Smart Contracts Overview: A Comprehensive Guide

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Introduction to Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They automatically enforce and execute predefined rules when conditions are met, eliminating the need for intermediaries.

How Smart Contracts Work

These digital contracts exist on decentralized blockchain networks like Ethereum, ensuring:

A Simple Smart Contract Example

Let's examine a basic storage contract to understand fundamental concepts.

Storage Contract Implementation

pragma solidity ^0.4.0;
contract SimpleStorage {
    uint storedData;
    
    function set(uint x) public {
        storedData = x;
    }
    
    function get() public constant returns (uint) {
        return storedData;
    }
}

Key Components:

  1. Version Pragma: pragma solidity ^0.4.0; specifies compiler compatibility
  2. State Variable: uint storedData declares a 256-bit unsigned integer storage slot
  3. Public Functions:

    • set() modifies the stored value
    • get() retrieves the current value

👉 Learn more about Solidity syntax

Cryptocurrency Implementation Example

This coin contract demonstrates more advanced features:

pragma solidity ^0.4.0;
contract Coin {
    address public minter;
    mapping (address => uint) public balances;
    event Sent(address from, address to, uint amount);

    function Coin() public {
        minter = msg.sender;
    }

    function mint(address receiver, uint amount) public {
        if (msg.sender != minter) return;
        balances[receiver] += amount;
    }

    function send(address receiver, uint amount) public {
        if (balances[msg.sender] < amount) return;
        balances[msg.sender] -= amount;
        balances[receiver] += amount;
        Sent(msg.sender, receiver, amount);
    }
}

Key Features:

Blockchain Fundamentals

Transaction Processing

Account Types

  1. Externally Owned Accounts (EOA)

    • Controlled by private keys
    • Can initiate transactions
  2. Contract Accounts

    • Controlled by code
    • Execute when receiving transactions

👉 Understand blockchain basics

Ethereum Virtual Machine (EVM) Architecture

Memory Hierarchy

  1. Storage: Persistent key-value store (256-bit words)
  2. Memory: Temporary byte-addressable space
  3. Stack: 1024-element LIFO structure (256-bit items)

Execution Environment

Smart Contract Development Considerations

Security Best Practices

Limitations

Frequently Asked Questions

What's the difference between a normal transaction and a contract creation transaction?

Contract creation transactions are sent to the zero-address (0x0) and contain initialization code that becomes the deployed contract's runtime code.

How are contract addresses determined?

Contract addresses are derived from:

Can smart contracts be deleted?

Contracts can self-destruct using selfdestruct, which:

  1. Transfers remaining ETH to designated address
  2. Removes code and storage from blockchain state
    However, archive nodes may retain historical data.

What happens if a contract runs out of gas during execution?

An out-of-gas exception triggers, reverting all state changes from the current call frame while consuming the allocated gas.

How do contract libraries work in Solidity?

Libraries are reusable code deployed once that can be called by multiple contracts using delegatecall, executing library code in the caller's context.