enable smart contract creation are known as smart contract coins. Ethereum (ETH), Binance Coin (BNB), Algorand (ALGO), and Polygon (MATIC) are prominent smart contract coins.
Semosis and Smart Contracts
Semosis, which allows promissory note payments to be made without visiting a bank or carrying cash, follows technological advancements and will soon implement a system where promissory notes can be created without a wet signature through smart contracts.
With Semosis, a smart contract technology, debtors will no longer need to print and sign the promissory notes they create. Debtors can make payments securely and quickly without visiting bank branches or carrying cash. Service providers offering products with deferred payments via promissory notes will benefit from a new payment method through Semosis, enabling secure and measurable agreements. By eliminating the need for paper in promissory note payments, Semosis provides a much easier way to create, manage, transfer, and collect promissory notes with more secure and trackable methods.