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Smart Contracts in Blockchain Explained | Guide to Understanding DeFi Smart Contracts

Nov. 5, 2022

Smart Contracts in Blockchain Explained | Guide to Understanding DeFi Smart Contracts

Watch this blockchain smart contracts guide to get a complete and thorough understanding of how blockchain smart contracts work, why are they used, and who controls them. Vince Wicker from https://SocialBees.io explains in simple an extremely simple to understand format that will make you more knowledgeable about how decentralized finance smart contracts work.

Smart contracts are self-executing contracts containing the terms and conditions of an agreement among peers. The smart contract executes on the Ethereum blockchain's decentralized platform. The agreements facilitate the exchange of money, shares, property, or any asset.

Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met.

Smart contracts work by following simple “if/when…then…” statements that are written into code on a blockchain. A network of computers executes the actions when predetermined conditions have been met and verified. These actions could include releasing funds to the appropriate parties, registering a vehicle, sending notifications, or issuing a ticket. The blockchain is then updated when the transaction is completed. That means the transaction cannot be changed, and only parties who have been granted permission can see the results.

Within a smart contract, there can be as many stipulations as needed to satisfy the participants that the task will be completed satisfactorily. To establish the terms, participants must determine how transactions and their data are represented on the blockchain, agree on the “if/when...then…” rules that govern those transactions, explore all possible exceptions, and define a framework for resolving disputes.

Then the smart contract can be programmed by a developer – although increasingly, organizations that use blockchain for business provide templates, web interfaces, and other online tools to simplify

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