New to blockchain and want to learn how to write a smart contract? In this post, you will find out everything from what’s a smart contract, how to write one with examples. Let’s begin!
How to write a smart contract?
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What is a smart contract?
Before you learn how to build a smart contract, you need to understand what is a smart contract? A smart contract is a self-executing contract stored on a blockchain, that is executed when the terms and conditions of the contract are met. Participants are sure it will be implemented, without any delay or involvement of an intermediary. It makes transactions traceable, transparent, and irreversible. Disparate, anonymous parties can execute smart contracts without requiring a central authority, legal system, or external enforcement.
Smart contract blockchain
A smart contract is a digital contract with the security of blockchain. A smart contract has details and permission written in code that require the exact chain of events to occur to trigger the agreement of the terms mentioned in the contract. The contract can have a deadline. Smart contract blockchain is embedded into the blockchain, making it transparent, immutable, inexpensive, and decentralized.
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Smart contract examples
Smart contract example are –
- Government voting system – Smart contract provide a safe environment for voting system. It is less susceptible to manipulation. Voting using smart-contract would be ledger-protected and difficult to decode.
- Healthcare – Blockchain can store the encoded health record of patients, accessed only through private key.
- Supply chain – Traditional supply chain system requires multiple approvals and is susceptible to delays, fraud, and loss. Smart contracts can be used for inventory management and automatic payment.
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How do smart contracts work?
Before we start to learn how to write a smart contract, let us understand how a smart contract work? Smart contracts follow a simple if/when clause written on the blockchain. A network of computers executes the action when the clauses in the contract are met and verified. Blockchain is updated after a transaction is completed.
All participants must be satisfied with all terms and conditions. They must determine how transactions and data will be represented on the blockchain and agree on if/when rules governing the transaction, examine all possible exceptions, and have a framework to resolve disputes. The smart contract developer proceeds to program the blockchain.
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Smart contract use cases
The top smart contract use cases are:
- Digital Identity: You can use a smart contract to create a digital identity. You can share your digital identity with companies you want while protecting it from counterparties. A smart contract can help counterparties know their true identity or verify transactions.
- Health and agriculture supply chain: You can use smart contracts to reduce the wastage of food and medication. An IoT smart contract can be written to assign a public key to packages whose data exists on a distributed ledger, along with the package location, and add additional information like the medical facility that owns it. All stakeholders can access their needs and find matches between markets and commodities faster.
- Real estate and crowdfunding: Token economy has changed how commodities are bought and sold and project funding. Smart contracts have reduced paperwork. You can tokenize assets, and different people can own portions.
Benefits of smart contracts
The benefits of smart contracts are:
- Speed, efficiency, and accuracy: Smart contracts are implemented as soon as the contract terms are met. The contract is digital and automated, and you do have to deal with paperwork.
- Trust and transparency: Since no third party is involved and all encrypted records are shared across participants, you do not have to worry that information is being tampered.
- Security: All blockchain transactions are encrypted and are difficult to hack. All entries on a distributed ledger are linked to the previous and next entries. Hackers would have to change entries on the entire chain to change a single record.
- Saving: Smart contract eliminates the need for intermediaries to conduct transactions and the fees and time associated with them.
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Types of smart contracts
There are three types of smart contracts are:
- Smart legal contract: Smart legal contract is the most common type of smart contract. The contracts are legally enforceable, and all parties need to fulfill a contractual obligation. Failure to fulfill obligations may result in strict legal actions.
- Decentralized Autonomous Organizations: Decentralized Autonomous Organizations (DAO) can be defined as communities. The communities rules are defined in the smart contract, combined with the governance mechanism. The rules may be specified in many smart contracts and work together to overlook the activities of the contract.
- Application of smart contract: The contract contains application-based code synced with other blockchain contracts. It enables communication across devices, such as merging the Internet of Things with blockchain technology.
How to write a smart contract?
Before you learn how to write a smart contract, you need to understand what is EVM and gas. EVM or Ethereum Virtual machine provides a run-time environment for smart contracts. Gas is the unit of measurement used to assign a fee for each transaction with a smart contract.
Each computation in the EVM requires gas. Complicated smart contracts will require more gas. You need to create your wallet for smart contract crypto.
Here is a smart contract guide you can use.
STEP 1: Finding an open-source Solidity Contract
The first step is finding an open-source solidity contract. You can use the contracts to build secure smart contracts in Solidity. You use them to minimize risk by using battle-tested libraries for smart contracts on Ethereum. You do not have to start your program from scratch. You reduce the risk of vulnerabilities in your smart contract app by using standard, community-tested code.
STEP 2: Defining abstract token contract
The defining abstract token contract helps contains a map of account addresses and their balances. The balance represents a value that is defined by the contract creator: one token contractor might use balances to represent physical objects, another monetary value, and third the holder’s reputation. The unit of this balance is called a token. When tokens are transferred from one account to another the token contract updates the balance of the two accounts.
STEP 3: Defining abstract store contract
Contracts in Solidity are like classes in object-oriented programming. Abstract store contracts have at least one function without its implementation. You cannot create an instance of the abstract token.
Defining abstract store token contract allows you to identify the base contract from which another contract can inherit. You can define an abstract contract by using the word abstract. Along with improved extensibility, abstract contract helps to provide better self-documentation, instill patterns, and eliminate code duplication.
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STEP 4: Writing test cases for use with TDD
TDD or test-driven development is a method for software development. TDD does not write code but makes a failing unit test pass and then makes the code work. Writing test cases for use with TDD has several advantages:
- TDD simplifies the writing of code. Without a test case, one function may become a universal function, making it difficult to test later.
- TDD makes the code more readable. Test code helps programmers to know which input function to receive and which output function to return.
- It ensures the completeness and correctness of the code.
STEP 5: Implementing smart contract code
Before you begin implementing smart contract code:
- Text editor: You need a text editor to edit smart contracts before deployment.
- MetaMask extension is used to make transactions for the deployment of the smart contract.
- Compiler: Remix Ethereum is an online compiler and is used for creating, compiling, and deploying the smart contract.
- Wallet to deploy smart contract and the wallet address is recorded in the deployment of contract.
Smart contracts are written in Solidity and saved with the extension .sol. You can use the Remix Ethereum platform to create folders based on your requirement. Click on the file option to create a filename. sol and use the git integration to store the smart contract on Github. You need to define the owner’s account to burn tokens if required.
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STEP 6: Creating a custom dev chain for testing
Due to the immutability of smart contracts, they must be tested thoroughly before they are deployed. When it comes to writing automated tests, developers can:
- Solidity Test
Creating a custom dev chain is the process of designing, creating, deploying, and maintaining software for a specific set of users, functions, or organizations. Custom dev chain for testing has the following benefits:
- Lower Integration costs
Smart contract deployment
You need to deploy your smart contract, so it is available to users on the Ethereum network. Unlike most software, a smart contract does not run on a server or a computer but lives on the smart contract network. Interacting with smart contracts is different than traditional applications. Smart contract deployment requires you to send an Ethereum transaction containing the compiled code without specifying the recipient. To deploy smart code you need:
- Contract’s bytecode
- ETH for gas·
- Deployment script or plugin
- Access to Ether node, either by running your own or connecting to a public node or via an API key using a node service like Infura and Alchemy.
How to interact with a deployed smart contract?
We will now learn how to interact with a deployed smart contract-
- Install Web3 library: Web3.js is a library used to make requests to the Ethereum chain. You can choose your library from web3 providers.
- Create a contract: interact.js file
- Grab your contract ABI: The ABI is the interface that interacts with the smart contract.
- Create an instance of the contract: To interact with the code you need to create an instance of the code.
- Read the init message: Read the init message stored in the contract and print it to the console.
- Update the message
- Update the .env file
- Create the transaction
- Sign the transaction
- Call update message and run contract-interact-js.
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How to audit a smart contract?
A smart contract audit examines and comments on a project’s smart contract code. The smart contract security audit is useful for Defi smart contract projects that can handle transactions worth millions of dollars. How to audit a smart contract?
- Start by determining the scope of the smart contract audit. You need to know the specification and purpose of the smart contract. You should understand the project goal when writing and using the code.
- Provide an initial quote based on the quantum of work.
- Run tests to audit the contract. The type of tests carried out will depend on the audit team, their analysis tools, and methods. The auditors usually carry out manual and automated tests.
- The first draft report contains errors found, feedback, and follow-up fixes recommendations.
- Publish the final report after analyzing actions by the team to address concerns raised.
How to verify a smart contract?
Etherscan is a Block Explorer and Analytics used to verify smart contracts. You may want to verify your new Defi smart contract applications or smart contract NFT. How to verify a smart contract? You can verify your smart contract,
- Verify and publish – Under the contract address, next to the “Transaction” tab, you will find the “Code” tab. You need to click “Verify and Publish.”
- Verify Contract Code – Contract users can use Etherscan’s new Beta source Code Contract Verifier, the verifier has a “run” option on top of the verify contract code page. You need to enter information such as contact name, compiler version, optimization option, and complete code. The contract code should be deployed in a single file, flatten, and with all imports removed. You can enter constructor arguments and other libraries at the bottom of the page. Before clicking the Verify and Publish button, you need to complete the Recaptcha. The contract will be verified.
- Confirm contact details – After the contract has been verified, the code page will be filled with contract details. The source code of the contract is publicly available on Etherscan.
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FAQs on creating a smart contract
How to find a smart contract address?
Ethereum has two addresses:
- Smart contract address
- Wallet address or EOA
A smart contract address uniquely identifies the smart contract on the blockchain. The smart contract address is a series of numbers and characters that starts with 0xba. You can find the smart contract address by looking for the field “Interacted with (To)” and then follow the contract link to find more details.
Is Bitcoin a smart contract?
Yes, Bitcoin is a smart contract platform. When we think of smart contracts we generally think of Ethereum smart contract, Solona smart contract, or Tron smart contract platforms. A smart contract is a way that lets us take a conventional legal contract and move the enforcement from government jurisdiction to enforcement through software and hardware. Bitcoin network functions as an arbitrator, enforcing the proper execution of smart contracts without relying on a central authority. It provides a mechanism for contracts to be observable, verifiable, and enforceable.
What is the best platform for smart contracts?
The best platform for smart contracts is Ethereum. Ethereum is the leading smart contract platform in the world and is the top choice to create a smart contract. Ethereum smart contract is popular because of the degree of standardization and support offered. Smart contract development is simplified, thanks to the clearly defined rules. ERC20 smart contracts are written in Solidity, which not only helps with standardization but simplifies the process.
Are smart contracts legal?
Since not all agreements must be in writing to be legally enforceable, smart or self-executing contracts would be considered valid in many jurisdictions. In a smart legal contract, the agreement summarizes the terms, and parties involved are required to honor the terms or be ready to face legal action. To be legally binding, the smart contract needs to comply with basic contract law requirements.
How do smart contracts make money?
- Smart contract development is not cheap and prices for development can vary from $7000 to $45000 depending on the complexity of the contract. The price is not inclusive of development.
- The costs of transactions or gas fees are a major expense in the smart contract. Supply and demand on the blockchain determine the price. If your gas fee is too low your transaction may not go through.
- Smart contract audit cost – companies auditing smart contracts can charge anywhere from $5000 to $15000 depending on the complexity of the code.
Are smart contracts only on Ethereum?
No smart contracts can be created on:
- Bitcoin: Provides a Tuning- incomplete script language that allows the creation of custom smart contracts.
- Cardano: Cardano is a decentralized, open-source blockchain that supports smart contract functionality. ADA Smart contract is fast, scalable, and has broader interoperability.
- Avalanche: Avalanche smart contracts is one of the fastest smart contract platforms. It is agile and has a low transaction fee.
- Solana: Solona smart contract uses a proof-of-history algorithm to process the transaction more quickly.
- Tron: Tron smart contract is a computerized transaction protocol. Currently, Tron smart contract supports Solidity language and has its features. It is the best platform for content-sharing and entertainment.
- Polygon: Polygon smart contract supports Ethereum consensus, smart contract, and stalking for the native Matic token.
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