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Beginner’s Guide: What Are Smart Contracts and How Do They Work?

What is a smart contract?

A smart contract is a computerized protocol for the digital facilitation, verification, and enforcement of the performance or negotiation of a contract. The smart contract permits the performance of transactions without the involvement of third parties.

How does the smart contract work?

The smart contract is a legal agreement between two parties in the form of codes. It runs on Blockchain technology and is stored in a public database. The smart contract transactions do not require a third party for the success of transactions.

What can a smart contract do?

  • The smart contract manages agreements between the users
  • It is a multi-signature account that enables the utilization of funds only upon the agreement of multiple users.
  • It holds important information like membership records and domain registration details about the applications.
  • It offers utility to different contracts.

What are RSK smart contracts?

RSK (Rootstock) is a platform of smart contracts that is secured by the high-powered Bitcoin network. The platform incorporates the Turing Complete Virtual Machine into Bitcoin. The RSK smart contract enables improved scalability and faster transactions. RSK functions as a Bitcoin Sidechain. The transfer of BTC into the RSK Blockchain converts the BTC into SBTC. Miners on the RSK sidechain receive SBTC as a reward for contract and transaction processing.  

Does Bitcoin have smart contracts?

As per CryptoMoonPress, Bitcoin does not have the supporting features for Bitcoin smart contracts. It is cumbersome to execute simple contracts as well on Bitcoin. And so, developers are working on the creation of a different Blockchain such as Ethereum for the performance of smart contracts.

Does Ethereum support smart contracts?

The decentralized platform of Ethereum supports the complex features of smart contracts. The smart contracts operate on the Ethereum Virtual Machine, which is a distributed computerized network of Ethereum nodes. Currently, there are 1,000,000 smart contracts on the platform of Ethereum.

Can you write smart contracts with Bitcoin?

Although the Blockchain of Bitcoin does not support the complexity of smart contracts, yet developers are striving hard to employ the protocol of Bitcoin for the creation of Bitcoin smart contracts. The evolution and development of the Bitcoin protocol have made it possible to write Bitcoin smart contracts. However, the Bitcoin smart contract is not as extensible and programmable in comparison to Ethereum. And so, the developers are adding a handful of features to Bitcoin through the improvement proposals. These additional features enable Bitcoin scripting for the creation of Bitcoin smart contracts.

Which Blockchains support smart contracts?

There are quite a few Blockchains which offer support to the negotiation and performance of smart contracts. The following Blockchain-based platform provides the best features for smart contracts:

  1. Hyperledger Fabric

The Linux Foundation hosts global collaboration and open-source Hyperledger. It is an outstanding platform for the creation of smart contracts. The Hyperledger fabric enables the execution of chain code or smart contract, as it I a permission Blockchain, co-developed by IBM.

  1. NEM

NEM is the peer-to-peer Blockchain and cryptocurrency platform. The recent Mijin v.2 upgrade by NEM has rendered the platform the most secure foundation for the creation of smart contracts. NEM can process a hundred transactions per second, and it is highly scalable too.

  1. Waves

The open-source platform of Waves focuses on the development of scalability and speed of the Blockchain. On the platform, the smart contracts work on modifying the default behavior of assets and accounts.

  1. Ethereum

The decentralized Ethereum Virtual Machine can execute scripts with the help of the global network of public nodes. It is very safe and easy to develop smart contracts on the platform of Ethereum. The platform has its programming language for the development of smart contracts, which is Solidity.

  1. NEO

NEO is one of the most renowned Blockchain projects and one of the best smart contract platforms in Asia. The platform enables the execution of trust-less smart contracts. It provides support to ordinary financial transactions as well as intricate transactions.

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