Difference Between Smart Contracts and Blockchain

In recent years, blockchain has been introduced as a highly powerful and transformative innovation in the world of technology. Alongside blockchain technology, smart contracts have also been introduced as an essential component of this new technology.

While these two terms may seem related, are they truly the same? Or, what is the difference between smart contracts and blockchain? In this article, we delve into a detailed examination of both concepts and explore the differences between them, aiming to explain this complex topic in a simple language.

Blockchain, as a secure and immutable data structure, has redefined the latest theories related to data security and transfer. Through blockchain technology, information is stored in a distributed manner across networks and verified by various network components.

On the other hand, smart contracts represent a part of blockchain capabilities that execute valid transactions automatically, without the need for intermediaries such as the judiciary, lawyers, banks, etc. These smart contracts are programmed in a solidity language and are executed based on predefined or agreed-upon conditions.

What is the main difference between a smart contract and blockchain? How can we express that they complement each other? In the continuation of this article, we answer these questions and strive to provide you with a clear understanding of the difference between smart contracts and blockchain.

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What is Blockchain?

Blockchain is an innovative technology used for storing and transferring data. It was first introduced in 2008 by an individual or group using the pseudonym Satoshi Nakamoto as the original author of the Bitcoin whitepaper. Blockchain refers to a collection of interconnected blocks, each containing a list of transactions.

Each block contains a hash code to validate the data it holds and is automatically encrypted. In the hash code of each block, the hash code of the previous block is present, forming a chain of interconnected blocks, known as the blockchain.

Due to the interconnection of each block with the previous one, the possibility of changing data in past blocks does not exist. This feature enhances trust and security in the data stored in the blockchain.

πŸš€For more details about blockchain and the emerging new world, visit this article.

How Does Blockchain Work?

Blockchain stores all data and details of executed transactions, including cryptocurrencies, in blocks. In each block, as soon as new data is entered, this information is stored and added to the blockchain.

In this way, with a chain of several interconnected blocks, the blockchain takes shape. If a user attempts to transact a Bitcoin more than twice (in a sense, attempting fraud), it is prevented from completing that transaction.

Add A Block To The Blockchain

To add a block to the blockchain, six steps are necessary:

1.Transaction: Each block in the blockchain starts with one or more transactions. Transactions can include information related to cryptocurrency transfers, digital signatures, or any data that needs to be stored in the block.

2.Transaction Confirmation: Transactions are verified and confirmed by users (nodes) in the network. This confirmation is done by a network of thousands of computers distributed globally, ensuring that transactions are correct and reliable.

3.Block Creation: After confirming transactions, a new unique block is created. This block contains information about transactions and a hash (unique code).

4.Previous Block Hash: Each block is connected to the hash of the previous block, creating a chain link between the blocks and establishing an ordered and interconnected structure.

5.Network Confirmation: The new block is sent to all nodes present in the network. All nodes check whether the block and transactions are correct and valid.

6.Block Acceptance: If all nodes confirm the block, it is officially added to the blockchain, and the blockchain is updated.

What Is a Smart Contract?

A smart contract is a protocol without an intermediary that operates automatically under specific conditions written for it, and its terms are stored and executed through the blockchain. In fact, these contracts are implemented as executable programs on blockchains, especially on the Ethereum blockchain. They operate under the rules and conditions that are stored in their code within the blockchain and are executed accordingly.

To create a blockchain-based smart contract, the parties first define conditions in code within the smart contract, which is then stored inside the blockchain. Subsequently, both parties read and agree to the negotiation agreement without the involvement of a third party.

Due to their automatic nature, smart contracts enable trustworthy transactions without the need for intermediaries. Their decentralized nature means that intermediaries play no role in transaction verification, and contracts automatically execute based on the predefined rules within them.

πŸ€” You might wonder if smart contracts can be changed or if rules and conditions are immutable. For a better understanding of this issue, you can refer to the article β€œIs it possible to change a smart contract?” πŸ“–

How Do Smart Contracts Work?

Smart contracts represent a novel structure in blockchain, operating through extensive collaboration among computers in the network. Each computer or node in this network stores a version of all existing smart contracts in the blockchain.

The transaction data is permanently and immutably recorded in the blockchain. When a smart contract receives funds or assets from a user, its code is executed by all nodes in the network.

This execution is carried out to reach a consensus. Through this method, smart contracts have managed to securely and autonomously operate in environments where users engage in financial transactions with unknown entities, without the need for any central authority.

The transparency, decentralization, and the ability to execute on all network nodes enhance the power of this technology.

Difference Between Smart Contracts and Blockchain

Smart contracts and blockchain collectively aim to create a secure, transparent environment for performing financial transactions without the need for intermediaries. As a difference between smart contracts and blockchain, it can be noted that blockchain, as a physical infrastructure, stores information in continuous blocks and enables secure digital ownership transfers like cryptocurrencies and secure transactions. In contrast, smart contracts play a decisive role in executing defined conditions and rules in a contract.

For example, suppose an electricity company wants to execute a smart contract to supply energy to its customers. In this scenario, the smart contract can define conditions such as the amount of consumed energy, payment dates, and predetermined prices. This smart contract is stored on the blockchain to ensure that no changes occur, and the information is transparent and traceable to all network members.

Blockchain functions here as a storage and data security tool, while smart contracts play the role of executing agreed-upon conditions and rules. This combination of technologies allows companies and customers to participate in transactions transparently and without intermediaries, ensuring the proper execution of contracts.


Blockchain and smart contract technologies, either separately or combined, facilitate the development and execution of digital transactions. The combination of these two technologies creates a secure, transparent environment without the need for intermediaries to carry out transactions. These tools have succeeded in addressing issues such as cost reduction, increased speed, and enhanced trust in the digital transaction process.

“How has your experience been with these new technologies? 😊 Write your opinions and experiences for us, and share this article with your friends. πŸš€ Let’s move towards the future of technology together! πŸŒπŸ’‘”

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