Smart Contracts — A Simple Yet Comprehensive Explanation in Pictures

What Smart Contracts are Not

A simple Google search on the internet would yield the following definitions for Smart Contracts

The definition of Smart Contracts from around the web

What Smart Contracts Truly Are

To better understand the real value of Smart Contracts, it is essential to have a fundamental (and a bit over-simplified) understanding of how the internet works. Let’s do that now.

1. How the Internet Works — Oversimplified

When you give your web browser a URL that it should visit, it primarily does two things:
1. Find the server of the website that it should visit from the URL
2. Ask the server mentioned above, what it should load on the site

How the internet plays cat videos

2. What does all this have to do with Blockchains?

Now, this is the time we have to recall our lesson from my previous article, “Blockchain — A Short and Simple Explanation in Pictures.” If you do not have prior knowledge about Blockchains then…

https://medium.com/@adilharis/blockchain-a-short-and-simple-explanation-with-pictures-d60d652f207f

3. Sooo… Smart Contracts?

From the previous article, we discussed that Alice sending Bob $100 is an example of a transaction on a Blockchain. At present, however, it is not possible to send US dollars on any Blockchain ledger. We have banks for that, and all transactions with US dollars are managed between banks internally, between a bank and a central bank, or in cash.

If you don’t know what public keys are, kindly read the article linked below the boss kid

4. How is this different from executing code on standard servers?

It is important to realize that such rule-based transactions can be conducted on standard servers owned by a company or business. This has been done for many years and is what has been happening in all businesses, banks and other financial institutions.

5. I don’t get it. Break it down and give me an Alice & Bob story

Let’s say some of the top artists in the music industry came together and decided to launch a decentralized music distribution platform called Dotify. This platform allows content creators to upload their music and sell them directly without relying on intermediaries in between such as record companies or distribution platforms who charge fees or take a cut of their potential earnings.

6. If Smart Contracts happen to be super secure, tamper-proof code, then why not use them everywhere?

There are multiple reasons, the primary one being, that the internet of today does not need tamper-proof code everywhere. Most of the time, it requires code which is easy and cheap to upgrade for developers, while being intuitive and friendly to end-users. Both are presently not possible with Smart Contract technology of today. Finally, when it comes to data storage, it is essential to ask yourself the following question…

EOS and TRON are smart contract Blockchains which are less decentralized but have high performance
Ethereum is a smart contract Blockchain with a robust consensus algorithm but sacrifices on performance

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Tiny Crypto Labs

Tiny Crypto Labs

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Sharing wonderful ideas and knowledge from the world of Crypto and Web3