What is a Smart Contract?
A smart contract is often referred to as the process of putting financial thought into code.
In more specific terms, a smart contract is a piece of computer programming code, usually written in a high level language, that instructs a blockchain on how to receive, process, store and distribute funds. Smart contracts are therefore the building blocks of financial applications that live on distributed and decentralized networks that process cryptocurrency.
These decentralized applications are often called D'Apps.
A smart contract can automatically execute all or parts of an agreement or instruction, and is stored on a blockchain-based platform. The code can either be the sole manifestation of an agreement between the parties or might complement a traditional text-based contract and execute certain provisions, such as transferring funds from Party A to Party B. The code itself is replicated across multiple nodes of a blockchain and, therefore, benefits from the security, permanence and immutability that a blockchain offers.
The most common programming languages used for Smart contract development are:
- Solidity
- Vyper
- Python
- Haskell (Plutus)
Of these, Solidity is the most widely used and is also the language of the Caduceus IDE
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