Types of contracts in Solidity

Contracts are pieces of code that are hosted on a blockchain and run when certain conditions are met. Thanks to the immutability and transparency provided by a blockchain, the use of smart contracts is rising exponentially. Solidity smart contracts run on EVMsEthereum Virtual Machines. There are three main types of smart contracts:

• Smart legal contracts

• Decentralized Autonomous Organizations (DAO)

• Application logic contracts

Smart legal contracts

These smart contracts are legally enforceable. They follow the pattern of legal contracts: "if this happens, then this will happen." As smart contracts are hosted on blockchain and thus immutable, legal smart contracts provide more transparency among contracting parties. Contracting parties sign contracts using digital signatures. Smart legal contracts can execute automatically when conditions have been met.

Example

The examples of Smart legal contracts are as follows:

• Digital will

• A legal agreement between two organizations

DAOs

Smart contracts are revolutionizing the corporate culture. In Decentralized Autonomous Organizations, business is built by collaborative decisions of shareholders or people setting up DAO. No one is boss. Decisions do not change with the change in leadership, and decisions are made based on the voting system (a smart contract) created while setting up DAO.

Example

The examples of such organizations are as follows:

• Molecule

• VitaDao

Application logic contracts

Thanks to IoTInternet of Things, our devices are getting smarter day by day. Communication between smart devices can be done using smart contracts. Such smart contracts are called application logic contracts.

Example

An example of application logic contracts is a smart toothbrush created by Beam technologies that sends data collected from sensors on the toothbrush about mouth hygiene to an insurance agency so that they can adjust their insurance prices accordingly.