in the crypto world. We hear a lot about
smart contracts, but what are they and how do
they work? Smart contracts are computer programs that run
on the Blockchain picture vending machine, you insert money
, push a button and get something back. There's
no negotiation or small talk. The vending machine side
of the transaction is automated. It's programming responds to
your inputs. Smart contracts can be a bit like
a vending machine or maybe they look like you and
a friend betting on a game or the price of
ether. Some smart contracts look more like computer programs
, little autonomous agents that execute code when prompted.
A lot of smart contracts run on the ethereum Blockchain
, which is a distributed virtual computer. There's no
keyboards or monitors, Just thousands of computers running nodes
of the ethereum network. Your smart contract will have
all those computers verifying that everything looks okay, which
takes a little bit of time. You wouldn't use
this sort of computer architecture for anything like a self
driving car or robot assisted surgery. But this big
virtual computer does allow for consensus. There's agreement about
what happens on the network who sent money to whom
and what was executed, win. And that's part
of the magic check out the crypto story by matt
Levine for Bloomberg business week