How smart contracts work on the Ethereum blockchain and security considerations
The first thing to understand is what contracts are, how applications using smart contracts are structured, and how they get on the blockchain. We’ll understand the most famous vulnerability, named Reentrancy.
What are smart contracts in the Ethereum blockchain?
To define smart contracts, we can refer directly to the documentation on Ethereum, which states that a smart contract “is simply a program that runs on the Ethereum blockchain. It’s a collection of code (its functions) and data (its state) that resides at a specific address on the Ethereum blockchain.” [8]
Contracts have a balance and can use it, as specified in their functions, such as via fund transfer or state change. You can send transactions that call upon these functions to interact with these contracts.
Smart contracts – being Turing-complete – can be used to develop different things:
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