What is Ethereum And Smart Contracts?
You will understand Ethereum in simple language in the guide below.
What is Ethereum?
Ethereum is the second-largest cryptocurrency in the world in terms of market capitalization, behind Bitcoin but way ahead of the competition.
Ethereum is a decentralized open-source blockchain platform.
Ether (ETH) is the trading currency of ethereum. However, it is still referred to as Ethereum in many cryptocurrency exchanges.
18 million ETH are mined every year.
Its price lies in the range of $300 – $400 with an all-time high of $1440.
Ethereum, along with currency, also offers smart contracts on the network.
Types Of Ethereum Accounts
- EOAs (Externally owned accounts)
- Contract Accounts
Externally owned accounts are owned by users in external applications such as web wallets.
EOAs are simple accounts that can be used like any other cryptocurrency accounts.
Contract accounts are controlled by programming codes.
They are commonly called Smart Contracts.
What Are Smart Contracts ?
They are agreements made by programming code between two parties that run on the decentralized platform.
Smart contracts are simply the terms and conditions put on ether. Once the conditions are met, the payment is sent automatically to the recipient.
Smart contracts run on the EVM (Ethereum Virtual Machine).
Smart contracts can act as legal documents and can be used for the exchange of currency, property, or anything of monetary value.
You can even code a smart contract for another smart contract.
The contract can’t be altered once it is executed.
Ether tokens are paid to the miners who give their computational power to run these contracts.
Who Can Make Smart Contracts ?
They can be made by ethereum developers or by someone who has a sound knowledge of solidity semantics and ethereum in general.
You can use already made contracts but I advise you to hire an ethereum developer for the contract so that it is made accurately.
Why Use Ethereum Smart Contracts ?
- Contracts are encrypted and listed on publicly accessible decentralized platform
- It can be used as a traditional legal document between two parties
- No intermediary required
- Smart contracts work precisely on conditions it is made upon
- They are also very secure
Where Can I Use Smart Contracts ?
Sectors / Industries where smart contracts can be used –
- Real Estate
- Business and employment management
- Copyright protection
Ethereum and smart contracts are revolutionizing the way contracts are executed.
The benefits of smart contracts are much more than traditional ones.
It does not require any governing authority or intermediary and it is also cheap, safe, and secure.
If you have any questions, ask me in the comments below.
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