Understanding Smart Contracts on Blockchain | P100

What are Smart Contracts?

Smart contracts are self-executing contracts with the terms of the agreement directly written into lines of code. They exist on a blockchain network and automatically enforce and execute the terms of a contract when predetermined conditions are met. These digital contracts facilitate, verify, and enforce the negotiation or performance of a contract, essentially removing the need for a middleman in many processes. They are immutable and distributed, meaning that the output of the contract is validated by everyone on the network, which adds to a heightened level of security.

Characteristics of Smart Contracts

Smart contracts are a revolutionary feature of blockchain technology that provides a secure, automated way to encode and enforce agreements. Here’s a detailed look at their characteristics:

Programmable Logic

At their core, smart contracts are composed of pre-defined rules and conditions, written in code. They are programmed to automatically execute specific actions (such as transferring funds) when agreed-upon conditions are met. These conditions are often structured as "if-then" statements.

Deployed on Blockchain 

Once written, the smart contract code is compiled and deployed to the blockchain, and is given a unique address, much like how each user has a unique wallet address.

Immutability and Transparency

Smart contracts benefit from blockchain's inherent properties. Once a contract is deployed, it cannot be altered, offering a level of security and trust that traditional contracts lack. Additionally, the transaction history and contract terms are transparent and verifiable by all participants.

Interaction with Other Contracts

Smart contracts can be designed to interact with other contracts, create complex multistep processes, and even create new contracts. This creates a rich ecosystem of interlinked contracts and decentralized applications (DApps).

In essence, smart contracts leverage the decentralized and immutable nature of blockchains to provide a secure and automatic way of making agreements, reducing the need for intermediaries, and ensuring execution is carried out as intended.

Ethereum Smart Contracts

Ethereum smart contracts are self-executing contractual states, stored on the Ethereum blockchain, which automatically carry out the terms of an agreement once predetermined conditions are met. Written in a programming language called Solidity, these contracts are the framework behind decentralized applications (DApps) and a plethora of other digital agreements. Ethereum's innovation lies in its Turing-complete Ethereum Virtual Machine (EVM), which can execute complex logic that traditional blockchains cannot handle. This capability has cemented Ethereum's status as a platform for developers looking to create a wide array of decentralized services—from creating new cryptocurrencies and financial services in the burgeoning field of decentralized finance (DeFi) to the issuance of unique digital assets like non-fungible tokens (NFTs). Despite facing scalability challenges and high transaction fees, Ethereum's continuous evolution, notably with its ongoing transition to Ethereum 2.0, aims to enhance its efficiency and sustainability, ensuring its place at the forefront of blockchain innovation.

Cardano Smart Contracts

Cardano smart contracts are built using a unique programming language, Plutus, which is based on the functional programming language Haskell. This foundation allows for the creation of high-assurance contracts—ones that can be mathematically verified for correctness and security. Cardano’s approach is methodical and research-driven, focusing on scalability, interoperability, and sustainability. Smart contracts on Cardano run on the Alonzo upgrade, which integrates the extended UTXO model, enhancing the ability to execute more complex contracts efficiently and securely. This allows developers to create decentralized applications (DApps), or even nft dapps. With a layered architecture that separates the ledger of account values from the reason why values are moved from one account to the other, Cardano aims to provide more flexibility and less congestion on its network, addressing some of the limitations seen in other blockchain systems. As Cardano continues to evolve with its rigorous, peer-reviewed updates, its smart contract capabilities are expected to become even more robust, potentially transforming how decentralized solutions are implemented across the blockchain ecosystem.


In essence, smart contracts are redefining the architecture of agreement and trust in the digital age. Far from being just another feature of blockchain technology, they are a revolution in their own right. Ethereum has led the charge, creating a vibrant ecosystem where smart contracts thrive, nurturing groundbreaking platforms for decentralized finance and digital art. Cardano, with its meticulous research-driven approach and high-integrity contracts, is not just following suit but is carving out its path, aiming to refine and redefine what smart contracts can achieve. Both platforms, in their unique ways, are not merely changing the game, they're creating an entirely new playing field.

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