What is a Smart Contract

What is a Smart Contract

SUMMARY KEYWORDS

smart contracts, crypto, blockchain, coins, nick szabo, podcast, computer scientist, execute, ethereum, injective protocol, inj, cardano, ada, eth, ethereum, polkadot, dot, vechain, vet, algorand, algo, chainlink, link, neo, stellar, xlm, zilliqa, zil, avalanche, avax, harmony, one, kardiachain, kai, eos, ethereum classic, internet computer, tron, tezos, celo

00:00

Welcome to the New to Crypto Podcast designed to guide you through the crypto landscape with pinpoint accuracy created for the new and intermediate crypto investor. Join your host Crypto Travels Michael as he takes you through the different facets of getting started and succeeding in your crypto journey. New to Crypto Podcast brings you new episodes daily, Monday through Friday with surprise bonus episodes sometimes on the weekend. Let me ask you, are you new to crypto? Don’t know where to start? Are you more experienced too but have questions? Then you’re in the right place. This podcast is designed for you coming at you from the Trading Center and the Lifestyle Dezign Studio. Here’s your host Crypto Travels Michael.

00:53

Hey, welcome to today’s show. I’m excited about what we’re going to go over today. The podcast was just recently launched. And we already have listeners in 77 cities around the world in 15 countries. And I’m looking forward to the future as we dive into more. So without further ado, let’s jump into today’s podcast. 

01:16

What is a smart contract? smart contracts. It’s a term used to describe computer code that automatically executes all or part of an agreement that is stored on a blockchain based platform. So smart contracts are a critical component of many platforms and applications being built using blockchain or distributed ledger technology. 

01:48

A smart contract is a self executing contract. smart contracts allow trusted transactions and agreements to be carried out with anonymous parties without the need for a central authority. 

02:05

So who created smart contracts? Smart contracts were first created in 1994 by Nick Szabo, an American computer scientist who invented a virtual currency called bit gold, which he did in 1998. Szabo defines smart contracts as computerized transaction protocols that execute terms of a contract. He wanted to extend the functionality of electronic transaction methods, such as point of sale into the digital realm. Szabo was a computer scientist and cryptographer. 

02:45

Szabo uses the quotes around the word smart when comparing smart contracts to paper based contracts. smart contracts may be smarter than paper contracts because they automatically can execute certain pre-program steps. Smart contracts are like regular contracts, except the rules of the contract are enforced in real time on the blockchain, which eliminates the middleman and it adds levels of accountability for all parties involved. This isn’t seen with traditional agreements. This saves businesses time and money, and it also ensures compliance from everyone involved. Blockchain based contracts are becoming more and more popular. 

03:36

Some of the coins or tokens which have smart contracts are the following. These are some of the largest market cap coins and blockchains which have smart contracts operating now. Ethereum is the blockchain and the coin is Eth, Cardano and ADA is the coin or token. Polkadot and DOT, Vechain and VET, Algorand and Algo, chainlink, NEO, Stellar has XLM, Zilliqa and the coin is ZIL, Avalanche has AVAX, Harmony has ONE, Injective Protocol has INJ,  KardiaChain has KAI, Others include EOS and Ethereum Classic, Internet Computer, Tron, Tezos and Celo. 

04:41

According to cryptoslate.com, smart contract coins make up about 25.43% sector dominance, which translates into roughly $329 billion worth of market cap amongst these different coins. combined. As you can tell, the demand for smart contracts on blockchains is growing, and very important.

05:11

So let me share with you the best metaphor for a smart contract that Nick Szabo shares, he compares it to a vending machine. To get a snack from a vending machine, you have the money, plus the snack equals you receiving the snack. A smart contract is like a vending machine. It has logic programmed into it. It’s permissionless. Anyone can write a smart contract and deploy it to a network. You just need to learn how to code the specific language that smart contracts are written in and deploy it on a blockchain. So I hope this is unpacked and sort of revealed to you provided some more light on what is a smart contract. So that concludes today’s episode. And I look forward to our next one.

06:02

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