How are Smart Contracts Executed?
Smart contracts are self-executing contracts with the terms of the agreement directly written into code. Execution occurs on a blockchain, a decentralized ledger technology that ensures transparency and immutability.
1. Contract Deployment
To initiate a smart contract, developers write the contract's code using a programming language specific to the blockchain platform, such as Solidity for Ethereum. Once the code is complete, it is deployed to the blockchain, where it receives a unique address.
2. Event Triggers
Smart contracts operate on a set of predefined conditions. When these conditions are met (triggers), the contract is executed automatically. Events can include user actions, transactions, or other smart contracts interacting with one another.
3. Gas Fees and Execution
Execution often requires a fee, commonly known as "gas" on platforms like Ethereum. Users must pay this fee for the computational resources necessary to run the smart contract. The more complex the contract, the higher the gas fee.
4. Finalization
Once executed, the results are recorded on the blockchain, ensuring permanent and tamper-proof records of all transactions. This finalization is distributed across all nodes in the network, enhancing trust in the system.