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What are blockchain smart contracts? Explained for non-techies✅

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Automated car washes work a lot like vending machines. The customers pays directly  for a car wash and receive it automatically.

What are Blockchain Smart Contracts?

In non-techy terms,  blockchain smart contracts are like vending machines.

You trust the vending machine .

You know it will release your candy bar or coke as well as your change once you put your money in

You don’t need a person on human on the sport to approve the transactions.

A software takes care of that.

Smart contracts add this extra layer of security cryptocurrencies and blockchain tokens.



What are smart contracts?

Smart contracts are an important component in a blockchain algorithm.

They guarantee that the cryptocurrencies or tokens reach the right recipient’s wallet.

Bitcoin is currently the most popular blockchain smart contract.

The bitcoin miners all over the world been verifying transactions using another layer of security called proof of work


The problem with traditional banking is that you don’t own your money once it is the account.

The banks can decide when and how much to give you.

You lose control.


Smart contracts are similar to vending machine, the vending machine accepts the coins and returns charge. The vending machine has several mechanisms to protect the coins from thieves. Also any body can buy from a vending machine. This is the first known explanation of smart contracts.

This is the first known explanation of smart contracts by Nick Szabo (the inventor of BitGold) in 1996


What are smart contracts?
smart contracts definition


In simple terms, blockchain smart contracts can be described as:


“a way to create complex transactions between untrusted individuals”


Mark Pascall, Founder of The Wellbeing Protocol 

Smart contracts vs Traditional contracts

If you work in the legal field or real estate field, you are probably are aware that documents can be forged.

The slightest human error can result in years and tens of thousands in dollars in damages.

Not to mention authentification.


Blockchain Smart contracts can potential save people millions by removing all the middle men.


Are Smart contracts reversible?

The most popular case of cryptocurrencies being reversed is of Bitcoin gold.

For this reason, the more decentralized a blockchain is,the safer it becomes.

BlackRock recently said it would create it’s own Bitcoin but would ensure it retained control.


Most Central Government Digital Currencies (CBDCs) are considered dangerous in the crypto space because of this loophole.

Centralized can potentially have transactions reversed because one person controls the transactions.


How smart contracts evolved

Now, let’s explore how blockchain went from minable cryptocurrencies to minted tokens

Bitcoin is the most famous use case of smart contracts on the blockchain.

It paved the way for other cryptocurrencies which is now a trillion dollar industry.

The biggest limitation with the Bitcoin blockchain for software engineers is the inability to build on.

While, the limited supply is great for Bitcoin investing, it does not use blockchain technology to it’s full potential.


Examples of Blockchain Smart Contracts

ICOs and Blockchain tokens

Previously Ethereum’s ERC20 tokens are also the preferred smart contracts for ICOs (Initial Coin Offerings) because the template has already been created.

Blockchain start-ups can “mint” any amount of new tokens and distribute them to whoever they wanted to,

But the transactions fees (a.k.a gas fees) quickly become exorbitant as users rise.

Crypto Vesting

If you are new to blockchain investing, token vesting has become the norm for start-ups.

The tokens of the Team and early investors get locked up from anywhere from 6 months to 5 years.

This is done to protect retail investors


A more in-depth guide: What is Vesting in Crypto?

NFTs (Non-Fungible Tokens)

The Bored Ape Yacht Club digital art tokens propelled blockchain smart contracts to non-techie investors with its ape graphic illustrations.

Just as Dogecoin made cryptocurrencies more appealing to non-techies, the BAYC used celebrities such as Paris Hilton and Justin Bieber market the tokens.



The BAYC introduced proprietorship tokens with images to the masses.

Despite the Bored Ape controversy, the true value of NFTs are to help artists prove proprietorship.



In a recent article by a player paid over $1,200 worth of ETH for an NFT character named “Egg,” while player spent over $500 for a hero named “Starvation.”

Gamers are usually the first adopters for everything.

They were the first start mining Bitcoin

Games are always selling limited edition collectibles –

The most expensive pokemon card in world is worth $5.275 million

However, digital collectibles such as weapons and armour were never that much because they were never truly limited and unique.



While it is easy to get scammed into overpriced jpegs file of diamonds and luxury items with all the hype.

There are a particular type of collectors who actually do prefer unique and one of a kind jewellery or charms such as pandora.

The NFT jewellery would be for them.


What are blockchain smart contracts? Explained for non-techies✅
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Real estate

Nfts are disrupting real estate as they can potentially not only reduce the paperwork by proving proprietorship.

But also simplify the process when there are several owners.


Inheritance and wills

Just like cryptocurrencies eliminate the banks, blockchain smart contracts can potentially reduce legal fees because of the immutable nature of the technology.

Why documents can be forged and require authentication, once something is registered on the blockchain, it can not be modified.

While this is less excite


Example of Non-Blockchain Smart Contracts

The concept of smart contract is not new.

And automatic purchases without human intervention has been around for decades.

Here are 5 popular business models which can be compared to blockchain.


Self-Serving Kiosks

  • ticketing kiosks for transportation services,
  • self-checkout stations in retail stores,
  • DVD rental kiosks,
  • even self-service printing stations

These work a lot like vending machines.


Online Streaming Services

Subscriptions services like Netflix and Disney Plus have subscription services which operate like vending machin


Digital Market Places

  • Amazon
  • Ebay
  • Etsy

These are great examples of where buyers and sellers can make transactions similar the vending machine’s sales automation.


Automated Car Washes:

Automated car washes work a lot like vending machines.

The customers pays directly  for a car wash and receive it automatically.


Micro-Mobility Services:

For pay-per-use equipment, such as electric scooters and bike-sharing also do not require human intervention.

The users need to pay for a specified duration or distance of use through an app.

They unlock the vehicle, and use it.

Once finished, the drop it off at another designated location.


Drone delivery ou (UAV):

Using an Unmanned Aerial Vehicle to automate delivery is another interesting evolution.


Non-blockchain smart contracts
Smart Contracts in Everyday life


Platforms which host smart contracts

Ethereum – ERC 20

Binance –  BNB Smart Chain

Solana –  SPL

Neo – NEP-5 


Smart contracts vs Dapps

Decentralized Applications (or Dapps) are often confused with smart contracts.

Dapps are the ‘infrustructure’ that run the smart contracts.

We could compare them to the vending machine manufacturer.


Cheat Sheet Infographic

Smart contracts explained in an infographic


Please include attribution to with this graphic.

Smart Contracts explained infographic


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The Bottom Line

The most important use cases of smart contracts are the least excited, unfortunately for investors.

Just like Steve jobs purchased a patent for the digital keyboards for smartphones, smart contracts are the same.

They solve bigger but less glamourous problems such trust and proprietorship.


And if you are a non-techie, you might find all this blockchain technology talk intimidate.

But interestingly enough, smart contracts have been around for decades and you have probably been using them without realizing it.

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