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Smart Contractsby Suzanna Kalendzhian
A gentle introduction to
1997 Nick SzaboComputer scientist, law scholar and cryptographer
Start with WhatThe million dollar question is What is the Smart Contract?
In the context of blockchains and cryptocurrencies, smart contracts are:
‒ pre-written logic (computer code)‒ stored and replicated on a distributed storage platform (eg a blockchain)‒ executed/run by a network of computers (usually the same ones running the blockchain) ‒ and can result in ledger updates (cryptocurrency payments, etc).
If This Than That
Simple Example
What’s good about Smart Contracts
1 AutonomyYou are the one making the contract; no lawyers or brokers required.
2 TrustYour documents are encrypted on a shared ledger.
3 BackupYour documents are duplicated many times on the blockchain.
4 SavingsSmart contracts save you money since they knock out the presence of an intermediary.
5 AccuracySmart contracts are not only faster and cheaper but also avoid manual errors while filling out heaps of forms.
6 SafetyCryptography, the encryption of websites, keeps your documents safe. There is no hacking. In fact, it would take an abnormally smart hacker to crack the code and infiltrate.
7 SpeedYou would ordinarily have to spend time and paperwork to process documents manually. Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes.
Now for Problems
BagsRegulationTaxationExecution
Blockchains Where You Can Process Smart Contracts
Bitcoin: Bitcoin is great for processing Bitcoin transactions, but has limited ability for processing documents.
Side Chains: This is another name for blockchains that run adjacent to Bitcoin and offer more scope for processing contracts.
NXT: NXT is a public blockchain platform that contains a limited selection of templates for smart contracts. You have to use what is given; you’re unable to code your own.
Ethereum: Ethereum is a public blockchain platform and the most advanced for coding and processing smart contracts. You can code whatever you wish but would have to pay for computing power with “ETH” tokens.
22-year-old Vitalik Buterin
Vitalik Buterin is a Russian-Canadian programmer and writer primarily known as a co-founder of Ethereum and as a co-founder of Bitcoin Magazine.
