Unveiling the depth of smart contracts

Nick Szabo first introduced the concet of smart contract in 1994, however, it gained popularity only recently. Bitcoin SV blockchain has used these contracts to facilitate the users making their commerce deals.. It can be purely a decentralized network where people can validate the information or transaction available on the trading cryptocurrencies network from anywhere. People may think that smart contracts are used by ETH only, but you can find smart contracts in the BTC network with limited functionality.

Why can smart contracts be used on a decentralized network when centralized networks like Amazon Web and cloud servers are available? Such centralized networks are faster than decentralized networks, but such servers or centralized networks can add additional cost for their speed and maintenance. To reduce this cost, smart contracts are used on a decentralized network. The bitcoin network uses smart contracts with limited functionality to execute a fair transactional system. For example, smart contracts can be used on a bank’s server, and you can make a transaction through your bank to verify your transaction after completion. But you cannot trust their employees, who can manipulate your financial information while validating your transaction. You cannot be able to audit the bank’s transaction, and they can only access such information. In the case of a decentralized network, such problems can be exempted, as no bank or central authority is involved in these bitcoin transactions.

How do smart contracts work?

ETH is based on smart contracts where shared computers can generate such contracts. A computer program designed with smart contracts can be used on shared computers to validate the transactions over the network. Developers can write such contracts and deploy their contracts he shared computers. For example, as a miner of ETH, you can write a smart contract and deploy a special address on the ETH network, and users can make their transactions by using your contracts. But their transactions will be completed when all users involved in a particular transaction have met the criteria of your smart contract.

For example, you can write a program to transfer one ETH, and according to your program or smart contract, 1ETH will be divided into 12 equal pieces, and the receiver will get each piece every month. In the case of smart bitcoin contracts, people can avoid the custodian authority or third-party services to process their online transactions. It is known as a trust fund, where companies or businesses can manage their transactions and business contracts without taking help from a lawyer.

Basics of a bitcoin contract:

A BTC contract is an exclusive agreement based on a software program and is stored in the form of nodes in the BTC network. As a maker, you need to define the rules and regulations of your contracts, and people can use your contract and transfer funds with their BTC once they agree to your terms and conditions. Changing the nodes stored or written in a bitcoin contract is impossible. Blockchain defines the rules of a BTC contract to its users, which will be applied automatically to the users once they start using such contracts. Here, you can find some features of a bitcoin contract:

  • To protect your account and funds, you can enable multi-signature features of your account through a bitcoin contract. For example, you can add other users to your crypto account and transfer funds from your account to another account once a required percentage of people agree.
  • Bitcoin contracts can help you to measure or count all your spending, and you can store your receipts in an organized way.
  • It is impossible to execute a bitcoin contract automatically, and the help of human interaction is required to execute a contract. So, you can easily make the deals without any influence from others.

You can freeze, confiscate or deny a contract anytime and it can help you to keep your funds safe. Many people reported that they had made a transaction with their BTC by mistake and lost their funds because BTC is impossible to revert or refund. You can prevent such problems by using such bitcoin contracts.  You can use the bitcoin system.app to know more and use such contracts.