A Complete Introduction to Smart Contract Development
Smart contracts represent one of the most useful applications of blockchain technology. Taking advantage of the applicability of blockchain, smart contracts help us program and save additional data into blocks while still ensuring decentralization, security and transparency.
In this article, VNEXT Global shares the basics about the introduction and method of smart contract development.
1. What is a smart contract?
A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control or document events and actions according to the terms of a contract or an agreement. Smart contracts are stored on a blockchain, which is a distributed ledger that records transactions and ensures their security and immutability. Smart contracts can be used to automate the execution of an agreement without the need for a central authority, legal system, or external enforcement mechanism.
A Smart Contract includes 4 elements:
- Subject of the contract: The parties directly participating in the contract. In which parties are granted access to control the contract execution process.
- Contract terms: Are the agreement contents set out and accepted by the parties. They are specified in string form and special programming.
- Digital signature: The parties must agree on a digital signature when participating in a Smart Contract and perform operations through that digital signature.
- Decentralized platform: Once the agreement is completed, the Smart Contract is uploaded to the Blockchain platform for further distribution and data storage.
2. Differences between a smart contract and a traditional contract
A smart contract and a traditional contract are both agreements between two or more parties that specify the terms and conditions of a transaction or an exchange. However, there are some key differences between them that affect how they are created, executed, and enforced. Here are some of the main differences:
• 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: Smart contracts can enable decentralized finance (DeFi) services, such as lending, borrowing, trading, investing, and staking cryptocurrencies. For example, Compound is a DeFi platform that allows users to earn interest or borrow assets against collateral using smart contracts. Smart contracts can also facilitate cross-border payments, remittances, and escrow services.
• Gaming: Smart contracts can create digital assets that are unique, scarce, and verifiable, such as non-fungible tokens (NFTs). NFTs can represent in-game items, characters, or collectibles that can be owned, traded, or used by players. For example, CryptoKitties is a game that allows users to breed, collect, and sell digital cats using smart contracts.
• Legal: Smart contracts can streamline and simplify legal processes, such as contract drafting, execution, and enforcement. Smart contracts can also reduce the need for lawyers, courts, or arbitrators by providing clear and transparent rules and outcomes. For example, OpenLaw is a platform that allows users to create and manage legal agreements using smart contracts.
• Real estate: Smart contracts can improve the efficiency and security of real estate transactions, such as buying, selling, renting, or leasing properties. Smart contracts can also eliminate the need for intermediaries, such as agents, brokers, or notaries, by automating the verification of ownership, identity, and payments. For example, Propy is a platform that allows users to buy and sell properties using smart contracts.
• Healthcare: Smart contracts can enhance the quality and accessibility of healthcare services, such as patient records, prescriptions, insurance claims, or clinical trials. Smart contracts can also ensure the privacy and security of health data by allowing selective sharing and encryption. For example, MedRec is a system that uses smart contracts to create a decentralized medical record network.
4. Five steps to create a smart contract
To create a smart contract, you need to follow some steps:
• Choose a programming language
• Write smart contract code
Second, you need to write your smart contract code using an editor or an integrated development environment (IDE) that supports Solidity or your chosen language. You can use online tools, such as Remix IDE, Pragma, or Ethereum Studio, or you can use local tools, such as Visual Studio Code, Atom, or Truffle. You can find many tutorials and examples of smart contract codes online.
Here are some efficient tools and technologies that VNEXT Global are using for clients projects.
• Compile code into bytecode
Third, you need to compile your smart contract code into bytecode that can be understood by the EVM. You can use the compiler provided by your editor or IDE, or you can use a standalone compiler, such as solc or solc-js. Compiling your code will also generate an application binary interface (ABI), which is a JSON file that describes the functions and parameters of your smart contract.
• Deploy smart contract bytecode
Fourth, you need to deploy your smart contract bytecode to the Ethereum blockchain. You can use a web browser extension, such as MetaMask, or a web service, such as MyEtherWallet or Infura, to connect to an Ethereum node and send a transaction that contains your bytecode and ABI. You will need to pay some Ether for the gas fee, which is the cost of executing your smart contract on the blockchain. You can choose to deploy your smart contract to the main net, which is the official Ethereum network, or to a test, which is a simulated network for testing purposes. Some of the popular test nets are Ropsten, Rinkeby, Kovan, and Goerli.
• Interact with smart contract
5. Some popular smart contract development platforms
Solana is a high-performance, fast, and scalable network that can process up to 50,000 transactions per second (TPS) with low latency and low cost. Solana uses a novel consensus mechanism called Proof of History (PoH), which timestamps transactions with a verifiable delay function (VDF). Solana also supports smart contracts written in various languages, such as Rust, C, C++, and TypeScript. Solana has attracted many developers and users who seek speed and efficiency, especially in the fields of DeFi, NFTs, and Web3.
Avalanche is a platform that enables the creation of custom blockchains and interoperable decentralized applications. Avalanche uses a unique consensus protocol called Avalanche Consensus, which is based on a directed acyclic graph (DAG) structure and allows for fast finality and high throughput. Avalanche also supports smart contracts written in Solidity or other Ethereum-compatible languages. Avalanche aims to provide a scalable, secure, and flexible solution for various use cases, such as DeFi, gaming, identity, and enterprise.
In general, smart contract development is a complex project that a business is facing. There are 2 ways to proceed: in-house or outsourced. On the one hand, in-house development gives you more control and flexibility, but it also requires more resources and commitment. On the other hand, outsourcing development gives you more convenience and efficiency, but it also involves more risks and challenges. So the best option for you depends on your specific situation and goals. You can also consider a hybrid approach that combines both options to get the best of both worlds. For example, you can outsource some parts of your smart contract development that are not core to your business or that require specialized skills, while keeping other parts in-house that are critical to your strategy or that require ongoing support and collaboration
When it comes to outsourcing decisions, you may face difficulties in finding, hiring, and retaining qualified developers who have experience and expertise in smart contract development. If you are looking for a trusted IT partner for crypto development solutions, VNEXT Global is a prioritized blockchain development company. So far, VNEXT Global delivered full-cycle IT services to 289+ clients all over the world with 600+ mobility projects in various industries (Blockchain Development, Healthcare, Mobile App, Web App, System Development and Testing Services). Regarding the blockchain development sector, we are covering NFT Marketplace, GameFi Development, E-Wallet, iGaming & Lottery Services, ICO Support, P2E (Play-to-Earn) with an agile process. With 14+ years of experience, we certainly can help you to optimize your business digitalization within a small budget and short time.
Please feel free to drop us an email when it is convenient for you to have an online meeting to discuss this further. Have a productive day!