Smart Contracts and Dapps, an explainer

As part of our ongoing look at Ethereum, we’re at looking at one of the fundamental parts of the cryptocurrency, smart contracts.

Overview

We’re all familiar with apps and app stores. You browse, download the app you want and away you go.

In a nutshell, these apps are performing a specific set of instructions as laid out by their creator. It could be a game, a calendar, or a way to buy goods and services.

Smart contracts perform a very similar function.

The only difference is, there’s no middle-man. There’s no person or company holding your information or verifying it. The blockchain verifies and holds a record for you.

Vitalik Buterin, and the Ethereum community, believe this is the future of the blockchain. If Bitcoin is the gold of the business world, smart contracts are the oil the business world runs on.

Digging into Smart Contracts

So, you want to buy a car online without a smart contract. In order to do so you need:

• A listing site to hold the information on all the cars you’d like to see
• A way of communicating with sellers
• A payment system to allow you to exchange money once you’ve found your car
• Some capacity to get a refund if the car turns out to be a dud.

Each of these points requires you to trust the site or service you’re accessing — and a lot of the time, each part of that process is controlled by a different company or individual.

It wouldn’t take much for a sneaky person or organisation to change any of the above, making the whole process void.

Why? Smart contracts are:

• Secure 🔒 — it uses cryptography to stop people meddling with them.
• Transparent 🔍 — everyone can see on the blockchain what the smart contract is and what it’s being used for.
• No more middlemen 🙏 — smart contracts don’t need a third party to verify. The blockchain does that for you.
• Autonomous 🤖 — they work automatically, so you’re not having to wait for someone to push a button.
• Accurate ✅ — because smart contracts are written in code, they don’t rely on the grey areas of a language and what words mean.

Want to know more?

This is just the tip of the crypto iceberg. LitePaper has a a whole host of easy-to-understand articles that make learning about cryptocurrencies, blockchain and DLT technology really bloody simple.

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