The comparative advantage of Ethereum over other protocols is none other than the so-called “smart contracts“. The solution promises to get rid of intermediaries.
It is difficult to explain what exactly Ethereum is. Even its creators, who are well-known figures in the world of computing, find it hard to describe its limitations. But it is certainly the most interesting thing we have seen since the creation of bitcoin.
Smart Contracts: The Future of Contractual Agreements
At its core, it is a mechanism generation space that takes off the possibilities of digital coordination. Ethereum’s big innovation, which differentiates it from bitcoin and is its comparative advantage over other protocols, is about “smart contracts” (in computer science, a protocol is a set of rules governing data transmission. It is not owned by anyone and operates according to mathematical rules that are accepted by everyone who participates in the network).
What are smart contracts?
What are smart contracts and what makes them so important? A code that runs on the blockchain and contains a set of rules, of the type “when A happens, an action, B, is triggered”. These are pre-defined agreements that evaluate information and are automatically executed in AN/TOTE context when certain conditions are met.
5 steps to programming in Blockchain (Smart-Contract)
Smart contracts have pushed the cryptocurrency space towards a decisive step forward. They make it possible to exchange not just money but everything from information to property titles. Anything of value.
All in a transparent way, bypassing the middlemen. They don’t just bypass banks, they bypass lawyers! They contain within their terms, rules, punishments, rewards and other legal issues expressed in code. The sender’s code communicates and combines with the recipient’s code, precisely defining the stated parameters of the agreement. It will be executed if, and only if, all parameters are met. This is sufficient to automatically resolve issues without further human intervention.
Smart contracts in Ethereum each have their own coordination mechanism. You no longer need to coordinate with another human. Instead, you coordinate with smart contracts, i.e. robotic systems that cannot be influenced, bribed, or threatened.
Smart contracts on a blockchain are immutable (cannot be changed) and verifiable (everyone can see them), ensuring a high level of trust between the parties.
The technology is neutral
Improving human coordination could lead to new levels of knowledge sharing. It would help reduce the cost of innovative efforts, unlocking new creative potential.
Ethereum is a neutral piece of technology. Malicious users can use it for evil, just as well-meaning people can use it for good. Like all tools, Ethereum has no independent ethics. The moral effect of using a tool depends inextricably on the intent of its user, in the same way, that a hammer can be used to build a house or hit a skull.
Unlimited Possibilities with Smart Contracts on Web3
Yet we can be optimistic. Most individuals want to do good for the world. Very few people wake up every morning with the intention of doing harm. How can we be sure? Because we have seen something similar before.
When the Internet came along, many people feared that perverts would use it to traffic child pornography or criminals and terrorists would use it to communicate with each other. And suddenly they began to see cute little babies and dogs playing from YouTube and communicating with friends they had missed from school.
Vitalik Buterin Explaining How Smart Contracts Work
Most people are by nature reluctant or even negative to change. Few understood the revolution that would follow and even fewer took advantage of it. But whoever got on the train early, that inspiration led them to the forefront and gave them a decisive advantage.
Would you like to build your own smart contract? Contact Enkronos team today to make your project alive.