Module 3:- Programming for

Blockchain
A "smart contract" is simply a program that runs on the Ethereum blockchain. It's a collection of
code (its functions) and data (its state) that resides at a specific address on the Ethereum blockchain.

Smart Contract Advantages and disadvantages

The primary benefit of smart contracts is similar to the benefit of blockchain
technology—they remove the need for third parties. Other benefits of this technology
are:

● Efficiency: They speed up contract execution

● Accuracy: There can be no human error introduced
● Immutability: The programming cannot be altered

Some of the disadvantage of smart contracts are:

● Permanent: They cannot be changed if there are mistakes

● Human factor: They rely on the programmer to ensure the code is
programmed properly to execute the intended actions
● Loopholes: There may be loopholes in the coding, allowing for contracts to be
executed in bad faith

A Smart Contract (or cryptocontract) is a computer program that directly and automatically
controls the transfer of digital assets between the parties under certain conditions. A smart
contract works in the same way as a traditional contract while also automatically enforcing the
contract. Smart contracts are programs that execute exactly as they are set up(coded,
programmed) by their creators. Just like a traditional contract is enforceable by law, smart
contracts are enforceable by code.
● The bitcoin network was the first to use some sort of smart contract by using them to
transfer value from one person to another.
 ● The smart contract involved employs basic conditions like checking if the amount of
value to transfer is actually available in the sender account.
● Later, the Ethereum platform emerged which was considered more powerful,
precisely because the developers/programmers could make custom contracts in a
Turing-complete language.
● It is to be noted that the contracts written in the case of the bitcoin network were
written in a Turing-incomplete language, restricting the potential of smart contracts
implementation in the bitcoin network.
● There are some common smart contract platforms like Ethereum, Solana, Polkadot,
Hyperledger fabric, etc.

Features of Smart Contracts

The following are some essential characteristics of a smart contract:

1. Distributed: Everyone on the network is guaranteed to have a copy of all the

conditions of the smart contract and they cannot be changed by one of the parties. A
smart contract is replicated and distributed by all the nodes connected to the network.
2. Deterministic: Smart contracts can only perform functions for which they are

designed only when the required conditions are met. The final outcome will not vary,
no matter who executes the smart contract.
3. Immutable: Once deployed smart contract cannot be changed, it can only be

removed as long as the functionality is implemented previously.

4. Autonomy: There is no third party involved. The contract is made by you and shared

between the parties. No intermediaries are involved which minimizes bullying and
grants full authority to the dealing parties. Also, the smart contract is maintained and
executed by all the nodes on the network, thus removing all the controlling power
from any one party’s hand.
5. Customizable: Smart contracts have the ability for modification or we can say

customization before being launched to do what the user wants it to do.

 6. Transparent: Smart contracts are always stored on a public distributed ledger called

blockchain due to which the code is visible to everyone, whether or not they are
participants in the smart contract.
7. Trustless: These are not required by third parties to verify the integrity of the process

or to check whether the required conditions are met.

8. Self-verifying: These are self-verifying due to automated possibilities.

9. Self-enforcing: These are self-enforcing when the conditions and rules are met at all

stages.

Types of Smart Contracts

1. Smart Legal Contract:

There are legal guarantees for smart contracts. They follow the format seen in contracts: “If this
occurs, then this will occur.” Legal smart contracts provide more openness between contracting
entities than traditional documents because they are stored on blockchain and cannot be altered.
Contracts are executed by the parties using digital signatures. If certain conditions are met, such
as paying a debt when a predetermined date is reached, smart legal contracts may operate on
their own. If stakeholders don’t comply, there may be serious legal ramifications.

2. Decentralized Autonomous Organizations (DAOs):

DAOs are democratic organisations with voting powers granted by a smart contract. A
decentralised autonomous organisation, or DAO, is a blockchain-based entity with a shared goal
under collective governance. There is no such thing as an executive or president. Instead, the
organization’s operations and the distribution of assets are governed by blockchain-based
principles that are incorporated into the contract’s code. One example of this kind of smart
contract is VitaDAO, which uses technology to power a community dedicated to scientific
inquiry.

3. Application Logic Contracts:

Application-based code that usually keeps up with multiple other blockchain contracts makes up
application logic contracts, or ALCs. It permits device-to-device interactions such as blockchain
integration and the Internet of Things. These are signed between computers and other contracts
rather than between people or organisations like other kinds of smart contracts.

Working of Smart Contracts

A smart contract is just a digital contract with the security coding of the blockchain.
● It has details and permissions written in code that require an exact sequence of events
to take place to trigger the agreement of the terms mentioned in the smart contract.
● It can also include the time constraints that can introduce deadlines in the contract.
● Every smart contract has its address in the blockchain. The contract can be interacted
with by using its address presuming the contract has been broadcasted on the
network.

The idea behind smart contracts is pretty simple. They are executed on a basis of simple logic,
IF-THEN for example:
● IF you send object A, THEN the sum (of money, in cryptocurrency) will be
transferred to you.
● IF you transfer a certain amount of digital assets (cryptocurrency, for example, ether,
bitcoin), THEN the A object will be transferred to you.
● IF I finish the work, THEN the digital assets mentioned in the contract will be
transferred to me.
 Figure :- working of smart contract

● Identify Agreement: Multiple parties identify the cooperative opportunity and

desired outcomes and agreements could include business processes, asset swaps, etc.
● Set conditions: Smart contracts could be initiated by parties themselves or when
certain conditions are met like financial market indices, events like GPS locations,
etc.
● Code business logic: A computer program is written that will be executed
automatically when the conditional parameters are met.
● Encryption and blockchain technology: Encryption provides secure authentication
and transfer of messages between parties relating to smart contracts.
● Execution and processing: In blockchain iteration, whenever consensus is reached
between the parties regarding authentication and verification then the code is
executed and the outcomes are memorialized for compliance and verification.
● Network updates: After smart contracts are executed, all the nodes on the network
update their ledger to reflect the new state. Once the record is posted and verified on
the blockchain network, it cannot be modified, it is in append mode only.
Applications of Smart Contracts

1. Real Estate: Reduce money paid to the middleman and distribute between the parties

actually involved. For example, a smart contract to transfer ownership of an

apartment once a certain amount of resources have been transferred to the seller’s
account(or wallet).
2. Vehicle ownership: A smart contract can be deployed in a blockchain that keeps

track of vehicle maintenance and ownership. The smart contract can, for example,
enforce vehicle maintenance service every six months; failure of which will lead to
suspension of driving license.
3. Music Industry: The music industry could record the ownership of music in a

blockchain. A smart contract can be embedded in the blockchain and royalties can be
credited to the owner’s account when the song is used for commercial purposes. It can
also work in resolving ownership disputes.
4. Government elections: Once the votes are logged in the blockchain, it would be very

hard to decrypt the voter address and modify the vote leading to more confidence
against the ill practices.
5. Management: The blockchain application in management can streamline and

automate many decisions that are taken late or deferred. Every decision is transparent
and available to any party who has the authority(an application on the private
blockchain). For example, a smart contract can be deployed to trigger the supply of
raw materials when 10 tonnes of plastic bags are produced.
6. Healthcare: Automating healthcare payment processes using smart contracts can

prevent fraud. Every treatment is registered on the ledger and in the end, the smart
contract can calculate the sum of all the transactions. The patient can’t be discharged
from the hospital until the bill has been paid and can be coded in the smart contract.

Example Use cases:

 1. Smart contracts provide utility to other contracts. For example, consider a smart
contract that transfers funds to party A after 10 days. After 10 days, the
above-mentioned smart contract will execute another smart contract which checks if
the required funds are available at the source account(let’s say party B).
2. They facilitate the implementation of ‘multi-signature’ accounts, in which the assets
are transferred only when a certain percentage of people agree to do so
3. Smart contracts can map legal obligations into an automated process.
4. If smart contracts are implemented correctly, can provide a greater degree of
contractual security.

Advantages of Smart Contracts

1. Recordkeeping: All contract transactions are stored in chronological order in the

blockchain and can be accessed along with the complete audit trail. However, the
parties involved can be secured cryptographically for full privacy.
2. Autonomy: There are direct dealings between parties. Smart contracts remove the

need for intermediaries and allow for transparent, direct relationships with customers.
3. Reduce fraud: Fraudulent activity detection and reduction. Smart contracts are

stored in the blockchain. Forcefully modifying the blockchain is very difficult as it’s
computation-intensive. Also, a violation of the smart contract can be detected by the
nodes in the network and such a violation attempt is marked invalid and not stored in
the blockchain.
4. Fault-tolerance: Since no single person or entity is in control of the digital assets,

one-party domination and the situation of one party backing out do not happen as the
platform is decentralized and so even if one node detaches itself from the network,
the contract remains intact.
5. Enhanced trust: Business agreements are automatically executed and enforced. Plus,

these agreements are immutable and therefore unbreakable and undeniable.

 6. Cost-efficiency: The application of smart contracts eliminates the need for

intermediaries(brokers, lawyers, notaries, witnesses, etc.) leading to reduced costs.

Also eliminates paperwork leading to paper saving and money-saving.

Challenges of Smart Contracts

1. No regulations: A lack of international regulations focusing on blockchain

technology(and related technology like smart contracts, mining, and use cases like
cryptocurrency) makes these technologies difficult to oversee.
2. Difficult to implement: Smart contracts are also complicated to implement because

it’s still a relatively new concept and research is still going on to understand the smart
contract and its implications fully.
3. Immutable: They are practically immutable. Whenever there is a change that has to

be incorporated into the contract, a new contract has to be made and implemented in
the blockchain.
4. Alignment: Smart contracts can speed the execution of the process that span multiple

parties irrespective of the fact whether the smart contracts are in alignment with all
the parties’ intention and understanding.

Structure of Smart contracts

structure of a smart contract, focusing on its key components and their purposes:

1. Pragma Directive

● Purpose: Specifies the compiler version to ensure compatibility and prevent issues with
code execution.
● Example:
2. Contract Declaration

● Purpose: Defines the smart contract as a distinct entity on the blockchain. Contracts can
hold data and logic.
● Example

3. State Variables

● Purpose: Store the contract’s data permanently on the blockchain. State variables define
the state of the contract.
● Characteristics:
○ Visibility: Can be public, private, or internal.
○ Data Types: Various types (e.g., uint, address, bool, string).
● Example
4. Events

● Purpose: Enable logging of significant actions or changes in the contract state. Events
help external applications (like UIs) to track contract activity.
● Characteristics: Events are emitted to the blockchain and can be indexed for efficient
searching.
● Example

5. Modifiers

● Purpose: Functions that can alter the behavior of other functions, often used for access
control or validations.
● Characteristics: They allow reusable code and can enforce conditions before executing a
function.
● Example
6. Constructor

● Purpose: A special function that initializes the contract when it is deployed. It can set
initial values for state variables.
● Characteristics: It runs only once and does not have a return type.
● Example

7. Functions

● Purpose: Define the contract's operations and logic. Functions can read from and modify
state variables.
● Characteristics:
○ Visibility: Can be public, private, internal, or external.
 ○ Return Types: Can return values or void.
● Example

8. Fallback Function

● Purpose: A special function that executes when the contract receives Ether or when a
function call does not match any existing functions.
● Characteristics: Useful for accepting payments or handling unexpected calls.
● Example

9. Access Control

● Purpose: Ensures that only certain addresses can execute specific functions, enhancing
security.
 ● Implementation: Often achieved using modifiers or role-based systems.
● Example:

10. Error Handling

● Purpose: Ensures the contract behaves as expected by validating conditions before

executing critical logic.
● Methods: Use of require, revert, and assert statements.
● Example:

11. Self-Destruct Function

● Purpose: Allows the contract to self-destruct, freeing up space on the blockchain

and sending remaining Ether to a specified address.
● Use Case: Useful for managing contract lifecycle and removing outdated contracts.
● Example
Module 3.2:Introduction to programming language

Solidity is a brand-new programming language created by Ethereum which is the second-largest

market of cryptocurrency by capitalization, released in the year 2015 and led by Christian
Reitwiessner. Some key features of solidity are listed below:

● Solidity is a high-level programming language designed for implementing smart

contracts.
● It is a statically typed object-oriented(contract-oriented) language.
● Solidity is highly influenced by Python, c++, and JavaScript which run on the
Ethereum Virtual Machine(EVM).
● Solidity supports complex user-defined programming, libraries, and inheritance.
● Solidity is the primary language for blockchains running platforms.
● Solidity can be used to create contracts like voting, blind auctions, crowdfunding,
multi-signature wallets, etc.