Smart Contracts and Chaincode

Smart Contracts and Chaincode

What are smart contracts?

To put it simply, smart contracts are nothing but codes with automatic execution ability. These are codes that get executed when all the conditions for a contract are available, and the smart contracts are stored somewhere in the blockchain. The codes are made in such a way by the people who designed these smart contracts. They are meant to eliminate the third party or intermediaries, and smart contracts would enforce the contracts among different parties. They are a part of Blockchain technology.


To understand what are smart contracts and what do smart contracts do, here we are providing an example:


If you have bought a house, you would be familiar with the tedious process involved. Not everyone has the money to purchase it in one go, and that’s why various loan schemes are available. To get a loan, you have to go through several credit checks, KYC for personal information, and different kinds of paperwork. While doing all these tasks, you would meet a finance broker, lender, salesperson, bank head, and a lot of other people. Since many of them are intermediaries, and so many people are involved, you will be paying more than what you were paying for the house that you wanted to acquire, i.e. the cost would rise.

Here, if a smart contract stored in a blockchain is used, your identity, cred score everything would be available to the lender on the blockchain, helping in making a quick decision. Then a smart contract would be created after the terms agreed for payment and acquiring the ownership, and everything will happen according to the smart contract because once made, the details can’t be changed, maintaining the trust of all the parties.

Smart Contracts and the ledger

Blockchain technology has two components i.e. Distributed Ledger Technology or DLT and Smart Contracts.

As we read above, smart contracts are working upon enforcing the contract and terms and conditions earlier agreed upon by all the parties involved. 

Distributed Ledger, on the other hand, is what the name suggests, i.e. a Ledger. It is a digitally kept record while it is ‘distributed’ because every participant has a copy of the records being kept in the smart contract. The distributed ledger or in a simplified version, the record of all the transactions, in a blockchain is maintained by all the participants through their nodes (computers) with consensus. For any change by any party, all the parties have to be in consensus for introducing a change in Distributed Ledger.

Smart Contract Language

“Everyone should know how to program a computer because it teaches you how to think.”_ Steve Jobs


If you learned coding languages such as Javascript and Python for fun, you can find a language with similar syntax while developing smart contracts. There are languages for developing smart contracts that have similarities with languages such as C++, Python, Java, and Rust. With an understanding of these coding languages, you can move on and easily learn smart contract languages such as simplicity, solidity, Vyper, Yul, Yul+, LLL, etc. Among them, simplicity, solidity, and Vyper are versatile and popular smart contract languages.

Hyperledger Chaincode

So far we understood the core of blockchain is made up of two elements. First, a well maintained decentralized record, and two, an automatic enforcement mechanism of whatever terms and conditions are agreed upon by different parties involved. Chaincode performs the second function, i.e. Chaincode works as a ‘smart contract’ of Hyperledger. One thing to note here, smart contracts are used in Ethereum, and Chaincodes are used in Hyperledger, some parallels can be drawn and some differences that exist. Let’s understand what is a Chaincode.


To break it down, Hyperledger Chaincode is a code written in languages such as Java or Go. Hyperledger Chaincodes are used to develop contracts in Hyperledger Fabric (the lab of designing blockchains for different business use cases) and they have codes of how the contract will execute. Hyperledger Chaincodes are not limited to formulating business contracts, but they are also helpful in collectively managing decentralized applications. Hyperledger Chaincodes due to their enforcement role of business logic and controller of how applications interact with the distributed ledger spring into action whenever a transaction is proposed.

Chaincode vs. Smart Contract, What’s the difference?

The terms Chaincode and smart contract are interchangeably used and not much difference is understood between the two.

However, there are some tiny differences!

One primary difference is where these terms are used. A smart contract is used in Ethereum while a Chaincode is used in Hyperledger Fabric. Hyperledger and Ethereum on their own are quite different in terms of privacy, decentralization, place of origin, coding languages used, the involvement of cryptocurrency, and consensus mode used.

The second difference is the medium used to write them. Chaincode is written in java and go because these are preferred in this platform. On the other hand a smart contract of codes that resides inside an Ethereum Blockchain. Chaincode is working on a permissioned network on Hyperledger fabric whereas a smart contract is on a permission less network on Ethereum.

If we look broadly, Chaincodes are broader than a smart contract. A smart contract is enforcing a contract or a business logic, whereas a Chaincode looks after how different smart contracts are working. Smart Contract is specific to a domain whereas Chaincode is technically a vessel keeping group of related smart contacts in it. This way, it can be considered that a smart contract is a subset of Chaincode.

Want to be a Hyperledger fabric Chaincode developer or an Ethereum smart contracts developer?

Blockchain technology holds the future of technology like artificial intelligence, the internet of things, virtual reality, mixed reality, and holograms. 

It is high time that you make a career in blockchain technology and enjoy flexibility and creativity while earning a lot more. Learn about blockchain and be a blockchain developer from these courses that will give your certificate for your achievement as well. Check out these courses:

  • Ethereum for beginners: This free course will, in a user-friendly manner, teach you how to set up an Ethereum development environment, develop and compile smart contracts using solidity and deploy your smart contracts to Ganache and TestNet Blockchain. You will also learn how to interact with smart contracts from Frontend.

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  • Hyperledger Fabric Development: After giving you an introduction to blockchain and Hyperledger fabric, you will learn about Hyperledger fabric’s setup and networks. Thereafter you will be taught how to develop Hyperledger Chaincode using Go language. You will understand the complete lifecycle of Chaincode and by the sixth and last module, you will get to know about fabric node SDK.

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  • Ethereum Blockchain Development: Pegged at $250, in this course, you will learn about smart contracts and every feature of Ethereum. Other than compiling and deploying smart contracts you will advance solidity that will help you build advance smart contracts, truffle framework, Ethereum use cases and clients, Web3, and will also learn how to build Dapps from scratch.

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  • Blockchain Development Bootcamp: We all are aware of the usefulness of Bootcamps. They give the best experience and hands-on learning experience. This course will take you through all major blockchain types and is a wholesome package. You will learn about Ethereum, Hyperledger, and Multichain as well. Of course, all the components of all blockchain giants are covered.

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