How blockchain and smart contracts work together

Blockchain is a concept that is age-old but its real application was seen after the cryptocurrency came into existence. The first currency where its usage was seen was Bitcoin. Each cryptocurrency works on a chain called the blockchain. Every currency has its own blockchain on which it operates.

Not only in cryptocurrencies but its usage has been seen in different platforms such as to keep a medical record, for voting in an election, in the car industry for the odometer reading to assess the real value.


A block contains the storage of your data in a secured way. A block contains three basic things:

  • Data
  • Hash
  • Hash of the previous block

In data, the information stored is related to the parties making a transaction, their place, and the amount of the transaction. In hash, there is identity proof and that identity proof is in the form of a fingerprint. Thirdly, the hash of the previous block is the medium through which the chain of the block is formed.

The reason why it becomes difficult to hack these blocks is due to the proof of work mechanism and peer-to-peer transaction. In proof of work there lies complex puzzles that computers need to solve through the process of cryptography called mining. Some keys are provided to the parties that may or may not be the same for both parties.

In a peer-to-peer network, there is consensus between the parties, if any new block is added to the chain all members have to verify it to form the blockchain only if they find that it is valid. These two chains make it possible to secure the network and the transaction from being hacked.


Smart contracts are contracts that are kind of the same in our physical world, but they are digital. It is related to blockchain because the smart contracts are stored inside a blockchain which means whatever perks blockchain provides to its users are automatically added to the smart contracts. To know more about blockchain you can visit the official site and get tricks about how blockchain and smart contractors work together?

What are other things that a smart contract provides:

  • It can enter into other smart contracts,
  • It can just like other digital money send and receive coins,
  • They can be executed on their own.


Smart contracts can be applied in other fields as well, many countries around the world are using them to keep a track of so many other things. For example:

  • To keep a transparent record of medical records,
  • For voting purposes to have transparent elections,
  • In cars odometer, and
  • Manufacturing of so many other edible products etc.

This is possible because it is working through the process called the blockchain.


As told above smart contracts are stored inside the blockchain, so every smart contract that is entered into gets all the benefits that a blockchain provides otherwise, hence it becomes easy for a smart contract to incorporate all these things automatically that blockchain provides. These contracts are self-executing that is why they are called smart contracts.

Many cryptocurrencies have incorporated this advanced phenomenon into their respective currencies. Such currencies are the so-called 2nd and the 3rd generation currencies called Ethereum and Cardano. But apart from that, many other currencies are using these contracts to make them more viable for the people.

The brief article shared above pertains to smart contracts and blockchain technology and how they work together. I hope it would make crypto investments more reliable to you.