Saturday, May 12, 2018

What exactly is a Smart contract

A smart contract is a secure and unstoppable computer program representing an agreement that is automatically executable and enforceable.
Dissecting this definition further reveals that smart contract is, in fact, a computer program that is written in a language that a computer or target machine can understand. Also, it encompasses agreement between parties in the form of business logic. Another fundamental idea is that smart contracts are automatically executed when certain conditions are met. Also, they are enforceable which means that all contractual terms are executed as defined and expected even in the presence of adversaries. Enforcement is a broader term that encompasses traditional enforcement in the form of law along with an implementation of specific measures and controls that makes it possible to execute contract terms without requiring any mediation. It should be noted that "real" smart contracts should not rely on traditional methods of enforcement instead they should work on the principle where “code is law” meaning that there is no need of an arbitrator or a third party that can control or influence the execution of the smart contract. The smart contracts are self-enforcing as opposed to legally enforceable. This might be regarded as a libertarian’s dream but is entirely possible and is in line with the true spirit of smart contracts.
Moreover, they are secure and unstoppable which means that these computer programmes are required to be designed in such a fashion that they are fault tolerant and executable in a reasonable amount of time. These programmes should be able to execute and maintain a healthy internal state even if external factors are unfavourable.
For example, imagine a standard computer programme which is encoded with some logic and performs according to the instruction coded within, but if the environment it is running in or external factors it relies on deviates from normal or expected state the programme may react arbitrarily or simply abort. It is essential that smart contracts are immune to this type of issue.
It will provide more significant benefit in the long run if security and unstoppable properties are included in the smart contract definition from the beginning. It will allow researchers to focus on these aspects from the start and will help to build strong foundations on which further research can then be based.


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