Smart Contracts
Hey friend, it’s nice to see you again and I’m glad you think of me as a friend too. Lately i’ve been talking about Web3, and a lot of technology that surrounds it.
Why are these information even necessary? I want you, my friend to have a deeper understanding of how modern technology works, that’s why I'm sharing some basic and advanced knowledge with you. So, let’s start with what Smart Contracts are in 2 mins like we’re explaining to a 5-year old.
What are Smart Contracts?
Let’s look at something everyone is familiar with or can relate with, that’s also easy to understand for a 5 year old.
Case Study
There are two friends; Themmy and Abiola.
Themmy has a Kiwi fruit with him, but he doesn't want to eat the Kiwi because it’s not looking aesthetically pleasing to him, however it’s highly rich in protein and Abiola likes protein a lot, so Themmy offers to exchange his Kiwi with Abiola for a little cash. Normally, there would be an intermediary person that takes the Kiwi and cash from both parties and share respectively, but there might be cheating and no transparency. This is where Smart Contract comes in, both parties digitize their assets (Kiwi fruit and cash) into a digital wallet.
Then we code a digital contract saying;
If Kiwi is truly high in protein, then wallet must send cash to Themmy and fruit to Abiola.
If Kiwi is not high or rich in protein at all, then wallet must send the cash back to Abiola and Kiwi back to Themmy.
Now the Smart contract goes and checks Food Standards Agency several times till it displays; Kiwi is rich in Protein.
Now, at this point we might not trust FSA, so the contract also checks European Food Safety Authority, Food Safety Promotion Board and like 5 more food governing bodies across Europe and the world.
We then have 10 more computers check all this information to make sure they all concur and correlate that Kiwi is clearly high in protein. At this point, it means we reached a consensus.
The smart contract the tells the wallet to send Themmy the cash and Abiola the Kiwi.
Now, why is this important? To make sure that no one is lying and also to make sure no one is cheating the other person.
If we didn’t have Smart Contract, Themmy may never give Abiola the Kiwi and Abiola might have never given Themmy the cash. So this guarantees trust and prevents arguments or fight between both parties.
Now, I’m pretty sure as an adult you understand that more than a long 5 min boring read about what Smart Contracts are or not.
However, if you’d like to read more about Smart Contracts, you can check some of the links below.
For now, let me actually go and check if Kiwi is high in protein or not, maybe i can get some cash around (Lol). Until next time friend, I’ll make sure to include you as a character in my article.
https://www.coinbase.com/learn/crypto-basics/what-is-a-smart-contract
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