Smart Contract and Blockchain are two familiar words in the cryptocurrency world. Smart Contract is like a voice of a person inside a house. Blockchain, on the other hand, is like the house itself. Whenever the person comes into the house and uses his voice, the house receives the voice, ensuring that the other persons inside the house hear the voice, and release their voices too.
In knowing what Smart Contract and Blockchain mean, the definition of both terms will shed more light on the two. A Smart Contract is a series of computer programs, that will run by themselves inside a Blockchain without any additional computer command when certain predetermined conditions are met. If the set out conditions are not met, Smart Contract will not be able to carry out its functions.
More so, the Smart contract has been defined by various Bitcoin enthusiasts and Blockchain authorities. According to Saloni Sardana, "Smart Contract is a computer protocol that automatically ensures that there is an agreement between two exchanging parties after enforcement of negotiation. Subsequently in this article, an insight into how Smart Contract and Blockchain work together will be revealed.
Blockchain has brought a revolution into the world of digital currency. Blockchain has helped to cement the global use of digital money. One of the most popular Blockchain is Bitcoin. Ethereum is an example of a Blockchain application. There are many other types of Blockchain embedded in cryptocurrencies (Digital Coins).
In understanding what Blockchain is, the definition by Euromoney succinctly explains this. It states that "Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. It is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain."
One of the unique features of Blockchain is that data fed into Blockchain is immutable. This implies it can not be tampered with or edited into another type of data. This ensures the seamless running of the whole process.
The beauty of using Blockchain in business transactions is that it uses a Business logic layer (BLL). BLL functions to determine what rules should be adhered to when business is going on in the Blockchain. Another remarkable thing about the Blockchain is that CRUD is used. CRUD determines when data is to be received or retrieved, or even deleted in the Blockchain.
Who brought Blockchain technology into the world?
Since Blockchain was discovered over 10 years ago, its relevance and usage has spread to hundreds of countries all over the world.
Going down memory lane, Tech Target published that "Blockchain was first introduced in 2008 as the distributed ledger behind bitcoin transactions. The technology has since taken on a life of its own, with interest coming from many quarters." Satoshi Nakamoto is the pseudonym known globally as the persons who discovered Blockchain.
Smart Contract and Blockchain working relationship
How then do Smart Contract and Blockchain need each other? Since Smart Contract ensures there are exchanges and execution of programs between two parties, Blockchain provides the environment for the exchange and execution to happen.
Furthermore, any second party who tries to hack into the Blockchain, and rewrite the Smart Contract will never have access to do so. This means that Blockchain ensures the security of Smart Contract. One more thing to add to the relationship between Smart Contract and Blockchain is that Smart Contract enables the validation of Blockchain application transactions such as Ethereum.
Benefits of Smart Contract and Blockchain
Smart Contract and Blockchain help in the smooth running of digital currency transactions. They ensure the storage of highly confidential Bitcoin transactions. Also, they ensure that there is no slow performance in the exchange of contracts between two codes. Another unique benefit is the automation of cryptocurrency valuation during transactions.
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According to IBM, there are several advantages to the combination of Smart Contract and Blockchain. One of such is ensuring confidentiality during transactions. This means trust and privacy are built between the persons involved in the digital money business. One other benefit highlighted by IBM is that the use of Application Programming Interphase (API) by Blockchain, which sends and receives data helps to ensure the security of stored data.
Some other benefits and applications of Smart Contract and Blockchain mentioned by IBM to users include: building and maintaining trust in the retailer-supplier relationship; the ease of doing international trade is much faster and more efficient and ensuring there is accuracy in business transactions.
Is Smart Contract used elsewhere apart from Blockchain?
Now, that you already know the benefits and working relationship between Smart Contract and Blockchain, you might want to inquire about other things. This can be a question such as, 'is Smart Contract used elsewhere apart from Blockchain?' The answer to this question is simple. You can use Smart Contract elsewhere to run your businesses without the need for a Blockchain.
In an article published on May 30, 2022, titled 'Smart Contracts without Blockchain,' the author brought evidence of the use of vending machines, as an example of where Smart Contract technology is deployed without anything related to Blockchain. The author additionally cited SaaS (software as a service), and automation of sending and receiving invoices, as other examples.
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