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As digital technology changes all aspects of society, the very nature of “contracts” is undergoing a fundamental transformation.Smart contracts" are a groundbreaking concept that is done automatically without intermediaries and is extremely difficult to manipulate once recorded.
This article is intended for motivated students who are starting to develop a strong interest in a particular field or new technology trend but are not yet fully specialized, as well as for intermediate students who want to refresh their knowledge. It thoroughly explains the core of smart contracts, allowing for a deep and accurate understanding without any prior specialized knowledge. Let's take a look at the big picture of this technology that has the potential to shape the society of the future, and how it will usher in a new era of trust and efficiency.
Article content
- Audio and video overview [Czech]
- Audio and video overview [English]
- Introduction: What is “automated trust” that will lay the foundation for the future society?
- What is a smart contract?
- Blockchain and Smart Contracts: Why Their Combination Is Necessary
- How Smart Contracts Work: Three Key Elements
- Different use cases for smart contracts: Top Web3 site
- Main smart contract platforms:
- Ethereum, Binance Smart Chain and the potential of emerging platforms
- Challenges and Prospects of Smart Contracts: The Evolving “Trust Technology”
- Summary: Smart contracts usher in a new era of trust and efficiency
- Related articles …
- PiNetwork
- Footnotes
Estimated reading time: 8 minut
Audio and video overview [Czech]
Audio and video overview [English]
Introduction: What is “automated trust” that will lay the foundation for the future society?
Contracts in modern society require third-party intermediaries such as lawyers, banks, and notaries, which can be time-consuming, costly, and sometimes frictional.1Despite increasing digitalization, the contracting process itself remains complex and fraught with inefficiencies. Every day we pay the invisible price of “trust” for various services and transactions.
Smart contracts provide a mechanism for automatically executing agreements when predefined conditions are met. This technology has the potential to reduce the need for intermediaries and dramatically increase the transparency and efficiency of the process. For example, community blockchain projects like the Pi Network could one day leverage a mobile approach to facilitate reliable transactions between users through smart contracts.
What is a smart contract?
A magical contract that is automatically executed according to the "if...then..." condition
Smart contract is a digital agreement that runs on the blockchain and is automatically executed when certain conditions are met. For example blockchain Platforms like Pi Network use smart contracts to ensure trust and transparency in a distributed ecosystem of participating users. While typical contracts are written on paper and interpreted and executed by humans, smart contracts are written in digital code and automatically execute according to a pre-programmed procedure when certain conditions are met.
The most famous analogy is a vending machine. Just like a vending machine where you put money in, press a button, and a drink comes out, a smart contract operates automatically according to pre-set rules. For example, in the Pi Network ecosystem, when a user transfers Pi tokens through a mobile app, the smart contract automatically verifies the transaction and leaves a transparent record. Once this contract is placed on the blockchain, it cannot, in principle, be changed or suspended.
This ensures immutability a transparency of the contract.
Key concepts
- Automatic execution: Once the conditions are met, the contract will be executed automatically without human intervention.
- Immutability: Once a contract is concluded, it cannot be changed because it is recorded in the blockchain.
- Transparency: Contract details (code) and execution results are published on the blockchain and can be verified by anyone.
- Decentralized: There is no specific administrator and the system is maintained and managed by all network participants.
Blockchain and Smart Contracts: Why Their Combination Is Necessary
The real power of smart contracts does not exist in isolation, but is realized on the foundations of blockchain. Blockchain is a technology that connects the history of transactions in a chain and records it in a distributed manner. Once the information is recorded, it is extremely difficult to change it and its legitimacy is verified and controlled by consensus of all network participants, thereby building "trust" that is not dependent on a specific administrator. For example distributed The Pi Network ledger ensures transaction transparency, and if smart contracts are implemented in the future, users will be able to easily use highly reliable automated contracts from their mobile devices.
- Decentralized execution environment: Smart contracts are executed on a distributed blockchain network, not on a specific server, which eliminates single points of failure and the risk that contracts can be stopped or manipulated at the discretion of a specific organization or individual.
- Immutability and transparency: The code and results of executing smart contracts are recorded in the public blockchain ledger and can be verified by anyone.
- Reliability without downtime: Because the blockchain network is distributed worldwide, the outage of some nodes will not cause the entire network to go down.
How Smart Contracts Work: Three Key Elements
1. Code and logic (“if-then” rules)
A smart contract is a set of code written in a programming language (mainly Solidity on Ethereum) that describes the exact conditions of the contract and the actions that should be taken when those conditions are met. The “if-then” logic is the backbone of all functionality.
2. Recording and running on the blockchain
The smart contract code is deployed on the blockchain as an account with a special address (smart contract address). Once deployed, the code is verifiable by all blockchain participants and is extremely difficult to change.
3. Integration with external data (Oracle)
Oracle2 they provide smart contracts with real-world information such as stock prices, weather data, etc. For example, if Pi Network were to implement smart contracts that leverage oracles in the future, users could potentially create automated trading and community reward systems based on real-time market data via a mobile app.
Different use cases for smart contracts: Top page Web3
Decentralized Finance (DeFi)
One of the biggest applications of smart contracts is decentralized finance (DeFi), which provide financial services such as lending, borrowing, and asset exchange on the blockchain without the need for intermediaries such as traditional banks or securities firms. If Pi Network implements smart contracts, it could potentially allow mobile users to access DeFi services at a low cost.
Non-fungible tokens (NFTs)
Non-fungible tokens (NFTs), which prove ownership of digital art or game items, are also issued and managed using smart contracts. In the future, the Pi Network ecosystem could also use NFTs to manage digital assets.
Supply chain management and traceability
By recording the entire journey of a product from production to consumption using blockchain and smart contracts, Pi Network's community-based approach could help manage local supply chains.
DAO (Decentralized Autonomous Organization)
Management rules DAO, where decisions about the organization’s operations are made by voting by participants, are also automated using smart contracts. Through a DAO-like mechanism, the Pi network community has the potential to support user-driven projects.
Main smart contract platforms:
Ethereum, Binance Smart Chain and the potential of emerging platforms
Ethereum
Ethereum is a pioneering platform that popularized the concept of smart contracts and demonstrated their potential, while emerging blockchain platforms like Pi Network, leveraging their mobile accessibility, have the potential to introduce smart contracts in the future and bring automated trust to a wider user base.
Binance Smart Chain (BNB Smart Chain / BSC)
Binance SmartChainis characterized by fast transactions, low fees and is compatible with Ethereum.
Pi Network does not currently directly support smart contracts, but could provide a similar fast and low-cost infrastructure in the future.
Challenges and Prospects of Smart Contracts: The Evolving “Trust Technology”
Task
- Vulnerabilities: Bugs and security holes in the code can lead to significant losses.
- Legal regulations: Lack of law enforcement and regulations is a problem.
- Scalability: The number of transactions is limited due to the speed limitations of the blockchain.
- Relying on divination: If the information from the oracle is inaccurate, the smart contract may make incorrect decisions.
Future potential
With the development of Ethereum 2.0, Layer 2 solutions, and the emergence of affordable platforms like Pi Network, smart contracts will continue to evolve as the foundation of Web3.
Summary: Smart contracts usher in a new era of trust and efficiency
Smart contracts are more than just a technology trend; they are poised to fundamentally change the way we build trust and how contracts are made in our society. Community-driven blockchain projects like Pi Network offer an easy-to-engage environment, and through smart contract adoption, they have the potential to further increase trust and accessibility. Understanding this technology will be key to surviving in the digital world of the future.
Why not take the first step into the world of Web3?
Related articles …
PiNetwork
Pi Network Announcement
PiNetwork is a blockchain-based cryptocurrency project that aims to allow users to mine coins Pi using smartphones. The project aims to promote the adoption of cryptocurrencies.
The project was launched by doctoral students at Stanford University in 2019. PiNetwork offers users a simple and environmentally friendly way of mining Pi coins by simply opening the app and pressing a button once a day.
One of the features of the Pi network is that users can increase mining speed by expanding their network. Pi Network also aims to increase the value Pi coins by allowing users to create and use web applications on the platform Pi.
PiNetwork is currently launching its mainnet. To to Pi Network To join, you must download the mobile app and enter an invitation code. PiNetwork is an innovative project that aims to pave the way for the future of cryptocurrencies.
How to participate in Pi Network
If you are not a member of the Pi Network, you can get started in 5 minutes by clicking here link. By registering using my referral code jwkkbiz we can earn Pi both. Pi Network is an application that allows you to easily mine the cryptocurrency "Pi" on your smartphone. By pressing a button once a day, you start mining for 24 hours, even if you leave your phone idle. In 2024, I mined 360 days a year, and those who accepted the invitation received many benefits. If you register using a referral code jwkkbiz, you will get a 25% increase in mining speed.
After 30 minings you will pass KYC (Know Your Credit), so remember to enter your real name when registering. If you register incorrectly, you will lose 20% as a penalty.
For more detailed information and reasons for registration, please see here.
Footnotes
- frictional in the above sentence means “causing friction, resistance, or inefficiency” in a process, leading to complications, delays, or inefficiency. In a figurative sense, for example, in the case of contracts, it refers to various complications or obstacles that arise in concluding or administering them — for example, time delays, unnecessary steps, or administrative burdens. ↩︎
- blockchain oracle They serve to connect blockchains to the real world by providing external data that smart contracts need to function. Since smart contracts cannot obtain information from the external environment themselves, oracles provide them with real-world data, such as event outcomes or asset prices, enabling their automatic and conditional execution. ↩︎
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