Smart contracts deployed to blockchains render transactions traceable, transparent, and irreversible.Nick Szabo, an American computer scientist who invented a virtual currency called “Bit Gold” in 1998, 1 defined smart contracts as computerized transaction protocols that execute terms of a contract.
#Defi smart contract code#
Smart contracts are self-executing lines of code with the terms of an agreement between buyer and seller automatically verified and executed via a computer network.OK, so where do smart contracts exist? Where are they executed? And how do they work? Smart contracts both define the rules and penalties around an agreement in the same way that a traditional contract does, and also automatically enforces those obligations. The smart contract does all the work to determine whether the conditions of the order were satisfied. ledger), and your escrow, deed, contract, goods, driver’s licence, or whatever the contract is for, simply drops into your account. With smart contracts, you simply drop a bitcoin into the vending machine (i.e. Only once your lawyer has done the work to ensure everything is executed correctly will you get the document/goods/money, etc. Ordinarily, if you have a complex transaction involving significant money, you would need to go to a lawyer or a notary, have them set up an escrow account, pay them, and wait while they do the work and ensure the contract terms are satisfied. To lay it out in the most simplest way, you can compare smart contracts to a vending machine for complex transactions. A smart contract is a self-executing digital agreement that enables two or more parties to exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the need for a third party.
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