Every Ethereum application is based on a smart contract—a program defining its behavior. You can use smart contracts to create currency or perform complex computations, but more importantly, as a content creator, you’ll have a smart contract as a foundation for every NFT of your work. To The Moon asked founders of iNifty Inc NFT platform—Victor and Irina Sychov—about the basics of smart contracts
Long story short:
- A smart contract is a piece of code stored on the blockchain.
- Ethereum was the first to support smart contracts. It has a cloud computer called EVM (Ethereum Virtual Machine) that executes smart contracts automatically. Now there are other types of a smart contract.
- Every transaction via a smart contract follows the terms described in its code (like, “If this avatar gets sold, send 97% of the profits to the artist and 3% to OpenSea”).
- The programming language used to write smart contracts is called Solidity, and you can start learning it on Udemy or Coursera. Alternatively, you can read the language’s official documentation.
Smart contracts make selling art easier
Just like paper contracts, smart contracts are agreements that describe what happens once certain conditions are met. If it’s an NFT you’re selling, it will define to whom it can be sold and what the terms are: for instance, what rights to your work you sell.
Smart contracts have quite a few advantages over traditional ones: you can forget about loads of legal paperwork, and every transaction performed according to the contract will be completely transparent.
“Before, you would need 50 or 80 pages to cover all the legal issues, and if you wanted to work internationally, things would get times more complex. With a smart contract, you don’t depend on a specific country with its legislation. The relationship between you and the end customer is described very clearly, and the conditions are up to you,”
say iNifty founders.
You can’t change a smart contract
The fact that a smart contract is set in stone once you put it on the blockchain, can be a blessing or a curse.
“Ideally, every smart contract should be programmed specifically for your needs. If you’re serious about the future of your project, you will always work with a lawyer and a programmer to make sure all the gaps are covered. For example, you start a project with an NFT collection that will later turn into a Metaverse. All these future transformations have to be included in the contract even if you never announced the upcoming Metaverse to the public. Thorough planning is key to getting what you want from a smart contract,”
say Irina and Victor. If you end up dissatisfied with the result, you can’t blame bad customers who didn’t pay what they owed you. You’ll have to blame yourself.
Do not write the code yourself if you aren't a pro
On the blockchain, the human factor doesn’t really matter. But if you aim at having a personalized smart contract, you still depend on humans. In theory, your smart contract can contain whatever you desire. In real life, there are at the very least boundaries set by Solidity syntax and logic.
“An inexperienced programmer can describe conditions that simply won’t be executable. Choose people you work with wisely. After all, it’s your money that is at stake,”
say iNifty founders. And of course, unless you’re super experienced with Solidity (in that case you probably wouldn’t need this article), writing the contract code yourself should be out of the question.
Things don’t have to be complicated
However, if you’re just starting, you may go without human assistance. “Resources like OpenSea and Rarible are open to the public and offer pre-written smart contracts that describe what you’ll make once your work is sold, what the platform fee will be, and your royalty in case the NFT gets resold further. The latter has become standard and is one of the things that makes working with NFTs potentially much more beneficial for visual artists than the traditional art market where you only sell your work once,” say Viktor and Irina.
Smart contracts impose obligations on you
iNifty founders describe the NFT industry as reverse capitalism, “Before, if you wanted to launch a project you would develop it first, and then, one day, raise money to implement it. With NFT, your promise often comes first. You launch a project and tell the decentralized community how this project will evolve in the future, and get paid for this promise.” The smart contract is what prevents you from breaking the initial promise — EVM (Ethereum Virtual Machine) doesn’t care about reasons you couldn’t meet the deadline or other conditions you defined at the start.
A smart contract doesn’t guarantee your NFT will ever get sold
Smart contracts regulate your relationship with customers and middlemen, but they can’t help you with marketing. Overcrowded platforms like OpenSea have little interest in promoting artists, and the time of overhyped NFTs like CryptoPunks seems to be over. If all you have is yet another collection of profile pics, that’s not enough and there’s no smart contract that can save you. Irina and Viktor recommend gaining a deeper understanding of the NFT market and thinking like an entrepreneur rather than an artist,
“Even if you’re lucky to find a producer who will guide you into the bright decentralized future, all these producers are also just learning. The market is expanding so rapidly that any specific advice quickly grows old. Don’t count on specific art forms that are currently trending. Instead, think of the community you work for and the value your work will bring to the community. Next, think of a cause worth fighting for and brands that share your values. A lot of companies are open to artistic collaborations. Good partnerships can go a long way, and with the help of Web3 tools they can bring your artistic career to a whole new level.”