# Smart Contracts 101

**Published by:** [Timi Does Web3](https://paragraph.com/@timi-does-web3/)
**Published on:** 2025-03-14
**URL:** https://paragraph.com/@timi-does-web3/smart-contracts-101

## Content

Smart Contracts are self-executing programs or coded contracts that eliminate the need for intermediaries or third parties for faster and instant transactions.Let’s do a bit of historySo I learned from this book by Nathaniel Luz that the idea of smart contracts dates back to 1994, thanks to computer scientist / cryptographer / law scholar Nick Szabo. He proposed the concept of smart contracts, describing them as self-executing agreements written in code rather than enforced by humans.Nick SzaboThe breakthrough for his idea did not fully develop until 2015, when Ethereum introduced Solidity, which is a programming language specifically designed for smart contracts (…follow me for more on Solidity). At the time, Bitcoin was already about six years in, and while it introduced basic scripting for transactions, that was not fit for complex agreements. Today, smart contracts power decentralized digital interactions.How do Smart Contracts work?The rules are coded and deployed on Blockchain >>> when the conditions of these rules are met, the contract executes automatically >>> the blockchain verifies the outcome with no third parties needed. A good instance is buying an NFT;You send crypto to make your purchaseThe smart contract verifies payment and transfers ownershipThe seller automatically receives crypto, and this transaction is recorded on the blockchain.The Challenges of Smart ContractsImprovement goes hand in hand with Web3 and its concepts as the future of decentralization becomes more real. Smart Contracts are only as good as the code written, meaning bugs or vulnerabilities can lead to exploitation (for example, the DAO hack of 2016); plus high gas fees on Ethereum makes transactions pretty expensive. Thankfully, improvements like the Layer 2 scaling and alternative blockchains like Solana, are making smart contracts faster and cost-friendly. As Web3 grows, we expect even more real-world adoption across industries. If you’re excited to learn more about Web3 & Decentralization in a simplified way, please hit the SUBSCRIBE button!WAGMI!Thanks for reading. My name is Timi Lawani — I am a Data Analyst & Tech Content Creator passionate about simplifying Web3 and technical concepts. You can connect with me on LinkedIn and via Email; I would love to hear from you!

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