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What is Ehereum Smart Contract?
When talking about Ethereum (what is ethereum), the first thing comes to you may be smart contract. But what is it? Smart contract is a computer protocol that runs on the decentralized network, intending to verify or enforce the negotiation or performance of a contract. And the key feature of smart contracts is trustless execution. Briefly speaking, in Ethereum, smart contracts can help you do cryptocurrency transaction, manage agreements, store information or share any thing of value under certain conditions without 3rd-party. Unlike the traditional contract, not only can smart contract define rules and penalties, but automatically enforce the obligations.
How Does Ethereum Smart Contract Work?
Anonymous parties reached a binding and transparent agreement, then the terms of the contract will be written as codes in the blockchain. It also needs Ethereum Virtual Machine (EVM) , a distributed global computer, to process the smart contract. Given that smart contracts run within the EVM, actually simultaneously executed by nodes in the decentralized network, therefore gas is needed. When trigger events occur, for example expiration, defaults, etc., which require computations, there will be a cost that measured in gas, and each gas unit should be paid for in ETH/Ether. Moreover, the price that gas/ETH changes dynamically as well.
Use Cases of Ethereum Smart Contract
Currently, Ethereum smart contract is being used in various industries and areas such as:
1. Fiat or cryptocurrency trading without middleman. We can do money or digital assets transaction on a decentralized exchange.
2. Health care or hospital system. We can transfer patient's health data in a security way.
3. Insurance like flight delay. If the flight delay event triggered, customers who bought the insurance can automatically get the refund.
4. Intellectual property and copyrights protection. To protect original works being illegally used.
5. Voting activities. To make the governance voting system fair, transparent and without fraud.
Generally, Ethereum smart contract is an awesome tool for many aspects of our daily life and benefits us a lot, and it will be more widely used in more businesses and industries in the future! As we mentioned above, processing and enforcing smart contract in Ethereum will consume gas/ETH, as the broader the use of Ethereum smart contracts, the more demand on ETH. That is one of the reason why Ethereum's marketcap ranks second and is as the most valuable altcoin in cryptocurrency market.