A Complete Introduction to Smart Contract Development

Among the most practical uses of blockchain technology are smart contracts. Smart contracts enable us to program and store new data into blocks while maintaining decentralization, security, and transparency by utilizing the applications of blockchain technology.

LBM Solutions Global explains the fundamentals of the introduction and development process of smart contracts in this article.

1. What is a smart contract?

An agreement or contract's terms can be automatically carried out, controlled, or documented by a computer program or transaction protocol called a smart contract. A blockchain is a distributed ledger that records transactions and guarantees their security and immutability. Smart contracts are kept on blockchains. An agreement can be automatically carried out by smart contracts, doing away with the necessity for a centralized authority, a court system, or an outside enforcement agency. If you're considering implementing smart contracts for your business, collaborating with a reputable smart contract development company can streamline the process and ensure optimal results.

A Smart Contract includes 4 elements:

• The parties who are directly involved in the contract are its subjects. It gives the parties access to manage the process of carrying out the contract.
  
• Terms of the contract: Described and agreed upon by the parties. They require specific programming and are described in string form.
  
• Digital signature: To engage in a Smart Contract, the parties must decide on a digital signature and carry out transactions using it.
• Decentralized platform: The Smart Contract is posted to the Blockchain platform for additional distribution and data storage after the agreement is finalized. 

2. Differences between a smart contract and a traditional contract

Both a standard contract and a smart contract are arrangements between two or more parties that outline the terms and circumstances of a trade or transaction. Nonetheless, there are a few significant distinctions amongst them that have an impact on their formulation, implementation, and enforcement. The following are a few of the primary variations:

•  A smart contract is a computer program that runs on a blockchain, which is a distributed ledger that records and verifies transactions. A traditional contract is usually a written document that is signed by the parties and witnessed by a third party.
•  A smart contract is self-executing and can automatically perform actions when certain conditions are met. A traditional contract requires human intervention or external enforcement mechanisms to ensure compliance.

• A smart contract is immutable and transparent, meaning that it cannot be changed or tampered with once it is deployed on the blockchain. A traditional contract can be modified or breached by the parties or by external factors.

•  A smart contract is more secure and efficient than a traditional contract, as it reduces the risk of fraud, error, miscommunication, and intermediation costs. A traditional contract may involve more uncertainty, complexity, and expense. 

3. Some real-world use cases of smart contracts

Smart contracts have many potential applications in different domains and industries, such as:

Finance: Decentralised finance (DeFi) services, including cryptocurrency staking, trading, lending, and borrowing, can be made possible by smart contracts. The compound is one DeFi platform where users may utilize smart contracts to borrow assets against collateral and earn interest. Remittances, escrow services, and international payments can all be facilitated using smart contracts.

Gaming: Non-fungible tokens (NFTs), for example, are digital assets that can be created by smart contracts that are distinct, rare, and verifiable. NFTs can be used to represent in-game goods, characters, or collectibles that players can possess, exchange, or utilize. For instance, the game CryptoKitties lets users to use smart contracts to breed, collect, and sell virtual cats.

Legal: Legal procedures including contract drafting, execution, and enforcement can be made more efficient and straightforward with the help of smart contracts. By offering precise and transparent guidelines and results, smart contracts can also lessen the need for attorneys, courts, and arbitrators. For instance, OpenLaw is a platform that enables users to use smart contracts to construct and administer legal agreements.

Real estate: Real estate transactions, including the purchase, sale, rental, or leasing of real estate, can be made more secure and efficient with the help of smart contracts. By automating the verification of ownership, identification, and payments, smart contracts can also remove the need for middlemen like agents, brokers, or notaries. One platform that enables people to purchase and sell real estate using smart contracts is called Propy. 

Healthcare: Clinical trials, prescription drugs, insurance claims, and patient data are just a few examples of healthcare services that smart contracts might improve in terms of quality and accessibility. Smart contracts that provide encryption and selective sharing can also guarantee the confidentiality and privacy of health data. For instance, MedRec is a system that builds a decentralized network of medical records using smart contracts. 

4. Five steps to create a smart contract

To create a smart contract, you need to follow some steps:

•  Choose a programming language

Initially, you must select a programming language that works with Ethereum's Virtual Machine (EVM), which serves as the smart contract execution environment. Solidity is the most extensively used and well-liked high-level language; it looks like a cross between C++ and JavaScript. Although they are less popular and have less documentation and support, you can still utilise other languages like Vyper and Serpent.

•  Write smart contract code

Second, you must use an editor or integrated development environment (IDE) that supports Solidity or your preferred language for writing the code for your smart contract. You have the option of using local tools like Visual Studio Code, Atom, or Truffle, or online ones like Remix IDE, Pragma, or Ethereum Studio. Online lessons and code samples for smart contracts are widely available.

For projects for its clients, LBM Solutions Global uses the following effective tools and technology.

• Compile code into bytecode 

Third, you must translate the code in your smart contract into bytecode that the EVM can comprehend. You have two options for using a compiler: a standalone compiler like solc or solc-js, or the one that comes with your editor or IDE. An application binary interface (ABI), a JSON file that outlines the features and specifications of your smart contract, is also produced when your code is compiled.

•  Deploy smart contract bytecode

The fourth step is to upload the bytecode for your smart contract to the Ethereum network. A transaction containing your bytecode and ABI can be sent to an Ethereum node by connecting via a web service like MyEtherWallet or Infura, or by using a plugin like MetaMask for your web browser. The gas fee, which covers the cost of running your smart contract on the blockchain, will require some Ether from you. You have the option of deploying your smart contract to either a test, which is a simulated network used for testing, or the main net, which is the official Ethereum network. Popular test nets include Goerli, Kovan, Rinkeby, and Ropsten.

•  Interact with smart contract

Fifth, you must use the address and ABI of your smart contract to communicate with it. To call the functions and read the data of your smart contract, you can use the same tools that you used for deployment, like MetaMask or MyEtherWallet, or you can use other tools, like Etherscan or Web3.js. Moreover, you may use HTML, CSS, and JavaScript to develop a web user interface for your smart contract. 

5. Some popular smart contract development platforms

•  Ethereum

The first smart contract platform in history, Ethereum is still the most well-liked among developers. It is compatible with a wide range of decentralized apps (DApps) across multiple industries, including social networking, gaming, banking, and the arts. Solidity is the primary programming language used by Ethereum. It is a high-level language that is similar to C++ and JavaScript. In addition, Ethereum boasts a sizable and vibrant community, a robust security mechanism, and a rich ecosystem of tools and libraries. But Ethereum also has to deal with issues like network congestion, expensive petrol prices, and scalability.

•  Solana

With low latency and low cost, Solana is a high-performance, quick, and scalable network that can handle up to 50,000 transactions per second (TPS). Proof of History (PoH), a unique consensus technique used by Solana, timestamps transactions using a verifiable delay function (VDF). Additionally, Solana supports smart contracts written in several languages, including TypeScript, C, C++, and Rust. Particularly in the domains of DeFi, NFTs, and Web3, Solana has drawn a large number of developers and consumers who are looking for speed and efficiency.

•  Avalanche

Avalanche is a platform that makes it possible to create unique decentralized apps and blockchains that work together. Fast finality and high throughput are made possible via Avalanche's proprietary consensus mechanism, Avalanche Consensus, which is built on a directed acyclic graph (DAG) structure. Smart contracts created in Solidity or other languages compatible with Ethereum can also be supported by Avalanche. Avalanche seeks to offer a versatile, scalable, and secure solution for a range of use cases, including enterprise, gaming, identity, and DeFi. 

FINAL THOUGHT

Generally speaking, creating smart contracts is a challenging job for a company. One of two approaches can be taken: outsourcing or in-house. While in-house development offers greater control and flexibility, it also necessitates greater resources and dedication. However, outsourcing development comes with extra dangers and obstacles along with increased convenience and efficiency. Therefore, the best choice for you will rely on your objectives and unique circumstances. To get the best of both worlds, you might also think about using a hybrid strategy that blends the two approaches.