Smart Contract & Ethereum
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Ethereum is an open-source blockchain platform that enables developers to build decentralized applications and smart contracts. It differs from Bitcoin in that it allows developers to build applications on top of its blockchain using its token Ether. Smart contracts on Ethereum use "gas" paid in Ether to execute transactions and are programs that automatically execute the terms of a contract. While smart contracts provide benefits like security, standardization and reducing the need for third parties, they also have disadvantages like being vulnerable to human error in coding and having an uncertain legal status.
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Smart Contract & Ethereum
- 1. Ethereum & Smart Contract By: Akshay Singh
- 2. Index Blockchain Overview Ethereum • How Its Different From Bitcoin! • What is Ether? • Pros & Cons Smart Contract • Why We Need? • Pros & Cons Demo Q&A
- 3. Blockchain “The Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
- 4. Why Need Blockchain? Trust Shifting Decentralization Automation Machine To Machine Cryptography Private Key Permission-Less Validity Control Self System & Cross Checking Uniqueness No Double Spending AuthenticationImmutability
- 5. Ethereum • Ethereum was proposed in late 2013 by Vitalik Buterin. At its simplest, Ethereum is an open software platform based on Blockchain technology that enables developers to build and deploy Decentralized applications. • Ethereum’s token, “Ether,” works in a similar manner to Bitcoin. You can buy and sell it, with confirmations for transactions handled over the Blockchain. • It’s entirely decentralized, with no banks providing the confirmations needed to validate transactions. Instead, “miners” around the world fulfill that role
- 6. Bitcoin vs Ethereum Bitcoin • Bitcoin was the first true cryptocurrency and has been in circulation since 2009. • Bitcoin take 10 minutes to 1 hour to settle transactions. • The reward for mining Bitcoin halves about every four years and it is currently valued at 12.5 bitcoins. Ethereum • Ethereum is a far more recent development, going live in 2015. • Ethereum is certainly faster than with transactions typically settling in 12 seconds. • Ethereum rewards miners based on its proof-of-work algorithm called Ethash, with 5 ether given for each block.
- 7. What is Ether? • Like bitcoin, ether is a digital bearer asset. Just like cash, it doesn't require a third party to process or approve a transaction. But instead of operating as a digital currency or payment, Ether seeks to provide “Fuel" for the decentralized apps on the network. • ‘Ether' has sometimes been called ‘Digital Oil', and taking this analogy further, Ethereum transaction fees are calculated based on how much 'gas' the action requires.
- 8. Pros & Cons Pros • Immutability • Corruption & tamper proof • Secure • Zero downtime Cons • Immutable • Smart contracts written by humans • Code bugs • Attack or Exploitation
- 9. Smart Contract • Smart contracts were first proposed by Nick Szabo, who coined the term, in 1994. Proponents of smart contracts claim that many kinds of contractual clauses may be made partially or fully self-executing, self-enforcing, or both. • A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.
- 10. Why We Need? • Smart contracts are for Blockchain implemented with transaction constraints • Smart contracts will define contracts terms Digitally . • Smart contracts provide a description of responsibilities. • Smart contracts bind parties to their duties. • Smart contracts can establish a time frame for duties. • Smart contracts provide recourse when the relationship falters.
- 11. Pros & Cons Pros • Security • Economy and speed • Standardization Cons • Human factor • Uncertain legal status • Implementation costs
- 12. Demo Click To Start Demo
- 13. Q&A
Editor's Notes
- Contracts provide a description of responsibilities. Rather than suffer through the confusion of wondering what each party’s responsibilities are, you’re better to have everything in writing. This will help avoid confusion or disagreement. Contracts bind parties to their duties. It is incredibly disruptive if one party attempts to back out of an agreement. A contract will bind the parties to the previously defined description of duties eliminating this problem. Contracts can establish a time frame for duties. If you need work performed and performed within a certain time frame a contract binds the party to that time frame. As a consultant, you might want to require the other party to provide adequate and timely access to key personnel, for example. Contracts can secure payment. No one likes to be stiffed for work performed and a binding contract provides a written legal document establishing an agreement to be paid for services rendered. Contracts provide recourse when the relationship falters. If the relationship between the contracted parties deteriorates, a contract outlines the previously agreed upon steps required for dissolving the relationship without punitive measures.
- Smart contracts provide: Security The smart contract is encrypted and distributed among nodes. This guarantees that it will not be lost or changed without your permission. Economy and speed Most processes are automated, and most intermediaries are eliminated. Standardization There is a wide range of different types of smart contracts nowadays. You can choose one and change it according to your needs. Here are some of the issues smart contracts might have: Human factor The code is written by people, and they can make mistakes. If the smart contract is in the Blockchain, it couldn’t be changed. A good example of the human error is The DAO. Developers’ mistakes in the code were costly for the users and the company - some hackers exploited errors and stole about $60 mln. Uncertain legal status Currently, smart contracts are not regulated by any government. So there is a potential issue if governmental institutions decide to make a legislative framework for smart contracts. Implementation costs Smart contracts cannot be performed without programming. It is essential to have an experienced coder on the staff to make fail-proof smart contracts and adopt the internal structure of the company for Blockchain technology.