Smart contract
A smart contract is a
The original
A smart contract should not be confused with a
Etymology
By 1996, Nick Szabo was using the term "smart contract" to refer to contracts which would be enforced by physical property (such as hardware or software) instead of by law. Szabo described vending machines as an example of this concept.[13][14] In 1998, the term was used to describe objects in rights management service layer of the system The Stanford Infobus, which was a part of Stanford Digital Library Project.[1]
Legal status of smart contracts
A smart contract does not typically constitute a valid binding agreement at law.[15] Proposals exist to regulate smart contracts.[10][11][12]
Smart contracts are not legal agreements, but instead transactions which are executed automatically by a
Since the 2015 launch of the
In 2018, a
In April 2021, the UK Jurisdiction Taskforce (UKJT) published the Digital Dispute Resolution Rules (the Digital DR Rules) which was intended to enable the rapid resolution of blockchain and crypto legal disputes in Britain.[27]
Workings
Similar to a transfer of value on a blockchain, deployment of a smart contract on a blockchain occurs by sending a transaction from a
The most popular blockchain for running smart contracts is
Several languages are designed to enable formal verification: Bamboo, IELE, Simplicity, Michelson (can be verified with Coq),[34] Liquidity (compiles to Michelson), Scilla, DAML and Pact.[33]
Name | Description |
---|---|
Ethereum | Implements a Turing-complete language on its blockchain, a prominent smart contract framework[36] |
Bitcoin | Provides a Turing-incomplete script language that allows the creation of custom smart contracts on top of Bitcoin like multisignature accounts, payment channels, escrows, time locks, atomic cross-chain trading, oracles, or multi-party lottery with no operator.[37]
|
Binance Smart Chain |
A blockchain platform for smart contracts |
Cardano |
A blockchain platform for smart contracts, using proof of stake |
Solana | A blockchain platform for smart contracts |
Avalanche | A blockchain platform for smart contracts |
Tron | A blockchain platform for smart contracts |
EOS.IO | A blockchain platform for smart contracts |
Tezos | A blockchain platform modifying its own set of rules with minimal disruption to the network through an on-chain governance model |
Processes on a blockchain are generally deterministic in order to ensure Byzantine fault-tolerance.
Applications
In 1998, Szabo proposed that smart contract infrastructure can be implemented by replicated asset registries and contract execution using
One proposal for using bitcoin for replicated asset registration and contract execution is called "colored coins".[48] Replicated titles for potentially arbitrary forms of property, along with replicated contract execution, are implemented in different projects.
As of 2015[update],
Inheritance wishes could hypothetically be implemented automatically upon registration of a death certificate by means of smart contracts.[according to whom?][51][52] Birth certificates can also work together with smart contracts.[53][54]
Chris Snook of
Seth Oranburg and Liya Palagashvili argue that smart contracts could also be used in employment contracts, especially temporary employment contracts, which according to them would benefit the employer.[60][61]
Smart contract on block chain technology for smart villages[62]
Security issues
The transactions data from a blockchain-based smart contract is visible to all users in the blockchain. The data provides cryptographic view of the transactions, however, this leads to a situation where bugs, including security holes, are visible to all yet may not be quickly fixed.
Issues in Ethereum smart contracts, in particular, include ambiguities and easy-but-insecure constructs in its contract language Solidity, compiler bugs, Ethereum Virtual Machine bugs, attacks on the blockchain network, the immutability of bugs and that there is no central source documenting known vulnerabilities, attacks and problematic constructs.[36]
Difference from smart legal contracts
Smart legal contracts are distinct from smart contracts. As mentioned above, a smart contract is not necessarily legally enforceable as a contract. On the other hand, a smart legal contract has all the elements of a legally enforceable contract in the jurisdiction in which it can be enforced and it can be enforced by a court or tribunal. Therefore, while every smart legal contract will contain some elements of a smart contract, not every smart contract will be a smart legal contract.[67]
There is no formal definition of a smart legal contract in the legal industry.[68]
A Ricardian contract is a type of smart legal contract.[citation needed]
See also
- Code and Other Laws of Cyberspace
- Decentralized application
- Ethereum
- Regulation by algorithms
- Regulation of algorithms
- Ricardian contract (a design pattern to capture the intent of the agreement of parties)[citation needed]
- Loan
- Secure multiparty computation
- Transparency
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