Ethereum smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts enable the performance of credible transactions without third parties.
These transactions are trackable and irreversible. Ethereum smart contracts were first proposed by Vitalik Buterin in 2013.
How do Ethereum Smart Contracts Work
Ethereum smart contracts use blockchain technology to provide a decentralized, secure, and tamper-proof way to execute contracts. The terms of the contract are written into code that is stored on the blockchain.
The code is executed by the Ethereum Virtual Machine (EVM), which runs on every node in the Ethereum network.
The code for a smart contract is stored on the blockchain and is public. This makes it possible to verify the code and ensure that it has not been tampered with.
When a contract is executed, it can access data from other contracts, make calls to external APIs, and send transactions to other addresses. This makes it possible to create complex applications on top of Ethereum.
What are the advantages of Ethereum Smart Contracts
Smart contracts have many advantages over traditional contracts. They are more secure because they are stored on the blockchain and cannot be tampered with.
They are also more efficient because they can be executed automatically. And they are more transparent because the terms of the contract are publically available.
What are the disadvantages of Ethereum Smart Contracts
Smart contracts also have some disadvantages. They can be difficult to write correctly, and errors can be costly.
They also require a certain amount of trust in the network, as well as in the developers who wrote the code. And they may be subject to regulation in some jurisdictions.