Cointelegraph’s Jackson DuMont delves into the world of smart contracts in the most recent episode of Cryptopedia. In this episode, he breaks down the fundamentals of smart contracts and provides real-world examples of their practical applications.
According to DuMont, smart contracts are blocks of code embedded within the blockchain that automatically execute when specific conditions are met. These contracts, powered by blockchain technology, have the ability to facilitate transactions without the need for intermediaries.
To illustrate this concept, DuMont draws a comparison between transacting on a centralized exchange such as Binance and utilizing a decentralized exchange (DEX) like Uniswap, which operates on smart contracts.
When conducting transactions on Binance, users must place their trust in the platform to complete the transaction. The execution of the transaction hinges on the user’s faith in the third-party intermediary, in this case, Binance. Conversely, DuMont highlights that:
“In contrast, transactions executed through smart contracts on a decentralized exchange like Uniswap are based on a network that is not controlled by a single entity. Instead, a global network of anonymous nodes oversees the operations.”
Put simply, these nodes are small servers that constantly communicate with one another to ensure that the blockchain’s data remains consistent. This includes the replication and distribution of smart contracts to all nodes within the network.
Lastly, DuMont emphasizes the wide range of applications for smart contracts across various sectors, including investing, gaming, voting, crowdfunding, insurance, and more. He notes that the potential uses for smart contracts are only limited by human creativity.