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The crypto market has evolved significantly since bitcoin (BTC) creation in 2009. Blockchain networks have been enhanced, and a new way of trading has emerged with smart contracts.

The creation of smart contracts is fully linked to the launch of the Ethereum network, which happened in 2015. The blockchain platform was a pioneer in introducing this type of digital trading.

Smart contracts can be defined as the digital representation of an agreement where the parties involved use blockchain technology to record the terms of the deal.

And blockchain technology plays a vital role in this digital negotiation by automating the execution of the pre-established conditions in the smart contract.

What are smart contracts?

smart contracts

Smart contracts emerged with the creation of the Ethereum network in the crypto market. The platform was developed to establish an ecosystem to support smart contracts, tools, applications, and digital assets using blockchain technology.

Smart contracts make it possible to create rules beyond the simple trading of buying and selling crypto assets. Using a smart contract, for example, an exchange can define the conditions of a leveraged trade, a crypto asset can be created, non-fungible tokens (NFTs) and even liquidity pools.

 In practice, the smart contract performs functions following the description of the agreement conditions. The execution of these functions happens through consensus mechanisms that are registered on the blockchain network where the smart contract was created.

Blockchain Platform

smart contracts

The registration of smart contracts can happen on blockchain platforms such as the Ethereum network. The network will ensure that the agreement conditions are automated without the centralized supervision and control of any database.

The smart contract can be customized to meet the conditions proposed by those involved in the trade. These conditions can apply to a crypto asset loan settlement, a staking program, blockchain games, and metaverses.

The blockchain platform is the ecosystem where the smart contract will be registered. The network will also execute the terms of the agreement following the data entered in the digital document.

Although developers create smart contracts, some templates and platforms provide interfaces that can simplify the registration of the deal. In addition, blockchain technology ensures that the digital document cannot be altered after registration.

Decentralized Network

Smart contracts represent one of the main tools of decentralized networks that use blockchain technology. In addition, applications known as D’Apps use smart contracts for the development of the platform itself.

Data decentralization has become a major trend in the crypto market in recent years, with the emergence of technological innovations and digital solutions known as decentralized finance (DeFi).

And this decentralized transition of the crypto market also happens through smart contracts. Customizing agreement conditions signed via blockchain enables crypto projects to optimize smart contracts to meet business needs.

Benefits of digital contracts

The automation of operations on blockchain networks are developed by smart contracts. In addition to the guarantee of compliance with the conditions established in the agreement, digital contracts enable other benefits, such as:


The blockchain network enables the verification of smart contracts to happen quickly and on a scheduled basis. The decentralization of data and digital contract registration enables data to be verified quickly.


Forget paperwork and the judicial enforcement of contracts. Smart contracts are digitally recorded, which provides more efficiency for negotiation, and organizes information using blockchain technology.


The execution of smart contracts does not require a third party or the approval of some complex database system. Instead, all negotiation information is stored in the digital contract.


smart contracts

The data encryption of blockchain technology is also present in smart contracts. This prevents the digital document from being hacked, for example. In addition, the network has a connection to previous versions of the agreement, which can be accessed for data verification.

Examples of smart contracts

Through smart contracts, it is possible to create crypto assets within platforms such as Ethereum. The BRZ, for example, was created on the Ethereum network by a smart contract that sets from the issuance of the stablecoin to the transactions.

But beyond the crypto market, smart contracts can be integrated into other data management systems such as the logistics sector, traceability of production chains, debt recovery, and borrowing transactions.

A major evolution in the crypto market was initiated with the arrival of smart contracts seven years ago. Ethereum became the primary catalyst for smart contracts, attracting innovative projects such as the BRZ example.

The smart system for digitally recording agreements has been widely used in the industry ever since, especially in new trends that have emerged recently. Did you know that even the bitcoin blockchain network already uses smart contracts to ensure more privacy for the entire ecosystem? Check out the details!