What is Smart contract in the blockchain technology?

The popularity of Smart contracts is growing,but what are smart contracts and why are they important? The concept of a smart contract was first introduced by Nick Sabo in 1997—long before the creation of Bitcoin. He's a computer scientist, lawyer & cryptographer so I won't quote him directly, but in simple terms, he wanted to use a distributed Ledger to store contracts.

Now, A smart contract is like a traditional contract, and has all of the same obligations. The only difference is that these contracts exist on the Blockchain. So if you want to say "I will pay you $100", and then you can create a smart contract that says that whenever I pay you $100, then give me back $20 worth of Bitcoin. And then later on tomorrow when you get $20 worth of Bitcoin from me, it will automatically send back $20 worth of Ethereum or whatever your currency is based on.

So this allows us to have automatic payment without having to trust someone else because once these contracts are created and verified through digital signatures or whatever method it may be for your currency, then everyone can see that this transaction has taken place between two parties who agreed upon this transaction through their digital signature or whatever method

 Both the product team and its supporters have to trust Kickstarter, but with smart contracts we can build a similar system that doesn't require a third party like Kickstarter.

 So let's create a smart contract for this. We can program the smart contract so that it holds all the received funds until a certain goal is reached. The supporters of a project can now transfer their money to the smart contract. If the project gets fully funded, the contract automatically passes the money to the creator of the project. And if the project fails to meet these goals, then the money automatically goes back to the supporters. Pretty awesome, right? And because smart contracts are stored inside a blockchain, everything is completely distributed with this technique. No one is in control of the money. 

But wait a minute, why should we trust the smart contract? While because smart contracts are stored on a blockchain, they inherit some interesting properties, they are immutable and they are distributed. Being immutable means that once a smart contract is created, it can never be changed again, so no one can go behind your back and tamper with the code of your contract. And being distributed means that the output of your contract is validated by everyone on the network. So a single person cannot force the contract to release the funds because other people on the network will spot this attempt and mark it as invalid. Tampering with smart contracts becomes almost impossible.

 Smart contracts can be applied to many different things, not just on crowdfunding. Banks, for example, could use it to issue loans or to offer automatic payments. Insurance companies could use it to process certain claims, and postal companies could use it for payment on delivery. And so on and so on. So now you might wonder, where and how can I use smart contracts? Well, right now there are a handful of blockchains who support smart contracts, but the biggest one is Ethereum. It was specifically created and designed to support smart contracts. Smart contracts can be programmed in a special programming language called Solidity. This language was specifically created for Ethereum and uses a syntax that resembles JavaScript. It's also worth noting that Bitcoin also has support for smart contracts, although it's a lot more limited compared to its theory.

The major benefits of using smart contracts include:

- Automation: Smart contracts can automate the flow of money from one party to another without any need for human intervention or oversight. This helps cut down on administrative costs and streamlines processes by eliminating human error from the equation.

- Security: By writing code into a smart contract, you can ensure that it cannot be tampered with once it has been deployed on the blockchain so there’s no room for errors or accidents

So now you know what smart contracts are and what problems they solve. I hope you enjoyed this blog.