With the ongoing advancements in science and technology, how to write smart contracts has become a hot topic. In the world of cryptocurrencies, we may define a smart contractas an application or program that runs on a blockchain. Typically, they work as a digital agreement that is enforced by a specific set of rules. These rules are predefined by computer code, which is replicated and executed by all network nodes.
Blockchain smart contracts allow for the creation of trustless protocols. This means that two parties can make commitments via blockchain, without having to know or trust each other. They can be sure that if the conditions aren't fulfilled, the contract won't be executed. In this article, we’ll discuss how to write smart contract and how to interact with it.
How to write smart contracts
Once an ETHereum smart contract is in use, new functionalities cannot be added. However, if its creator includes a function called SELFDESTRUCT in the code, they are able to "delete" the smart contract in the future - and replace it with a new one. In contrast, though, if the function isn't included in the code beforehand, they won't be able to delete it.
Notably, the so-called upgradeable smart contracts allow developers to have more flexibility over contracts' immutability. There are many ways to create upgradeable smart contracts, with varying degrees of complexity.
Key features
An ETHereum smart contract often presents the following characteristics:
Distributed. Smart contracts are replicated and distributed in all nodes of the ETHereum network. One of the key distinctions between this and other centralized server-based solutions is this.
Deterministic. Smart contracts only perform the actions they were designed to, given the requirements are met. Furthermore, no matter who carries them out, the result will always be the same.
Autonomous. All kinds of jobs can be automated using smart contracts, which operate like self-executing software. A smart contract will remain "dormant" and take no further action if it is not activated.
Immutable. After being deployed, smart contracts cannot be modified. They can only be "deleted" if a particular function was previously implemented. Therefore, we may say that smart contracts can provide tamper-proof code.
Customizable. Before deployment, smart contracts can be coded in many different ways. Consequently, they can be applied to create many types of decentralized applications (DApps). This is related to the fact that ETHereum is a Turing completeblockchain.
Trustless. Two or more parties can interact via smart contracts without knowing or trusting each other. Additionally, blockchain technology guarantees a correct data.
Transparent. Since smart contracts are based on a public blocchain, their source code is not only immutable but also visible to anyone.
How do they work?
A smart contract works as a deterministic program. It performs a certain task when and if a set of requirements are met. As a result, a smart contract system often follows "if… then…" statements.
On the ETHereum network, smart contracts are responsible for executing and managing the blockchain operations that take place when users (addresses) interact with each other. Any address that is not a smart contract is called an externally owned account (EOA). EOAs are governed by users, whereas smart contracts are controlled by computer code.
Basically, ETHereum smart contracts are made of a contract code and two public keys. The first public key is the one provided by the creator of the contract. The other key represents the contract itself, acting as a digital identifier that is unique to each smart contract. The deployment of any smart contract is made through a blockchain transaction, and they can only be activated when called by an EOA (or by other smart contracts). However, the first trigger is always caused by an EOA (user).
Advantages and Examples of Use
As programmable code, smart contracts are highly customizable and can be designed in many different ways, offering a wide range of services and solutions.
As decentralized and self-executing programs, smart contracts may provide increased transparency and lower operational costs.
Smart contracts are highly useful in situations that involve the transfer or exchange of funds between two or more parties.
Smart contracts can be designed for a wide variety of use cases. Some examples include the creation of tokenized assets, voting systems, crypto wallets, decentralized exchanges, games, and mobile applications.
Limitations
Smart contracts are made of computer code written by humans. This brings numerous risks as the code is subject to vulnerabilities and bugs. Ideally, they should be written and deployed by experienced programmers, especially when involving sensitive information or large amounts of money.
Another limitation of smart contracts is related to their uncertain legal status. Not only because it's in a grey area in most countries, but also because smart contracts don't suit the existing legal framework.
Criticism
Some blockchain enthusiasts see smart contracts as a solution that will eventually replace and automate a significant proportion of our commercial, and bureaucratic systems. Although this is a possible reality, it's probably far from becoming the norm.
Smart contracts are undoubtedly an interesting piece of technology. However, being distributed, deterministic, transparent, and somewhat immutable can make them less appealing in some situations.
Closing thoughts
We’ve discussed how to write smart contracts and how to interact with them. Without a doubt, smart contracts had a significant impact on the cryptocurrency industry and revolutionized the blockchain space. While smart contracts may not be directly used by end-users, they are likely to power a wide range of applications in the future, ranging from financial services to supply chain management.
