To give you a high-level overview of what’s involved in smart contract development, we’ll provide a breakdown of the basic steps of the process. We won’t delve into the actual code, but we’ll provide you with a detailed dive into how to get a smart contract written.
What you will learn
How to create a smart contract
How much a smart contract cost
How long it takes to create a smart contract
As the world of cryptocurrency grows, the use of smart contracts will likely only expand due to their wide variety of uses. While the nuts and bolts of the technology can seem intimidating, every developer can understand the basics of how to create a smart contract.
If you want to learn how to create your own smart contract, you must start at the beginning. Think of a smart contract simply as a computer program that runs on a blockchain. These programs have a set of transaction terms built into the code of the “contract.” They perform all sorts of functions by establishing terms, managing the parties involved, and then carrying out transactions. You can find smart contracts on networks like Ethereum, Hedera, Fantom, Avalanche, and Harmony. They rely on coding languages like Solidity..
To better understand this idea, let's put it in typical contract terms. When buying a home, both parties involved will sign a contract. Yet, the contract only lays out the terms, it cannot enforce them. Instead, a third party, like the courts, must do the enforcement.
However, a smart contract can enforce itself, using its code, which eliminates the need for a middleman.
Originally conceived in 1994, smart contracts offer an ideal solution for many of today's problems. For example, if you want to build a co-governed blockchain community with set voting rules, a smart contract can automatically take action after your poll reaches some number of votes. Smart contracts also support decentralized applications, or dApps, which are apps that run on the blockchain. These dApps are part of the growing world of decentralized finance, or DeFi, which gives users a host of secure, revolutionary applications.
The beauty of using a smart contract over a centralized application is that it runs independently on code without any third party, ensuring trust amongst contract participants is retained. Smart contracts also simplify complex transactions into defined lines of code on the technology of blockchain, so they remain secure and transparent.
To give you a high-level overview of what’s involved in smart contract development, we’ll provide a breakdown of the basic steps of the process. We won’t delve into the actual code, but we’ll provide you with a detailed dive into how to get a smart contract written. This takes several stages, from creating your own smart contract idea to writing, compiling, and deploying the code using your chosen smart contract language. Finally, you can execute the contract and verify its effectiveness. Let's begin!
The first step is defining what you want your contract to do. What problem do you want an automated, smart computer program to solve? Let’s say you’re looking to raise funds for a business venture. You can use a smart contract to automatically run your fundraising operations. Your smart contract can recognize when you reach your goal and can stop the fundraiser, return unneeded donations, and do other tasks.
Whatever need you’re looking to address, knowing your desired outcome will help you begin the coding process with clarity.
Next is the process of actually coding your smart contract using a programming language. To begin, you’ll need an environment in which to write your contract, such as an integrated development environment (IDE).
Remix is an example of a great IDE starting place for developing a smart contract. It’s an open-source application that works on your desktop and as a web application. Remix specializes in Ethereum development, so you can use Ethereum's Solidity programming language to write the smart contract code. A benefit of Remix is that it offers a quick development cycle with a host of useful plugins.
Once it has been coded, testing your smart contract is the next step. Rigorous testing is absolutely vital. Smart contracts are immutable once placed on the mainnet, which means you can’t edit any errors found after deployment.
To test smart contracts, people use testnets (or testchains) or local blockchain networks. Thankfully, using these doesn't require real cryptocurrency. Instead, you can use dummy currency for testing purposes to immediately get feedback on how well your contract works.
There are a variety of testing tools available. Remix, for example, comes with integrated testing and deploying environments to simplify your process. Truffle is another testing framework with a compiler for the Solidity programming language. Hedera offers its own testnet where you can test your smart contract — to get started, visit the documentation.
Before deploying smart contracts, they must be compiled. This refers to the process of converting your contract’s code into a JSON file so it can be read by a normal web app. Take, for example, an Ethereum smart contract. Once it has been written in Solidity, your contracts are compiled to the bytecode of the EVM, or Ethereum Virtual Machine, making it compatible with all EVM networks.
Finally, it’s time to deploy your contract, or actually place it onto your chosen network. When you deploy smart contracts, you will execute them and make a transaction using real crypto. To do so, you’ll specify details like the appropriate wallets and rewards. After this stage, your deployed contract will be launched and all your coded functions will kick into gear after established conditions are met.
After your contract is executed, deployed, and live on the mainnet, you’ll want to do your due diligence to see that it's running smoothly. This includes checking your wallets to ensure the right balances appear when they should. This also is the time to address any storage issues and maintenance tasks.
Smart contracts are priced by the amount of “gas” it costs for nodes on the network to execute the contract multiplied by the gas price. Let’s break that down. Gas is a measurement unit for the fees associated with each smart contract transaction. Every computation in the execution environment, whether it’s Ethereum’s EVM or another, requires some gas cost. In other words, gas is the price of doing business in a smart contract.
So how does gas work in action? Nodes process smart contracts, and in exchange for their work, they receive a fixed payment of gas. On the Hedera network, for example, a node processes a contract, and then gets paid in HBAR.
In designing your smart contract, you will specify the amount of gas it will require. There are a few considerations to keep in mind in estimating and setting this gas limit. The amount of gas earned by processing a smart contract depends on how complicated it is. You will want to specify the right amount needed. If you over-specify the gas needed, the extra will be returned to you. That's not so bad. But if you under-price, your contract execution will fail and generate an “out of gas” error.
The Hedera network offers an incredible amount of throughput for smart contracts, and it doesn’t require “bribing” nodes to process transactions. On Ethereum and other alternative blockchains, it’s common to bribe nodes by raising the gas you set for your contract, resulting in it having a higher priority on the network but a lack of fairness in transaction ordering.
In terms of U.S. currency, you must consider two points.
The development cost. Development shops can charge anywhere from $7,000 to $45,000 to create and deploy a smart contract. For a contract to be used by a large organization, the price might hit around $100,000. Of course, people with the necessary coding skills could create a DIY smart contract for a fraction of those costs.
The audit cost. Because of the immutable nature of a smart contract, most companies pay for an audit of a smart contract before it goes on the mainnet. A third party checks all the coding and the performance of the smart contract. Most sources say this costs a few thousand dollars to $15,000. The price can be much higher for a large, complex contract.
Typically, blockchain developers are the ones creating smart contracts, using their expertise in coding languages and frameworks like blockchain. However, thanks to the wealth of resources available, anyone can become a developer and enter the world of writing smart contracts.
If you have no experience, it may take you a few months to get comfortable with coding a simple smart contract. Developers with more experience might need just days or weeks. Once created, your smart contract can take anywhere from a handful of seconds to minutes to complete.
Now that we've covered the basics of how smart contracts work, you can dive deeper into the world of smart contracts. The potential of these contracts is vast.
Hedera's Smart Contracts 2.0 solution allows developers to process contracts with speed, scalability, and predictable fees. Hedera is a public distributed ledger technology (DLT) that uses hashgraph consensus verify data without miners or blocks. Instead, Hashgraph uses a revolutionary “gossip about gossip” protocol that encourages network nodes to come to consensus on transactions. Create your own Smart Contract on Hedera today.