Explained: Life cycle of smart contracts on a blockchain

cnbctv18.com:

The Ethereum network founded in 2013 by programmer Vitalik Buterin along with other crypto enthusiasts has managed to steal the limelight from bitcoin for a while now. The primary reason for this was that the Ethereum network could be used for multiple applications, unlike bitcoin.While Ethereum used the same underlying blockchain technology as bitcoin, what made all the difference was the use of smart contracts on the Ethereum network.

Let’s delve a bit deeper into the concept of smart contracts and how they are executed on the blockchain.What are smart contracts?As mentioned above, Smart contracts were first introduced on the second-generation Ethereum blockchain. These are nothing but programs that are designed to execute when certain predefined criteria are met on the blockchain.

The objective of having smart contracts is swift execution, without intermediaries, and automation.Smart contracts consist of three primary components:A contractual arrangement between partiesThe governance of set conditions in executing contractual obligationsImplementation of the contractThe code that powers smart contracts incorporates set ‘if/when…then…’ conditions to make the contract work on the blockchain. When these criteria are met, the contractual activities are executed by programs on decentralized applications or dApps.

The coding language for smart contracts on the Ethereum blockchain is called Solidity, a Turing-complete language.The potential activities that can be run using smart contracts include payment transfers, vehicle registrations, sending alerts, ticket issuances, etc. The blockchain data is updated as soon as the selected transaction is completed.