There is little doubt at this point that blockchain technologies, which include cryptocurrencies and smart contracts, will play a large role in shaping the ways that societies function in the future. In fact, as they are becoming more widely adopted by both individuals and businesses we can already see how they are changing things today.
Smart contracts are one example of this. They are in essence the same as any business contract – an agreement between two or more parties to take specific actions when certain criteria are met. What makes them smart is that they are written in code and automatically executed.
This saves time and means that parties cannot renege on an agreement, for example by refusing or delaying payment for a service after it has been performed.
The challenge of smart contracts is that not all business people can read the code they are written in. This is where smart contract or ‘solidity’ auditors come in. This short guide will explain what they do and how they help people do business on the blockchain.
What is a smart contract audit?
Also known as solidity audits, smart contract audits are when a third party is hired to inspect the code of a smart contract. What they are looking for are errors and weak points which could mean that the smart contract does not work as intended or that it is vulnerable to hackers who could change it.
Making sure that the contract is free of mistakes is essential for making sure that the automatic execution works as intended.
Although they are written in code, smart contracts are essentially a series of instructions in the form “when x is done, do y.” If x or y are incorrect, both parties could experience problems.
There can also be errors in the logic of the code, especially for contracts with more complicated instructions. In plain language, these would be instructions that use words like “and”, “or” and “otherwise.”
Although things are getting better, the blockchain is still fraught with malicious actors involved in hacking or scamming. Even buying crypto safely is still somewhat problematic.
It is important to be sure that smart contracts are protected from criminals, especially as many smart contracts contain instructions to release cryptocurrency or other digital assets as payments for services.
Those who conduct the audits use a variety of automated tools and manual techniques to identify points of weakness.
How much do smart contract audits cost?
Now that you understand what smart contract audits do, you might also wonder how much they cost. The short answer is that it varies, and here are some reasons why.
The first reason is the complexity of the contract, because those with lots of functions and instructions will require a lot more time and expertise to analyse. The length, in terms of lines of code, also affects the cost because auditors have to review every line.
Conclusion
Smart contract audits are essential for making sure that contracts on the blockchain work as intended and cannot be exploited.
By checking the code, auditors ensure that all parties can trust that the contract covers everything that they agreed to. Even for parties who can read the code, a second opinion can be invaluable.
