The Knowledge Shot
The Knowledge Shot is short and concise article explaining something related to crypto; it can be an explanation of:
a concept: what is decentralisation? what is DeFi?
a definition: what is an ERC20? What is a smart contract?
a product: what is Mintr? what is ErasureBay?
a project: what is Ren? Numerai? Synthetix?
a question you have about anything.
It is your shot of knowledge. And it will happen often.
Today is about smart contracts.
What is a smart contract?
A smart contract is a contract, an agreement between a buyer and a seller to do something, which is written into lines of code, is irreversible and is registered into the blockchain.
To execute a smart contract, there is no need to trust a central authority or to involve middlemen, as it is registered in the blockchain and can be seen by everybody.
John produces apples.
Alex produces oranges.
Every month John wants to trade oranges with Alex.
They conclude a smart contract together, which says that John will give fifty oranges to Alex at the end of the month and at the same time, Alex will give fifty apples to John, for a maximum of one year.
So every month the smart contract will execute and trade fifty apples for fifty oranges between the two counterparties.
If one of the counterparties fail to their obligations, the contract will not be executed.
The smart contract will end after one year.
Every trade between John and Alex are registered in the blockchain and can be consulted by everybody. There is no need to trust an intermediary to check the quantity traded, the smart contract does it automatically.