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What is the smart contract?

SION Patent Law Tax What is smart contract

A smart contract is a computer program that automatically executes the terms of an agreement. It can be used to facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts (further SC) can be used in various fields, including finance, real estate and law, intellectual property. 

Today, there is no systematic definition of the term in theory or practice. However, if we turn to scientists, it is a computer code that automatically performs some part of the agreement, for example, paying Ethereum. 

Smart contracts Definition

Smart contract is the future of all legal relations, so it’s best to understand what it is and how it works now. It has all the attributes that allow them to replace conventional contracts, and they will increasingly take over in the exchange of values. SC is a program code, or rather its special description, which determines the procedure for processing information and transactions in Blockchain technology. A way to exchange value without involving a third party. At the same time, for the SC it is better to involve lawyers who understand Blockchain. They are also called computer protocols. The main objective of smart contracts is to make the relationship between two parties more direct and transparent. 

SION Patent Law Tax What is smart contract

Smart Contract legal is not a new concept, the idea of an SC is based on the principles of legal contracts. SCs have essentially been around since the dawn of the Internet, but the term “Smart Contract” was coined by Nick Szabo in 1996.They can be used to exchange the right of ownership of the property and be used as a floating pool collateral. Typically, smart contracts offer simpler and cheaper transactions, wherein identity fraud is eliminated. 

The creation of a smart contract requires close collaboration of both legal professionals and programmers. The parties will need to develop a legal strategy for automating the legal process  based on the legislation of the country under which the project will work. Such SCs solve many problems. For example, fixing copyright on NFT, payment of royalties, penalties for non-compliance, deadlines, and other points. 

To ensure that the conditions of smart contracts are not violated, it is possible to insert electronic signatures. Also, the contract itself can make a decision on how to act if certain rules or conditions are violated. The created contract is an automated agreement. They can be used to create new types of decentralized business models, and have been predicted to have a huge impact on the way we do commerce and trade in the future. Therefore, the conditions for it are prescribed by a professional blockchain lawyer. This is because a SC is an algorithm that functions like a computer program, where lawyers define the conditions for such an algorithm and programmers set it working. 

Smart contract Blockchain 

Smart contracts are legal documents that are automatically executed and enforced by the blockchain. They contain all of the information required to execute transactions, including their structure, content, and history. 

SION Patent Law Tax What is smart contract

Blockchain technology allows you to carry out transactions with absolute anonymity. SCs use a tool called a “hash value” which connects all participants of the Blockchain in order to validate any transaction made. In this document, the owner of an asset places it in a smart contract and then writes its hash value. A hash code is understood as a kind of seal placed on data so that any changes made afterwards will be noticeable (e.g., even one letter added or deleted from a text file will change the hash code). Since anyone can check this information using Blockchain, all participants receive confirmation when it is updated. 

An absolutely transparent protocol allows you to store, modify and copy information on a decentralized network. For example, a smart contract can track the entire list of deliveries and verify their authenticity. Thanks to the system, it will be possible completely to eliminate counterfeits and even check whether production complies with your ethical and moral standards. 

NFT smart contract 

The NFT smart contract is part of the program code, which allows the network to store data transparently and without changes. After all, it is this code that controls the digital asset, in this case the NFT. Allows you to own, sell, buy, exchange a digital NFT asset on online platforms where provided. 

What is the smart contract?

Non-fungible token (NFT) is the digital intellectual property. It is used to reflect and guarantee individual ownership of digital art, music and other intellectual property. Tokens are created using a blockchain smart contract in Ethereum. It is a smart contract, controlled by Ethereum Blockchain, which uses the Internet to track ownership and transfer rights. 

Ethereum smart contract

Ethereum is a blockchain platform, one of the first to run Turing-complete smart contracts. This function in smart agreements makes it possible to carry out mathematical functions. Ethereum has gained wide popularity among users, because it can be used to issue tokens and create decentralized applications. The possibilities for creating smart contracts are flexible, the scope of their use is very wide. 

The platform provides not only the functions that the developer put into it, but also those that were needed later. Different logically presented ideas are realized with the help of this network. Ethereum is one of the most commonly used cryptocurrencies among developers today and is best known for the number of decentralized applications. 

Ethereum smart contracts are based on the ETH platform. They are made on the basis of ready-made programs, which can be added to your project and taken as an example for its development. In general, there is no need to write algorithms here in full – you only need to specify the transaction data in the fields provided for this and confirm execution. 

Ethereum smart contract examples: 

  • validating the token’s authenticity; 
  • NFT manage;
  • insurance (optimization of the process of its consideration); 
  • voting (smart contracts provide automatism and transparency); 
  • deliveries (here, such an advantage of smart contracts as speed has a prevailing value);
  • storage of records (secure encryption and storage of archives). 

Cryptocurrency Smart Contracts

Cryptocurrency Smart Contracts are used for transactions related to cryptocurrencies and SCs can also include terms for trading stock or bonds on the stock market. 

Cryptocurrencies and smart contracts are revolutionizing the way we conduct business. This whitepaper is a limited and simplified view of how businesses can be dramatically impacted by cryptocurrency, blockchain technology and SCs. 

To make transactions without intermediaries, you need to create a strategy (smart agreement) is the case. The idea of cryptocurrency lawsuit contracts (smart contracts) are bilateral terms that govern the transaction, which work on “switches”. Cryptocurrency trading is not for the very experienced or novice investor. It is a convenient, fast and safe way to invest your money. 

What is GitHub?

GitHub is a platform for sharing code in which we can securely store and share any types of programs, smart contracts and data. It operates via Internet protocols, providing access to articles stored on the user’s account using web browsers or an application that supports these protocols. 

Also GitHub is a kind of social network for programmers that allows users to work together in the workplace. It has cloud storage and code sync, allowing developers to access their files from anywhere. You can create repositories for each of your projects. GitHub also offers additional tools, such as issue trackers and wikis, so you can keep up to date with the latest changes to your files and keep everyone informed of any changes or issues that may come up. Our first smart legal contract for the NFT can be viewed here.

Smart Contract Development 

SCs are implemented in different segments. The most common examples include cryptocurrency exchanges and online casinos. In the first case, a smart contract is used to provide security protection for users’ funds and ensure the fairness of trades while playing (for example, in cases when users use gambling bots). In online casinos, smart agreements are used to ensure the honesty of games by recognizing unusual activities or delays in bets or payments. 

SION Patent Law Tax What is smart contract

Smart contracts are programs that are stored in the blockchain system and only become active when certain conditions are met. For example, if a person borrows money, then their account will be blocked by the SC until they return the loan to their creditor with interest. 

Currently, many blockchain keepers already support the development of smart contracts (e.g., Ethereum). However, companies have mastered IPFS (InterPlanetary File System) and IPLD (InterPlanetary Linked Data) in order to increase their competitiveness. 

More often than not, smart agreements are developed entirely in code. Contracts are placed in a system where neither party controls the fulfillment of the conditions on its own. All parties are only participants. They can rely on blockchain and computer algorithms. When drawing up such agreements, the norms of the current legislation of the state, the laws of which the parties concluding this agreement want to be guided by, are taken into account.

Our team of blockchain lawyers and developers will create the necessary conditions for the SC for the purposes of your online project. In addition, we are engaged in the creation of blockchain projects of any complexity and set up the release of your NFT collection.

To discuss the details of the project and the cost of services, please contact us by email: info@sion-ip.com

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