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A smart contract is an automatically executed contract where the terms of the agreement between the buyer and seller are written directly into lines of code.

For example, the ethereum blockchain, which brought the technology into the spotlight, is a collection of code (its function) and data (its state) located at specific addresses on the blockchain.

Known for adding features to the blockchain, here are some of the features of Ether.

  • No licensing: anyone can write a smart contract and deploy it to the network
  • Composability: different smart contracts can interact with each other
  • Immutable: Rules coded into a smart contract cannot be changed once they appear on the blockchain
  • Efficiency and objectivity: as programs, smart contracts are executed in a “told” or peer-programmed manner
  • Distrust: They do not need to appoint a trusted intermediary on both sides to ensure that the terms of the contract are adopted as expected by the parties

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How Smart Contracts Work

Smart contracts work by following simple "if/when…then…" statements that are written into the code on the blockchain. These statements represent conditions and actions to be taken for a given problem.

The computer network performs these operations when predetermined conditions are met and verified. The blockchain is then updated when the transaction is completed.

For example, a smart contract can be programmed to release a new character in a video game once a player reaches a certain milestone. Another example is the release of funds into the wallet once certain conditions are met, etc.

These are just some of the ways smart contract technology is being used in the DeFi and GameFi communities today.

These contracts are also being used for decision making, and DAOs are coding their rules to execute when certain conditions are met – eliminating human interference in the decision making process.

Users need programming skills to write the instructions to execute smart contracts. On Ether, they created Solidity, a simple JavaScript-like language that users can use to build smart contracts.

However, as the blockchain industry evolves, smart contracts are expected to be easier to create, even for non-developers.

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Bitcoin address: 3CW75kjLYu7WpELdaqTv722vbobUswVtxT

ERC20 address: 0xBc11cFa590C6CC465248D77d399C3106B881cC0E

SOL Address: 9cC65AWFHj848kntcoyiT8av3jiRQEqyTTmBR1GvVUb

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