Cryptocurrency Q&A
How do bitcoin smart contracts work?
How do bitcoin smart contracts work?
HanbokGlamour
Thu Jul 18 2024
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7 answers
1505
Could you elaborate on the workings of Bitcoin smart contracts in simple terms? As a financial expert, I understand the complexities involved, but I'd appreciate a concise overview for those who may not be as familiar with the technical aspects. In particular, I'm curious about how they differ from traditional contracts, how they are enforced, and any limitations they may have in practice. Also, is there a need for a central authority to validate and approve these smart contracts, or does the blockchain handle that aspect? Your insights would be greatly appreciated.
7 answers
mia_clark_teacher
Sat Jul 20 2024
This process, known as Pay to Script Hash (P2SH), allows the hashes of scripts to be encoded into Bitcoin's Unspent Transaction Outputs (UTXOs).
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Chiara
Sat Jul 20 2024
By locking contracts to transaction hashes, smart contracts gain a layer of security and flexibility.
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Maria
Sat Jul 20 2024
Script hashes serve as unique identifiers, ensuring that only transactions with matching hashes can access the locked funds.
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Eleonora
Sat Jul 20 2024
When it comes to Bitcoin smart contracts, their functionality is deeply intertwined with the nature of Bitcoin transactions.
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BitcoinBaron
Sat Jul 20 2024
These contracts can be designed to be locked to specific transactions, utilizing script hashes as output addresses.
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