How do smart contracts work? And what is their importance?
Smart contracts are digital programs that automatically execute on the blockchain, implementing the terms agreed upon by the parties without the need for an intermediary.
In other words, they are "software code" that verifies the conditions, and if they are met, the operation is executed immediately.
Example: Automatically sending a cryptocurrency upon receiving a digital product.
✅ Smart contracts are used in:
– Decentralized trading
– Decentralized finance (DeFi) applications
– Digital token markets
– Gaming and digital identity
🟢 Advantages:
– Reducing reliance on intermediaries
– High security and transparency
– Automatic and fast execution
🔴 Challenges:
– Programming errors can lead to problems
– Difficulty in modification after deployment
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✅ Summary:
Smart contracts represent the cornerstone of the modern blockchain economy, opening new horizons for innovation.
📌 In the next lesson: What is Yield Farming? And is it profitable for the average user?