## Smart Contract (Smart contract) Makes Contracting Easy In today's digital age, the increasing demand for fast and reliable transactions has led to the emergence of **Smart contracts** or **สัญญาอัจฉริยะ** as a key technology to solve issues associated with traditional contracts, which often require lengthy processes and multiple intermediaries. These smart contracts are computer programs that operate automatically on the Blockchain, executing based on predefined coded conditions. ### What exactly is a smart contract? **Smart contracts** are scripts that can execute agreements between two or more parties without the need for a middleman. Once the specified conditions are met, the transaction is executed immediately and recorded on an immutable Blockchain. The key point about **Smart contracts** is that they do not involve legal language or documents like traditional contracts. Instead, they are computer codes that only operate when conditions are fulfilled. This enables trust among strangers because everyone relies on the code written from the start. ### The history of smart contracts Although Smart contracts gained attention with Ethereum's launch in 2014, the concept dates back to 1994, introduced by American computer engineer Nick Szabo, who recognized the complexities involved in storing and verifying data and proposed this idea. The development of Blockchain has progressed through several phases, starting with Blockchain 1.0 in 2008, which underpins Bitcoin and digital currency, moving to Blockchain 2.0 in 2014 with the introduction of Smart contracts and the creation of Ethereum. Currently, we are at Blockchain 3.0, which includes Dapps (Decentralized application) that incorporate Smart contract concepts but with greater creative potential, such as games, NFT art, and real-world business applications. ### How do smart contracts work? 6 steps Smart contracts operate through a clear step-by-step process as follows: **1. Both parties agree on the terms** All involved parties agree on the transaction conditions. They plan how the Smart contract will function, which conditions must be met, and when the system will execute automatically. **2. Write the smart contract code** Participants may write the code themselves or collaborate with developers. The agreement's conditions are translated into programming language, specifying rules and outcomes. Ensuring the code's security at this stage is crucial, as poorly designed code can pose security risks. **3. Deploy the contract on Blockchain** Once the code is ready, the next step is to send the smart contract to the Blockchain, similar to a typical crypto transaction. The contract code is included in the transaction data. After confirmation and publication on the Blockchain, it cannot be revoked or altered. **4. Wait for trigger conditions** The smart contract monitors the Blockchain or trusted data sources for specific conditions or events that trigger actions. These triggers could be dates, payments, or other verifiable events. **5. Automatic execution of the contract** When conditions are met, the smart contract executes as programmed. This could involve transferring funds, registering ownership, or other actions as specified. **6. Record the outcome on Blockchain** The final step is broadcasting the result of the smart contract's execution to the Blockchain. The network verifies the operation, records it as a transaction, and stores the completed contract on the Blockchain. This record is public and can be checked at any time. ### Real-life example of how a smart contract works Imagine a vending machine: when you select a product and insert the required amount of money, the machine verifies the amount and dispenses the product. Smart contracts work similarly. For example, two students competing in a bicycle race can use a smart contract to record a $10 bet. When the race results are announced, the system automatically transfers the money to the winner, without waiting for the loser to pay or worrying about cheating. ### Benefits of smart contracts to know **Automatic and reliable** Smart contracts always execute exactly as coded, without human intervention or third-party payments. Conditions are guaranteed to be followed. If the execution does not match the programmed conditions, the system will reject the transaction on the Blockchain. **Public and verifiable data** Since Blockchain is a public platform, smart contracts can be inspected and viewed by anyone. If you have the wallet address of the contract, you can verify all transactions transparently. **Privacy and security** Although Blockchain is public, your personal data can remain confidential. The system only identifies wallet addresses (address), which are not linked to real identities, ensuring privacy. **Transparency from the start** Smart contracts are public, so everyone can see how they work from the beginning, making them transparent and trustworthy. ### Drawbacks to be aware of **No middleman management** Without intermediaries, smart contracts cannot resolve issues requiring human judgment. If something goes wrong, no one can intervene to fix it because the code on the Blockchain is immutable. **Legal recognition is limited** Current legal systems lack clear regulations regarding smart contracts. If problems arise, you may not receive legal assistance, whether due to fraud or errors, as this system is essentially decentralized and unregulated. **Dependence on developers** All operations depend on the code written. You must trust that developers have written bug-free, secure code. If vulnerabilities are embedded from the start, they may be impossible to fix. ### Current applications of smart contracts **Stablecoins (Stablecoins)** These are coins designed to maintain a stable value, such as Dai, USDC, and Tether on Ethereum. Stablecoins can be transferred globally via the internet. You can deposit them into platforms for lending or exchange for other coins, protected by encryption technology. **NFT (Non-fungible tokens)** These tokens represent ownership of unique items, such as art, real estate, music, images, documents, and other digital goods. Use cases include platforms like Foundation for showcasing and selling art, The X for NFT shoes used in the Metaverse Decentraland, and ENS (Ethereum Name Service) for wallet naming. **Decentralized Exchanges (DEXs)** These are markets for exchanging Ethereum or other tokens using smart contracts instead of middlemen. DEXs allow buyers and sellers to match directly, such as Uniswap, Kyber, dYdX, and 1inch. **Contracts and voting** Smart contracts can be used for agreements, legal contracts, or voting among organizations. Open Law Forms facilitate creating and executing legal agreements more easily—users fill out forms according to the agreement, and data is securely stored on the Blockchain. **Automatic insurance** Smart contracts enable automatic claims processing and payouts. They can be programmed to pay out immediately when certain verifiable events occur, such as natural disasters or car accidents. ### Future of smart contracts From their inception to today, smart contracts have been developed and applied across various fields, including finance, data storage, and industry. Their importance lies in their potential to reduce complexity, lower costs, and increase transparency and security of all transactions. Looking ahead, smart contracts are expected to continue evolving and become integral to business operations, peer-to-peer transactions, and data management in the digital world. Eliminating the need for intermediaries will make transactions faster and more efficient. The potential of smart contracts to improve industries and transform how humans conduct business is something to watch closely in the coming years.