Module 4: What are smart contracts, and why do we need them?

In this module, we will discuss smart contracts, which serve as the foundation for the operation of DeFi, DApps, and DAOs. We'll learn what they are, how they originated, and the role they play in the blockchain.

Summary

A smart contract is a program recorded on a blockchain that enables the automation of various processes within the network, such as facilitating secure cryptocurrency exchanges between users.

The concept of smart contracts was originally proposed by Nick Szabo in the 1990s. However, initial attempts at implementation faced the challenge of decentralization. The advent of blockchain technology eliminated this drawback.

Like any other programs, smart contracts can have vulnerabilities that hackers exploit. Consequently, developers pay significant attention to their security and auditing.

Today, smart contracts are supported by numerous blockchains and are actively utilized in various facets of the crypto world, including the creation of DeFi (Decentralized Finance), DApps (Decentralized Applications), and DAOs (Decentralized Autonomous Organizations).