Why should you trust a protocol following ‘Trustless’ policy ?— The Smart Contracts
We have seen many people falling into traps of illegal transactions only because of not having a proper agreement proof. Many people started coming up as mediators to ensure proper contract is made and as the time passed, many companies switched to the online platform to do the same. In this system both the parties (sender and receiver) of a transaction have to rely on a third party for the transaction to be completed. Here both the parties have to ‘TRUST’ the mediator. Here where the smart contract comes into action.
Smart contracts are similar to the contracts that we use in our daily life with the only difference that they are in a digital format. ‘Smart contracts’ the term is often associated with Blockchain but it was introduced way before in 1997 by Nick Szabo, a computer scientist and a cryptograher. He created a distributed ledger to store contracts. The main aspect of smart contracts coming into the world of blockchain is that it is based on ‘NO TRUST’. There is no middle party between the transactions and thus having peer to peer connection. So the smart contract is basically a digital program (or code) with set of rules for the transactions.
Now the question might arise ‘How are they secured?’. Well, these smart contracts once deployed are ‘IMMUTABLE’, means those set of rules or functions cannot be changed once set into the network. Also the authenticity of a contract is maintained as it is ‘DISTRIBUTED’, for example, a person is trying to show any kind of false transaction, but at the same time there are multiple people verifying the ledger which shows the correct transaction record. To know more about blockchain and this verification process, do refer my previous article https://medium.com/@kartikrane360/blockchain-the-upcomming-revolution-45ef333eb3ae .
Ethereum Blockchain is based on smart contracts which supports programming language Solidity. These contracts are widely used in making decentralized applications on platforms like Ethereum. Such applications are used for crowdfunding projects, banks to issue loans automatically, insurance companies can use it to process claims, postal services to ensure delivery and many more. We can ourselves try coding smart contract and make our own set of rules and deploy( for example on remix IDE using solidity) into the network. Thus, smart contracts are immutable, distributed and secure way of transactions and these are the reasons why should you trust this program.