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Introduction to Smart Contracts


A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible. Source: Wikipedia.

A smart contract facilitates, verifies, and enforces a transaction between two or more parties on a distributed ledger or blockchain.

Smart contracts store transactional data on the permanent and irreversible blockchain ledger and, on doing so, change the state of the ledger.

Smart contract programming languages are scripting languages specific to the cryptocurrency or platform, such Bitcoin's Script or Ethereum's Solidity. smart contracts run on the etch virtual machine (VM) which is a logical computation layer used to execute smart contract code. The etch VM and smart contract code reside on every node of the distributed Ledger.

Smart contracts can be used for voting applications, crowdfunding, auctions, multi-signature wallets, identity verification, and much more.

etch builds up smart contracts using persistent global representations of State and ShardedState data structures, and the Address type which represents account owners and gives access to respective balances.

The Ledger

Smart contract transactions are etched onto the distributed ledger, or blockchain, and are therefore permanent, traceable, and irreversible.

The Ledger is the blockchain foundation of the etch VM. Quick start instructions for spinning up a Ledger node are here.

The Ledger is unlike more traditional blockchain designs. Instead of a single chain of truth, the Ledger is sharded into parallel lanes.

Memory mapping on the Ledger shards

This blockchain sharding design speeds up the network as contracts can execute concurrently.

For Ledger developer documentation, click here.


In computer science, determinism ensures that an input to an algorithm will always produce the same output.

When designing etch smart contract code which will execute on Ledger nodes, it is essential to avoid non-deterministic behaviour that may break consensus. Any code that causes separate nodes to have different values for the same thing may break consensus.

Smart contract developers should therefore consider the following:

  • Randomness: along with random functions, non-deterministic randomness can arise in other places, such as Hash Map implementations and Map iterations, for example.
  • Concurrency: multiple processes targeting the same state transactions can break consensus.
  • Ill-considered imports: e.g. libraries containing non-deterministic functions, such as time functions, or APIs that access external and unpredictable systems.
  • Timestamps: watch out for non-deterministic timestamp implementations.
  • Asynchronous behaviour can break consensus.

It may be prudent to implement any essential non-deterministic behaviour outside of smart contract ledger code.