Cointelegraph’s Jackson DuMont delves into the world of smart contracts in the most recent installment of Cryptopedia. In this episode, DuMont breaks down the fundamentals of smart contracts and offers real-world examples of their practical applications.
According to DuMont, smart contracts are essentially lines of code embedded within the blockchain that automatically execute when specific conditions are met. These self-executing contracts, powered by blockchain technology, possess the ability to facilitate transactions without the need for intermediaries.
To illustrate this concept, DuMont draws a comparison between conducting transactions on a centralized exchange such as Binance and utilizing a decentralized exchange (DEX) like Uniswap, which relies on smart contracts.
When transacting on Binance, users must place their trust in the platform to successfully complete their transactions. The execution of these transactions is contingent upon the user’s faith in Binance as a third-party intermediary. Conversely, DuMont explains that with a DEX, the likelihood of smart contracts being executed is significantly higher since the network is not controlled by a single entity. Instead, a global network of anonymous nodes collectively operates the blockchain.
In simpler terms, nodes function as small servers that continuously communicate with one another to ensure the integrity of the data within the blockchain. This includes the replication and distribution of smart contracts to all nodes within the network, as DuMont clarifies.
Lastly, DuMont highlights the diverse range of use cases for smart contracts across various industries, including investing, gaming, voting, crowdfunding, payments, insurance, and more. He emphasizes that the potential applications for smart contracts are limited only by the imagination and creativity of individuals.