Ethereum, smart contracts and altcoins
Smart contracts
4 min
Bitcoin was designed mainly to move value. Ethereum, launched in 2015, generalised the idea: a blockchain that can run programs. Those programs are called smart contracts.
What a smart contract is
A smart contract is code stored on the blockchain that runs exactly as written when its conditions are met. The classic shorthand is a vending machine: put in the right input and the defined output happens automatically, with no clerk and no discretion.
Once deployed, a contract is typically immutable and runs without anyone able to stop or alter it. Anyone can inspect its code, and anyone can interact with it.
Why this is powerful
Smart contracts let people build applications where the rules are enforced by the network rather than by a company. From this single capability flow most of the things later in this track — decentralised finance, tokens, NFTs — which are all just smart contracts.
The honest risks
Programmability cuts both ways and the risks are real:
- Bugs are permanent. If a contract has a flaw, that flaw is set in stone and has been exploited to drain large sums. "Code is law" means the code's mistakes are law too.
- "Immutable" can hide back doors. Some contracts include admin keys or upgrade mechanisms that let a party change behaviour. Decentralisation is a spectrum, not a guarantee.
- You must trust the code, not a brand. Auditing exists but does not eliminate risk. Treat any claim of "trustless" critically and assume you can lose what you commit.
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