Using a smart contract is usually directly related to the operation of the blockchain in which it is created and may depend on the accompanying data obtained from external sources. To achieve this, specialized services can be used in addition to the blockchain tools themselves.

Creating and executing a smart contract

The process of creating and executing a smart contract involves the following steps:

  1. Agreeing on the terms of the transaction.
  2. Creating a digital contract.
  3. Connecting the contract to external services and internal systems of financial organizations.
  4. Monitoring the execution of the transaction terms.
  5. Automatically executing the contract when the specified requirements are met.

When executing a digital agreement, an audit trail is formed, which helps identify the sequence of actions of the agreement participants. Computer contracts also have cryptographic protection to prevent attacks from cybercriminals.

Smart contracts are actively used for conducting transactions in the blockchain. They allow for controlling and verifying the recording of information automatically. The contract terms are represented in a formal manner and translated into a programming language. A smart contract, accessible to all blockchain participants, can have varying degrees of complexity. One digital contract can be linked to others. The blockchain network stores not only a set of interconnected transactions but also all the information generated by smart contracts.

Example of practical use of a smart contract

Let's suppose you have a digital asset, for example, an NFT created by you, and you want to sell it to another person for a specific cryptocurrency, such as ETH. You can make the deal using a smart contract on the blockchain.

The smart contract will contain the terms of the transaction: the sale price, the form of payment, and any additional conditions, if applicable.

A buyer is found who agrees to your conditions. However, they only have bitcoins in their account. After the buyer confirms their willingness to pay the corresponding amount, the smart contract automatically performs the following actions:

  1. Checks the fulfillment of all transaction conditions specified by you.
  2. Checks the sufficiency of funds in the buyer's account. It also recalculates BTC to ETH using a service that tracks the current cryptocurrency rates.
  3. "Freezes" the NFT you put up for sale - until the transaction is completed, any operations with it become unavailable.
  4. Deducts the corresponding amount of BTC from the buyer's account.
  5. Transfers the corresponding amount of ETH to you based on the exchange rate.
  6. Transfers your NFT to the buyer.
  7. Records information about the transaction in the blockchain, where it is recorded and becomes visible to other participants.

Thus, a smart contract allows for conducting transactions between parties without the need to trust each other or use intermediaries. This ensures automatic and secure execution of the transaction.