What are smart contracts and how they relate to blockchain technology?

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mart contracts are kind of self executing contracts where the terms and conditions are defined and enforced using software. Smart contracts are generally stored and secured using blockchain technology.
In other words, a smart contract or a crypto contract is a computer program that executes when a set of conditions defined by the creator of the contract are met.
It is smart, because the software is doing it automatically as the conditions are met.
It is called “crypto” contract as a lot of events are based on the principles of cryptography.
The benefit of this contract is that technologies like blockchain and cryptography ensure the execution of a peer-to-peer contract without needing to involve lawyers and trust as third-parties (these contractss are trustless peer-to-peer contracts).
It can be said that Bitcoin’s whole system of transactions is composed of blockchain-based smart contracts. Actually, it can be said that all cryptocurrencies are smart contract-based. However, the term comes with the Ethereum network (as it’s a software platform focused on hosting smart contracts and decentralized applications on a blockchain).
We should notice that smart contracts don’t have to work in isolation, many smart contracts can work in tandem to create a complex system.
The potential of them goes far beyond just facilitating transactions. Smart contracts can really do whatever one can imagine a software-based contract is doing, such as interacting with decentralized applications.
This is different than a real life contract where the parties who signed the contract (or a third party) have to execute and enforce the contract. It’s more like software-based conditional “if…then” commands and it is enforced by codes.
Moreover, a smart contract is more flexible than a real contract, since it can do anything a real contract can do and anything a computer script can do.
As said, their based platforms, like Ethereum, use smart contracts and blockchain technology and allow anybody to create a trustless smart contract for any reason.
An important thing that is commonly done with Etherum’s network is ICOs (specifically the pre-sale of tokens and the distribution of tokens).
Using it, Ether can be collected and a new token can be distributed to cryptocurrency wallets globally based on the terms of the contract.
It might feel scary to give some company your Ether in the hope of getting tokens back if it weren’t for some assurance. The smart contract is that assurance.
Like with cryptocurrency transactions, these transactions leverage a technology that replaces the need for trust. Thus, the existence of smart contracts are big steps for trustless peer-to-peer contracts that leverages the technology behind Bitcoin and other cryptocurrencies to do much more than just facilitate transactions.
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