A QUICK SIMPLE GUIDE TO SMART CONTRACTS

We often hear the word ‘Smart Contracts’ thrown around whenever a discussion happens about blockchain. This might come out to be a bit confusing especially to those individuals who are unaware of what smart contracts are and how they work. 

So, here is a quick simple guide that will walk you through all the aspects of smart contracts.  

What Are Smart Contracts? 

‘Smart Contracts’ – the term was first coined by a prominent computer scientist and cryptographer – Nick Szabo when he first put forward the idea way back in the 1990s. Szabo found that decentralized ledger technology can be used for smart contracts, and Bitcoin became the first cryptocurrency that supported basic smart contracts.  

Though bitcoin does enable the development of smart contracts viz escrows, time locks, payment channels, and multisig accounts, their use cases are limited to some extent. On the other hand, Ethereum was created keeping smart contracts in mind. Therefore, it enables the development of decentralized applications. Presently, it is one of the most remarkable smart contracts being used. 

How Smart Contracts Work? 

Unlike traditional contracts that are drafted by lawyers, smart contracts are developed through cryptographic codes. Smart contracts are written in codes and contain complex if-then statements. They have the ability to self-execute, but it is only fulfilled during instances when it meets the specific established conditions. 

Due to this reason, smart contracts eliminate the requirement of a third party enabling participating parties to make transfers directly. 

Benefits of Smart Contracts 

• Accuracy 

Being digitally automated, there are minimal to fewer chances of errors when you are dealing with smart contracts than traditionally written manual contracts. 

• Backup 

Blockchain has got all the data duplicated. Therefore, even if you lose your data, you have not really lost it. 

• Autonomy 

Smart contracts as stated earlier eliminates the requirement of third parties like lawyers, intermediaries, brokers, etc. Therefore, you get to have complete control over your agreement without having to worry about manipulations by third parties. 

• Savings  

With intermediaries eliminated, you will get to cut short a lot of expenses. 

• Safety 

Smart contracts are hack resistant as they are protected with complex cryptography. 

• Trust 

You can completely trust the shared ledger where your documents are stored. As they are encrypted, there will be no risk of stealing or data loss.  

• Speed 

Smart contracts leverage software code to automate tasks, unlike traditional contracts where you will have to spend a massive lot of time in paperwork. Therefore, smart contracts cut off the time required to process a contract. 

An Important Question – Will Smart Contracts Replace Lawyers? 

It is true that smart contracts are revolutionizing how contracts are made across different industries. However, we aren’t really sure whether it would replace lawyers and traditional contracts.  

Essentially, the group of people who believe smart contracts will tag lawyers useless also believe that code is law. But smart contracts are simply codes that are used to execute a fundamental legal agreement. Smart contracts are not the law itself.  

As for now, smart contracts aren’t legally binding. 

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 A Beginners Mini Guide To Cryptocurrency 

Seen as a rebellious technological invention that could overturn the world’s financial institutions, cryptocurrency has endured the speculations of the wild market. Though people are familiar with crypto terms such as Ethereum, Bitcoin, and more, very few understand the fundamental working principle behind cryptocurrency especially when it comes to the financial arena.  

So, we have put together a mini guide to help you out with determining whether cryptocurrencies are for you and to also keep you away from getting ripped off.  

What Is Cryptocurrency? 

Let’s start with the basics – what is cryptocurrency. Typically, cryptocurrency is just a way of managing and transferring value online using cryptographical functions. As it leverages blockchain technology, it is decentralized, transparent, and immutable – the three greatest features of cryptocurrency.  

Among the three features, decentralization happens to be the greatest most important feature of cryptocurrency as this feature makes cryptocurrency uncontrolled by any form of central authorities. Additionally, decentralized nature also makes cryptocurrency immune to the traditional ways of control and interference established by the government.  

Cryptocurrency exchanges can take place between two parties through both private and public keys. Such transfers being devoid of steep fees charged by traditional financial institutions happens with minimal processing fees as well.  

Cryptocurrency Mining 

The interesting fact about cryptocurrency mining is that it allows almost anyone to be a miner. As cryptocurrency follow a decentralized structure, it doesn’t hold the authority supervise this task. Thus, cryptocurrency must have some mechanism in order to prevent the ruling party from abusing this ability.  

For instance, what if there was someone who created thousands of peers and forged the transactions? It will lead to the system breaking down immediately.  

Due to this reason, Satoshi, when he invented cryptocurrency, defined a rule for miners – every miner needs to invest some part of their work into their system to get qualified to do this task. In fact, what they actually have do is find a hash.  

A hash is nothing but the resultant product of a cryptographic function that links the newly created block with its antecedent and the entire process is called the Proof-of-Work. When it comes to Bitcoin, Proof-of-Work follows the SHA 256 algorithm. 

The Top 5 Cryptocurrency 

1. Bitcoin 

Bitcoin is the go-to leader when it comes to the cryptocurrency industry. In fact, according to the studies conducted by Coin Market Cap, the market capitalization of the world's top digital currency is more than $179 billion, with a price per coin of more than $9,9901. 

2. Ethereum 

Ethereum has made it to this list because it is that digital token which sparked the invention of Initial Coin Offering (ICO). Though it is comparatively smaller than Bitcoin, it holds a trading price of around $185 per token and a market cap of $20 billion. The recent studies have found out the total number of ETH tokens present in circulation around the world to be more than 100.7 million.  

3. Ripple 

Next on our list is the pretty popular Ripple that holds a total market capitalization of over $11.8 billion. Unlike the other cryptocurrencies that we have on this list, the value of XRP tokens is too small (50 cents per token). Nevertheless, the amount of XRP in circulation account to 39 billion tokens which is quite high.  

4. Bitcoin Cash 

A spin-off of bitcoin, Bitcoin cash was the resultant product of a hard fork. The estimated marketing cap of Bitcoin cash is $5 billion, and it holds a market value of $298 per coin. The total circulation accounts for over 17,2 million BCH.  

5. EOS 

Last on our list is EOS that rocks a total circulation of 926+ million token and a market cap of $3.83.  

How Can You Buy Cryptocurrency? 

More and more way to buy cryptocurrency are becoming available with every passing day. Thus, it goes without saying that buying cryptocurrency has grown to be a lot more easier than before. Here is our shortlist of ways to buy cryptocurrency.  

• Crypto ATM 
• Crypto exchanges (Decentralized or Centralized) 
• Crypto Brokers 

All these three methods are ample to use even if you are a complete newbie at buying cryptocurrency. However, if you ask us what the best option is, our simple answer would be: it depends on your geographical location and your needs.  

Cryptocurrency Exchanges 

Cryptocurrency exchanges to put it simply are web-services that help people turn their cash into cryptocurrency and the other way around. Basically, exchanges offer services that help people trade cryptocurrency like Ethereum, Bitcoin, Litecoin, etc.  

In the upcoming section, we will discuss the three types of cryptocurrency exchanges - Centralized (CEX), Decentralized (DEX), and Hybrid. 

• Centralized Cryptocurrency Exchanges (CEX) 
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Centralized Cryptocurrency Exchanges aka CEX are pretty much identical to traditional stock exchanges. It is a platform that acts as a middleman for both sellers and buyers to come together to do trading.  

In the crypto arena, the word ‘centralized’ often means ‘to trust someone with handling your money’.  

A centralized exchange works in the following way: 

• You hand over your money to the exchange 
• Like a bank or a middleman, they exchange then stay in possession of your money 

• You keep an eye on the rates available for cryptocurrency on the exchange 
• You trade your fiat currency (physical currencies like the US dollar) for a cryptocurrency (digital assets like Bitcoins) 
• You place the order 
• The exchange will then find you a seller who matches your buy. On the other hand, if you are selling, the exchange will find you a buyer.  
• And, finally, you have successfully completed your crypto exchange 

However, the only issue with cryptocurrency exchange is that it is vulnerable to hacks.  

• Decentralized Cryptocurrency Exchanges (DEX) 
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Now, we are going to talk about decentralized cryptocurrency exchanges. Decentralized cryptocurrency exchanges main goal is to do complete justice to the founding philosophy behind the cryptocurrency industry.  

DEX does not depend on middleman and thus doesn’t hold your fund. Long story short, DEX is a platform where both the buyer and the seller come together to do trading with each other. Simply put, DEXs promote peer-to-peer trades. 

The greatest advantage of DEX is that it is hard to hack. Talking about the disadvantages, working with DEX, you might easily get yourself out of money. Additionally, low volumes and liquidity is yet another demerit that happens as a result of low popularity.  

• Hybrids 
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Hybrid cryptocurrency exchanges are popularly known as the next generation crypto trading marketplace. These platforms combine the benefits of both CEX and DEX to offer the functionality and liquidity of CEX and the privacy and security of DEX. Many crypto enthusiasts find hybrid platforms to be the future of cryptocurrency trading experience.  

Qurrex launched in 2018 is the first-ever hybrid exchange platform in the world.  

The Offers That DigiXHub Has In Store For You 

At DigiXHub,one of the best blockchain application development company, features a panel of blockchain experts who works with the aim to deploy the best cryptocurrency exchange networks in the world. Our solutions are user-friendly and offer high-end codes and military security to enhance your exchange business.  

Want to mint high revenue and turn heads your way? Reach out to us for a live demo and get your exchange platform built now! 

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