How do Ethereum Smart Contracts Work?
Ethereum smart contracts are self-executing contracts with the terms of the agreement directly written into code. They operate on the Ethereum blockchain, which ensures transparency, security, and immutability. Here’s how they work:
1. Code Deployment
Developers write smart contracts using a programming language called Solidity. Once the code is ready, it gets deployed to the Ethereum blockchain, making it accessible to all network participants.
2. Triggering Events
Smart contracts can be triggered by various events, such as transactions from users or other contracts. When an event occurs, the contract's code executes automatically, facilitating transactions according to predefined rules.
3. Execution and Verification
Once invoked, the Ethereum Virtual Machine (EVM) processes the contract’s code across all network nodes. Each node independently verifies the execution, ensuring consensus and preventing manipulation.
4. Immutable Log
All transactions and contract executions are recorded on the blockchain. This becomes part of an immutable ledger, allowing users to audit contract behavior and results transparently.
5. Use Cases
Smart contracts have diverse applications, including decentralized finance (DeFi), supply chain management, identity verification, and more, revolutionizing traditional business practices.