Smart Contracts in the Blockchain technology

1. Blockchain
Technology
Ethereum Network , Smart
Contracts

2. As a blockchain network, Ethereum is a decentralized public
ledger for verifying and recording transactions. The network's users
can create, publish, monetize, and use applications on the platform,
and use its Ether cryptocurrency as payment. Insiders call the
decentralized applications on the network "dApps.“
Ether is a decentralized digital
currency, also known as ETH. In
addition to being a tradeable
cryptocurrency, ether powers the
Ethereum network by paying for
transaction fees and computational
services. Ether is paving the way for a
more intelligent financial platform.

3. • Users pay fees to use dApps on the Ethereum platform. These fees
are called "gas" because they vary depending on the amount of
computational power used.
• The median fee for gas was above $10 per transaction in early 2021,
according to the Ethereum Gas Report.
• The length of time it takes to mine Ethereum and receive Ether
mining rewards depends on the hashrate, power consumption, cost
of electricity, and any fees paid to a mining pool and/or hosting
service related to the mining operation.
• These factors also directly impact profitability and increases in
mining difficulty targets and the overall price performance of the
crypto market. Using the default calculations of this popular
Ethereum mining calculator,
• it is estimated that mining one ETH will take 51.8 days.

5. • The ethereum network is a public blockchain network. It forms the basis of
all decentralized peer-to-peer applications and organizations run on the
network.
• The network is comprised of two types of nodes namely, full nodes and
light-weight-nodes:-
1) Full nodes contain the entire history of transactions since the genesis
block. They are a full-fledged proof of the integrity of the blockchain
network. Full nodes have to contain each and every transaction that has
been verified according to the rules set up by Ethereum’s specifications.
2) Light-weight nodes on the other hand only contain a subset of the entire
entire blockchain. These types of nodes are mostly used in e-wallets which
have to be light-weight in nature and hence the entire blockchain cannot
be stored on them. These nodes, in contrast, do not verify every block or
transaction and may not have a copy of the current blockchain state. They
rely on full nodes to provide them with missing details (or simply lack
particular functionality).
• The advantage of light nodes is that they can get up and running much
more quickly, can run on more computationally/memory constrained
devices, and don’t eat up nearly as much storage.

6. • Ethereum, like any blockchain, is a database of information that is
designed to be unhackable. Ether, or ETH, is the cryptocurrency used
to complete transactions on the blockchain.
• Unlike in a traditional database, information in a blockchain is
organized as a chronological "chain" made up of "blocks" of data.
For instance, every transaction using an Ether coin must be verified
and recorded as an additional block on that coin's unique
blockchain. This process of recording every transaction in a sequence
is the reason that a blockchain is often compared to a ledger.
• The Ethereum blockchain stores more than transaction records for
Ether currency. It allows software developers to create games and
business applications, called dApps, and market them to users. Those
users want to take advantage of the relative lack of risks that come
with storing sensitive information on the World Wide Web.

7. • A smart contract is a self-executing contract with the terms of the
agreement between buyer and seller being directly written into lines
of code.
• The code and the agreements contained therein exist across a
distributed, decentralized blockchain network.
• The code controls the execution, and transactions are trackable and
irreversible.
• Smart contracts are computer protocols that facilitate, verify, or
enforce the negotiation and performance of some sort of agreement.
• For instance, a smart contract could be used to represent a legal
contract emulating the logic of contractual clauses or a financial
contract specifying responsibilities of the counterparts and
automated flows of value.
“Smart contracts are applications
that run exactly as programmed
without any possibility of
downtime, censorship, fraud or
third-party interference.”

8. Four core technological building blocks form the foundation of Ethereum’s
smart contract platform:
Cryptographic tokens and addresses: a mathematically secure unique
voucher system that allows for assets to be built on existing blockchains.
They can serve as payment for goods, services, and can also be used to
represent a mathematically secured and pseudonymous identity.
Peer-to-peer networking: individual users connect their computers together
to form a network that can exchange data without a central server. Bitcoin and
Ethereum run on P2P networks, as does nearly every other cryptocurrency in
use today.
Consensus algorithms: these algorithms permit blockchain users to reach a
consensus about the current state of the blockchain. The Bitcoin blockchain
reaches consensus on a global state change (which typically involves adding a
new block to the blockchain) about once every 10 minutes, whereas the
Ethereum blockchain reaches consensus in approximately 15 seconds.
Turing complete virtual machine: “Turing complete” system can run any
program and is powerful enough to implement any program defined in any
similarly computationally complete system.

10. Speed, efficiency and accuracy
Once a condition is met, the contract
executed immediately. Because smart
contracts are digital and automated,
there’s no paperwork to process and
no time spent reconciling errors that
often result from manually filling in
documents.
Trust and transparency
Because there’s no third party
involved, and because encrypted
records of transactions are shared
across participants, there’s no need
to question whether information
has been altered for personal
benefit.
Security
Blockchain transaction records are
encrypted, which makes them very
hard to hack. Moreover, because
each record is connected to the
previous and subsequent records on
a distributed ledger, hackers would
have to alter the entire chain to
change a single record.
Savings
Smart contracts remove the need
for intermediaries to handle
transactions and, by extension,
their associated time delays and
fees.

12.  Safeguarding the efficacy of medications
 Increasing trust in retailer-supplier relationships
 Making international trade faster and more
efficient

13. WHAT IS GAS?
Gas refers to the unit that measures the amount of computational effort
required to execute specific operations on the Ethereum network.
Since each Ethereum transaction requires computational resources to
each transaction requires a fee. Gas refers to the fee required to conduct a
transaction on Ethereum successfully.
Ethereum is the blockchain on which DApps run through smart contracts.
But it is not the currency that powers the blockchain. The currency is
known as Ether (ETH).
ETH is the token that facilitates transactions and operations on the
Ethereum network.
As with all DApps and programmes, services linked with the network
require computing power (which is not free), ETH acts as a form of
payment. The ETH token thus allows network participants to execute their
requested operations on the Ethereum blockchain network.
The ETH token, which is a cryptocurrency that can be bought, sold and
traded, reached an all-time high of $4,356.99 on May 12, 2021.

14. Just as a motorbike with an internal combustion engine requires fuel to run,
smart contracts require certain amounts of fees to successfully run. These
fees are known as ‘gas’ or ‘gas fees’.
In essence, gas fees are paid for in ETH by users who want to transact on the
Ethereum network.
Gas fees prevent users from running infinite loops of code on Ethereum,
which would strain the blockchain since all transactions need to be updated
and run by all nodes across the network.
More complex contracts require more gas fees than simple ones.
And if there isn’t enough gas, a smart contract gets halted. If there is
congestion in the Ethereum network and several users are trying to
transact concurrently, the average gas price rises.

15. The EVM is a runtime environment for every smart contract on Ethereum,
and enables the execution of code as intended. Consensus is maintained
across the Ethereum blockchain since every node runs on the EVM.
So when individuals use DApps built on Ethereum, they interact with smart
contracts by submitting transactions that execute functions of the DApps.
In other words, when a user sends a transaction request to a
contract, every node on the network runs the code and records the
output using the EVM, which converts smart contracts into code that
is readable by computers.
To update the transaction across nodes, mining is currently done using
a proof-of-work algorithm similar to that of Bitcoin.

16.  Decentralized applications—also known as "dApps" or "dapps"—are
digital applications that run on a blockchain network of computers
instead of relying on a single computer.
 Because dApps are decentralized, they are free from the control and
interference of a single authority.
 Benefits of dApps include the safeguarding of user privacy, the lack of
censorship, and the flexibility of development.
 Drawbacks include the potential inability to scale, challenges in
developing a user interface, and difficulties in making code modifications.

17.  DApps can run on a P2P network or a blockchain network. For example,
BitTorrent, Tor, and Popcorn Time are applications that run on computers
that are part of a P2P network, whereby multiple participants are consuming
content, feeding or seeding content, or simultaneously performing both
functions.
 In the context of cryptocurrencies, dApps run on a blockchain network in a
public, open-source, decentralized environment and are free from control
and interference by any single authority.
 For example, a developer can create a Twitter-like dApp and put it on a
blockchain where any user can publish messages. Once posted, no one—
including the app creators—can delete the messages.

19. Pros
• Promotes user privacy
• Resists censorship
• Flexible platform enables dApp development
Cons
• Experimental, may not be able to scale
• Challenges in developing a user-friendly interface
• Difficult to make needed code modifications