First lets understand the two main components of the smart contract. Translate legal info into IF ELSE.
– Smart Contract Code – The code that is stored, is verified and executed on a
– Smart Legal Contracts – The use of the smart contract code is that it can be
used as a complement, or substitute, for legal contracts.
• Code is what goes into the Smart Contract.
• Because smart contracts work like computer programs, it is very important that
they do exactly what the parties want them to do.
• This is achieved by inputting the proper logic when writing your smart contract.
• The code behaves in predefined ways and doesn’t have the linguistic nuances of
human languages. Thus, it has now automated the “if this happens then do that”
part of traditional contracts.
• Distributed ledger is how the smart contract is sent out to everyone in the
• The code is then encrypted and sent out to other computers via a distributed
network of ledgers (i.e. Distributed Ledgers). Similar to the way the transactions are broadcasted to each node.
• One the computers in this network of distributed ledgers receive the code, they
each come to an individual agreement on the results of the code execution. The contract is stored in the EVM.
• The network would then update the distributed ledgers to record the execution of
the contract, and then monitor for compliance with the terms of the smart
• In this type of system, single party manipulation is avoided because the control is
OVER THE EXECUTION of the smart contract & it is no longer possible because
execution is no longer in the hands of a single party.