Ethereum and Smart Contracts
Based on distributed network architecture, the ethereum block chain enables smart contracts between two contracting parties. It is based on self-enforcing and self-executing contracts, irrespective of any mediating parties and regulatory authorities. It creates an irreversible contract once a consensus is reached eliminating the risk of non-performance. It creates a system which is immune to censorship, collusion, counter-party risk and fraudulent practices, adding a level of trust which cannot be breached.
The Ethereum block chain makes use of nodes or computers with block chain installed in it and a network to communicate between the nodes. The network could be established over TCP/IP protocol or any other form of networks. The simple mechanism that the block chain follows is that it communicates all smart contract across multiple nodes and achieves a joint consensus based on a logically structured algorithm. Smart contracts are enforced with a help of a private key for encoding the message and a public key for decoding the message.
Block chains have widespread applicability. It can be used to own or lease property, make payments, and involve in any form of contractual agreements involving physical goods or ideas.