Can a contract be smart?
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How do Smart Contracts work in practice?
One of the core developments that have come from the blockchain’s support of scripts are smart contracts.
Smart contracts are scripts or small programs that run on the blockchain and provide specific instructions for when certain predetermined things happen in the network.
For an example of how this could work, let’s take the case of Bob.
Bob owns a grocery shop. Every morning his vegetable supplier Tim makes a delivery of fresh vegetables.
Bob and Tim have a smart contract set up with the terms that Tim will deliver 5 crates of vegetables by 6am every day, and in turn Bob will pay him immediately on delivery. Tim makes today’s delivery on time, and once both Tim and Bob confirm this, the smart contract will immediately release the funds from Bob’s bitcoin wallet and send them to Tim.
These contracts can be much simpler or much more complex. You could create a smart contract with terms as simple as if you greet it, it will greet you back, or you can use a contract as part of your new decentralised app.
If you want to go a step beyond smart contracts, you can create a sidechain. A sidechain is essentially a new chain pegged to an existing blockchain. It uses the stability and security of an existing, larger blockchain while allowing much more flexibility and experimentation in the way things are recorded without impacting the function or security of the main blockchain.
Just two examples of services using a sidechain are Mine and Streamium.
Sidechains have allowed for a whole wave of blockchain innovations, as they allow for relatively safe experimentation and have dramatically increased the development of blockchain technology as a whole.
There is even an entire business called Blockstream dedicated to helping develop and advance the use of sidechains and blockchain innovation.