0:00 Hi. 0:06 Hi. A few days ago, somebody asked me what was a smart contract in blockchain. And at first they just went right into a conversation about contracts and lawyers and they didn't know why lawyers were involved in the blockchain. And they weren't really sure what a blockchain was. And so I figured that I would drop a few video shorts describing my take on smart contracts and blockchain. So this is the first one. What is a smart contract in blockchain? So let me walk you through it. In my perspective, I'm doing a lot of work on the Ethereum blockchain. So I'm going to start with a theory on blockchain from our perspective of what goes on with smart contracts. If you haven't seen some of the earlier videos we've done, we described 0:57 blockchains as a network. And the Ethereum blockchain, specifically, as this world computer it is a network of about 8400 or so nodes, the current Aetherium network. And on these nodes, these nodes are making sure that everything is written to the blockchain, the Ledger's that are in the blockchain, in essence, recording each transaction that happens everywhere across the Ethereum blockchain, across that network. So if something happens on this part of the network, every node records all of those transactions. So if somebody were to try to run another transaction on another node, because all those nodes that replicated, you'd be able to find the same transactions. So it's a uniform network of truth. 1:43 But one of the things that's happened, specifically with Aetherium, Aetherium, was built to be this world computer, as I mentioned earlier, and a world computer means that you can run some de centralized applications, or daps. Now these daps can run on this Aetherium network, but they're not necessarily running on the nodes. They're running self contained across this network. So you access a particular node, it accesses the theory of network. And this program runs. Most of the time, these programs are self executing rules, there are these small building blocks that can be stacked one on top of another. These self executing rules are what we call smart contracts. So in short, on a blockchain, a smart contract, is a computer program that's running on a decentralized part of the Ethereum network. What does that mean in the general scheme of things, it means just this people and organizations can write and deploy that means send the contract, the smart contract off to the Ethereum network, and it can run decentralized, without any corporate or centralized control, that program just runs. Now, the weird thing about it is that that program just runs and there's a problem with it and needs to be updated. They have to kill that program. And put up another one, you can't update it, you can't change it. So in essence, for those of you looking for a scam or a hustle under every, under every rock, if you were to see a smart contract, and it was out there and it looked great, you really couldn't say, well, somebody is going to come in afterwards and change it and fix it for me. No, no one's going to change it, no one's going to update it. That's one of the reasons that people when they make a smart contract and deploy to the blockchain, they spend a lot of time testing it. And they spent a lot of time having an audited, because when they put it out there, that's it. It's flying, be free in it to run it. So a smart contract. Just the last bit about this, the self executing rules are the beautiful part about working on the Ethereum blockchain, working about it can go and detect that let's say you wanted to have a smart contract that fired off on the first of every month, it would just use data from outside the blockchain, to see when the first of the month was. And then those rules would fire off. And let's say they sent you 4:14 to Aetherium units every first of the month, that smart contract will be those self executing rules. Those smart contracts could also be more advanced, like a lending protocol, a lending protocol that could a lot could enable you to put 4:31 up collateral to go borrow funds, or capital to go do something with 4:38 it would also be detecting the amount and the value of your collateral in your wallet. If the amount or the collateral in your wallet dropped below a certain level. The self executing contract would say, I'm sorry. We need to go liquidate your assets at that point before it becomes something that we can't cover. To make sure all 5:00 other people who have loaned money into that protocol can be safe. That's a self executing rules. Those are not being run by somebody, those aren't being run by some accountant in a corner with a green visor. Those aren't run by some buddy at Google or somebody at Amazon. They aren't even hosted at Google or Amazon. The smart contracts exist on the blockchain. These programs are on the blockchain, and they are smart contracts. And that's how blockchain and smart contracts work together. And the last bit of fact, is that most smart contracts, at least on the Ethereum blockchain are written in a programming language called solidity. And if you go to some place on the blockchain, like ether scan, for particular contract, in many cases, you can drill right down into that particular contract that is that particular program. And you can actually look at some of the solidity code. And if you can't find it in that smart contract element of the Ethereum blockchain on ether scan, you more than likely, if the organization is open enough, you'll be able to find it on GitHub and linked from the organization's page or link from that organization's white paper. So that's blockchain and smart contracts in the context of the Ethereum blockchain. I hope this is helpful. Stay tuned for our other videos on this topic. Because it's very important to me that everyone understand this at a basic level and understand it. I'm not expecting you to know how to develop I'm not expecting you to know every protocol that exists out there. But you just need to know that a blockchain is a network, a specific network, and on particular blockchains apps can run. And in this case, an app is a smart contract and a smart contract are a set of self executing rules that could run without any control and they're run decentralized. And sometimes people call those daps decentralized apps. That's it. Take care see you next time. 7:08 Why does the blockchain need a smart contract? A blockchain needs a smart contract, because people are not satisfied with just writing to the blockchain. blockchains and smart contracts work together, because there's more need for more sophisticated things to occur on these blockchains. As we're talking about, and the Ethereum blockchain, there are rules that need to be executed, there are programs that need to be run, there are loans that need to be made, there are investments that need to be made, there are investments that need to be pulled back, these smart contracts, run all of these things on the blockchain. And it's far more 7:53 important to have a set of rules that can go and do things for you than have everyone manually going and doing things on the blockchain. Because ultimately, it wouldn't scale it wouldn't allow people to run. Now, given that you have things like the Ethereum blockchain, which runs only 15 transactions per second, or the the Bitcoin Blockchain which runs even fewer, they are slower running than most things. The other thing that I would add is that every blockchain has different rules about how its smart contracts work, the Ethereum blockchain, when its smart contracts work, those smart contracts actually need Aetherium to run. So when those rules run, there is a gas fee to have those rules run. So when you go and try to execute a transaction, when you're requested a gas fee, it is to keep that network running. And that network consumes those gas fees and Aetherium fractions of Aetherium. And those gas fees go to the miners as a reward for writing one more element, one more thing in the ledger in that block to reflect the transaction that was made. And so that's why it's needed. Hopefully, that helps. It's just a little tidbit. Have a great day. 9:23 Somebody asked me the other day how a smart contract really works. Now, this is not the forum to dig into how a program actually works. Because if you remember, a smart contract is actually a program that runs on a blockchain. 9:39 lawyers aren't involved unless it's about a legal topic. But for the most part, a smart contract is a self of self executing rules. And what does it mean when I sell say self executing rules? When something triggers the smart contract, it will execute the rules that are programmed into it usually 10:00 The programming language solidity. So it might be something as simple as on the first of every month, do something, it might be the fact that a particular token has reached a certain price, execute the set of rules to either liquidate my holdings, or go buy another holding, if that price was below a certain threshold, it might even be to walk through a complex transaction is something as like, if you come to the table with an listed credit score of 790, and you have 45 Aetherium in your wallet, and you have the title to your home. And all those things can be found by looking on various places on the Ethereum blockchain. If all those things are true, then provide you a loan at a rate equal to the combination of that and a formula. And you could get a loan for a mortgage for 2% 3% 4%, or 7%. Based upon all that criteria, it wouldn't matter where you lived, it wouldn't matter that you had a horrible accident, it wouldn't matter that all those things took place. This the smart contract would work, execute those rules, and ensure that it protected all the lenders, like I mentioned in a previous video, if your balance dropped below a certain threshold, it would liquidate the rest of your balance to make sure that the lenders were whole, that would be another smart contract operating to back it up. So how smart contracts work. They are triggered by specific events. They execute on the blockchain. And they can enforce manage or run complex or very simple transactions on the blockchain, to satisfy your needs. Hopefully, that's helpful. 12:02 We try to get as clear as possible. And I hope that wasn't as clear as mud. But if you understand it's a program, it's triggered, self executing rules is written in solidity. If you need any more information, you know where to find us. Have a great day. 12:24 We often get questions from readers who are wondering if something is being controlled by a large corporation, or if they have a tendency towards conspiracy theories, or they just don't trust a system. They're in Bitcoin, or they're in Aetherium. And they're on blockchains because they don't trust banks and financial institutions or centralized institutions. And the question always comes up, who controls blockchains? That's a very easy answer to provide, because it depends. 12:58 It depends on the blockchain that you're going after, as we said in a couple of previous videos, and I'll say again, here blockchains are networks. There are specific proprietary networks that have a purpose that do things for a specific purpose built, Focused Objective, and they have different reasons for existing, some are completely decentralized and controlled by no one. And some are controlled by centralized organizations, because they run for a specific purpose. So the Ethereum blockchain is not controlled by any one person. It is a decentralized exchange set up in its own blockchain, it is its own network. The same goes for Bitcoin, it is completely decentralized. It's run by no one, except for the Node running the blockchain. And those nodes are dispersed around the globe, as they are with Aetherium. 13:58 There are a variety of other blockchains that run in a decentralized basis. But there are blockchains that actually run from a centralized perspective. And those tend to be ones that are more controlled by organizations and corporations, and are pretty much deployed for 14:18 business specific entities. So let's say you could run a set a private blockchain, for organizations that were tracking the provenance or the genealogy of products that were 14:33 made in a certain country, shipped all the way through to understand where they were built, to be able to manage counterfeiting, to that blockchain could be run by a central authority, and that service can be provided to different clothing and fashion manufacturers around the globe. That would be a private blockchain that's controlled by a central organization. But the massive blockchains as I said, you're going to have to do a little bit more research and we probably should do some more research 15:00 I'll try to come up with a list of some of the blockchains that really are centralized or decentralized. But for the sake of this video, just understand that the larger blockchains are pretty much controlled by no one except for the people on them running things every day. Now, that's not to say that there are security concerns about one blockchain over another. But the cryptography and the way it's distributed around the globe, to make it nearly impossible for anything to happen to, to really compromise those networks. But those should always be questions that you should ask. The control is, for the most part, decentralized, the ones we've been talking about are decentralized. And that's what it's all about. 15:48 smart contracts, I've been talking about the Ethereum blockchain. And we always have heard about the Bitcoin Blockchain. But the question is, which blockchains support smart contracts. If you take a look at this list here, these are the blockchains that support smart contracts. Some are more used than others. Some are very popular, some are very specialized. And some haven't even made the list because they're private b2b contracts. But these are the blockchains that support smart contracts based upon when we recorded this video. And as always, if you have any more questions, you know where to find us, take care. 16:37 A lot of people don't know a lot about Bitcoin and smart contracts. And for the most part, because the Bitcoin network is relatively constrained with three to four transactions per second, globally, a lot of the smart contract activity are done on the Lightning Network connected blockchain that's connected to the blockchain network of Bitcoin. So most of the smart contracts for Bitcoin are running on the Lightning Network. So if you're looking for smart contracts, if you're looking for information that runs across a network that allow you to do things in Bitcoin, you would definitely take a look at the Lightning Network. The Bitcoin blockchain is notoriously conservative. There's a tremendous amount of value being stored on that blockchain, there's not a lot of appetite for massive change. So that's why a lot of the changes in the innovations you see happening off the chain and working back and forth with the Bitcoin Blockchain. So that's the answer that we have based upon our research, there may be a vast amount of information that we haven't covered, because things are developing. And people will say that there are things that are happening on these blockchains. But some of those things are in development. Some of those things aren't real. So when we talk about things that are working, we're talking about things. We're talking about networks, we're talking about things that are being used by average consumers on a regular basis, or regular businesses on a regular basis. So that's the net of blockchain, the blockchain of Bitcoin and smart contracts. Hopefully, that's helpful. I'm sorry, I can't give you a huge, comprehensive definition. Our expertise is more on the Ethereum blockchain, but people do ask about Bitcoin and smart contracts. And that's my answer.