What is a Smart Contract?

In a blockchain, you can put a set of transactions, but you can also store code that resembles the logic and rules of a real contract.

A Smart Contract is a computer program, stored in a blockchain, that guarantee the fulfillment of an agreement automatically and safely, without the need for third parties. Smart Contract technology is not new, but the way it is applied is.

Smart Contract

Smart Contracts run exactly as programmed. They are self-executing with specific instructions or clauses written on their code which get executed when certain conditions are met. For example, when two people participate in a Smart Contract that implements a bet, they'll send the money to the contract with their selected winner choice. The Contract will be responsible for transferring the amount deposited by the two people to the address of the person who has guessed right. The action of sending money is made using the native token of the blockchain where the contract is deployed.

Any agreement between individuals or corporations may have clauses whose execution is automated with a Smart Contract deployed in a blockchain. In the case of conflicts, the traditional solution is to go to court to demand compliance with the contract or compensation for the damages caused, which implies time and costs for the parties. The risk of contract execution can be significantly reduced and very efficiently solved with Smart Contracts and Blockchain technology. It is an automated mechanism that guarantees the execution of the contract quickly, safely, and cheaply when certain agreed conditions are met.

Once a Smart Contract is programmed, tested, and deployed, the execution of the Smart Contract does not need a central authority or intermediary to be executed. Thus, many commercial exchanges are more efficient by reducing the transaction costs associated with the default of the counterparty, and the derivatives of going to court to claim compensation, in case of default. Smart Contracts avoid the burden of interpretation by being written in computer programming languages. This means that the terms in the contract are pure statements and commands in the code that forms it. For example, Cardano uses the Haskell programming language which makes it easier to test and achieve a very solid logic to enforce the contract. The Ethereum platform uses a Javascript derived language named Solidity.

The blockchain not only provides a single ledger as a source of trust, but also strips possible complications in communication and workflow because of its precision, transparency, and automated system.

A Smart Contract that runs on a blockchain needs to be immutable and must have the ability to run through multiple nodes without compromising its integrity. As a result of which, the Smart Contract functionality needs to be deterministic, terminable, and isolated. Deterministic means that the contract output will be the same if identical inputs are given. Terminable implies that the contract must have an exit when specific conditions are met or a time limit is exceeded. Isolation is needed to evade secondary effects on the platform where the contract is executed. Since any contract may knowingly and unknowingly contain bugs is important that the contract executes in an isolated sandbox.

There are lots of Smart Contract use cases. We'll review them in a later post. If you need deeper knowledge about blockchain you can enroll in any of these blockchain courses.

For a really cool graphic explanation of how Smart contracts work, you can check this infographic from Raise P2P Lending Platform. They also have a crystal clear Beginner's guide to Smart Contracts.

  • Twitter
  • LinkedIn
  • Facebook
  • Instagram
  • RSS



The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation, or needs. All statements made on this website are made in good faith and we believe they are accurate and reliable. This website disclaims all and any guarantees, undertakings, and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on the information or advice on this site. Before acting on this advice you should consider the appropriateness of the advice, having regard to your objectives, financial situation, and needs. Where any product(s) is/are detailed on this website, you should obtain a Product Disclosure Statement relating to the product(s), consider its contents and obtain professional advice before making any decisions. The information on this website is not a substitute for financial advice. Past performance is not indicative of future performance. Cardano™ is a trademark of Cardano Foundation, CHE-184.477.354, Dammstrasse 16, 6300 Zug, Switzerland, in Switzerland and other countries.  Copyright © 2020 by Vantica Trading. All rights reserved.. Madrid  Spain.

We receive, collect, and store any information you enter on our website or provide us in any other way. In addition, we collect the Internet protocol (IP) address used to connect your computer to the Internet; login; e-mail address; password; computer and connection information and purchase history. We may use software tools to measure and collect session information, including page response times, length of visits to certain pages, page interaction information, and methods used to browse away from the page. We also collect personally identifiable information (including name, email, password, communications); payment details (including credit card information), comments, feedback, product reviews, recommendations, and personal profile. Our website is hosted on the platform. provides us with an online platform that allows us to sell our products and services to you. Your data may be stored through’s data storage, databases, and general applications. They store your data on secure servers behind a firewall. All direct payment gateways offered by and used by our company adhere to the standards set by PCI-DSS as managed by the PCI Security Standards Council, which is a joint effort of brands like Visa, MasterCard, American Express and Discover. PCI-DSS requirements help ensure the secure handling of credit card information by our store and its service providers... Please read our complete  Privacy Policy© 2021 by Vantica Trading,

[Valid RSS]