Smart Contracts
Purpose of Smart Contracts
Intelligent contracts are necessary to ensure the functioning of decentralized projects (Defi, DApps, etc.), as these are systems without the support of regulatory authorities. In this case, smart contracts ensure that conditional agreements are enforced in the correct algorithmic sequence.
The algorithm is prescribed inside the blockchain, so the rules for transactions and other manipulations cannot be changed and are binding for all participants.
How Smart Contracts Work
Smarts are part of the blockchain software code and work directly within the network. They perform the function of the paper contracts we are used to, only in the digital field. The terms are not written in pen on paper but using mathematical algorithms and programming languages.
The terms are subject to mandatory execution, just like in a paper contract. Only then will the transaction be realized, and the users will receive the conditioned result.
Types of Smart Contracts
Execution environment. According to the execution environment, intelligent contracts can be centralized and distributed.
Degree of anonymity. Intelligent contracts are confidential, partially open, and fully available with a degree of anonymity.
Mechanism of initiation. Intelligent contracts can be limited and preset according to the means of initiation.
