What are smart contracts?
A smart contract is a contract that is written in code and stored on a blockchain. When the conditions of the contract are met, the contract automatically executes the agreed-upon terms.
Smart contracts were first proposed by Nick Szabo in 1996 as a way to enforce the performance of contracts without the need for a third party. Szabo proposed that smart contracts could be used to automate the management of financial instruments, legal documents, and other kinds of contracts.
The use of smart contracts in the cryptocurrency space was first proposed by Vitalik Buterin in 2013. Buterin proposed that smart contracts could be used to create a decentralized autonomous organization (DAO). A DAO is a decentralized organization that is run by code, not by people.
The first DAO, The DAO, was created on the Ethereum blockchain in 2016. The DAO raised over $150 million in funding from investors. However, The DAO was hacked and the funds were stolen. This event led to a hard fork of the Ethereum blockchain, which created Ethereum (ETH) and Ethereum Classic (ETC).
Despite the setback of The DAO hack, smart contracts have continued to be used in the cryptocurrency space. Smart contracts have been used to create decentralized exchanges, lending platforms, and prediction markets.
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