Do you know what a smart contract is?

DaDa / tr. by Phil Newell)

Let's take a look at what a smart contract sounds like. It may be a little brain-burning below, please be prepared.

As early as the 1900's, Nixabo, a master of encryption, put forward the idea of intelligent contract, which was almost born with the Internet. However, due to the lack of credible execution environment at that time, smart contracts were not applied to the actual industry. Since the birth of Bitcoin, people have begun to realize that the underlying technology blockchain of Bitcoin can naturally provide a credible environment for the execution of smart contracts, and etherfang first saw the combination of blockchain and smart contracts. Published the white paper "Etay Fong: the next generation of smart contracts and decentralized application platform", and has been committed to building Etay Fong into the best intelligent contract platform. It can be said that Bitcoin led the blockchain, while Ethernet Fong revived the smart contract. As for what is Tai Tai Fong, the editor will tell you more about it next time. Today, let's take a look at it:

What is a smart contract?

Generally speaking, an intelligent contract is a contract that can be executed automatically on a computer system when certain conditions are met. Compared with Bitcoin, the trading scope of smart contracts is not limited to digital currency. Developers write code for contracts through blockchain, which contains conditions that trigger the automatic execution of contracts. By executing the code, smart contracts can be used for any exchange between two or more parties to the transaction.

From the user's point of view, the smart contract is usually thought of as an automatic guarantee account, for example, when certain conditions are met, the program will release and transfer funds. For example, if Zhang San has an idle house to rent, and Li Si wants to rent it, then Zhang San and Li Si can write a smart contract about the house rent agreement through blockchain developers. Only when Zhang San receives the rent, the intelligent contract can be executed automatically, and the security key of the house can be sent to Li Si. As required, smart contracts can ensure that rents are paid on time and restart on a monthly basis.

From a technical point of view, intelligent contracts are considered to be network servers, but these servers are not set up on the Internet using IP addresses, but on block chains. As a result, specific contract programs can be run on it, so there are some differences between intelligent contracts and traditional network servers.

The smart contract itself is also a system participant. It can respond to the information received, receive and store value, and send information and value to the outside. This program is like a trusted person made up of node-by-node records. It can temporarily take care of assets and always operate in accordance with prior rules.

What are the advantages of smart contracts?

The biggest advantage of intelligent contracts is security, which is different from network servers. Intelligent contracts can be seen by everyone, because if the code and status of these intelligent contracts are placed on the open block chain, each node on the block chain will record the contract, thus establishing a perfect third-party trust mechanism.

The following diagram is an intelligent contract model (it is a computer program running on a replicable, shareable ledger that can process information, receive, store, and send value). Smart contracts are deployed in the form of code on shared and copied books, which can maintain their own state, control their assets and respond to external information or assets received.

Intelligent contract model:

What are the uses of smart contracts?

1. Registration and liquidation of securities. The status of the contract contains information about the ownership of securities. If the registered securities owner notices that the securities in the contract have been sold to other participants, the other participants will send the cryptographic currency to the guarantee account, and then the securities registration information will be updated. the currency is forwarded to the original holder of the security. Depending on which information arrives first, the securities or currency will be kept in a guaranteed account to avoid double use, and the guarantee will be cancelled when the transaction is cancelled or obsolete.

two。 The bank's existing account. The blockchain itself already uses cryptographic currency accounts, so there is no need for smart contracts. However, people in real life want to say euro or dollar accounts, which are similar to the securities registration accounts mentioned above. There is a counterparty risk in using a contract, just like any bank in the real world. This risk can be transferred through counterparty risk regulation, or eliminated by guarantee.

3. Derivatives, gambling. Assuming that opponents agree to a data source that can be accessed on the Internet, they can make derivative contracts or betting on the value of the data source.

4. Advance payment and recharge. Contracts can be bound with mobile SIM cards, prepaid electricity cards, etc., and can be recharged when cryptographic currency is received. Smart contracts have many uses, so the editor will not enumerate them one by one. Emerging things always have defects, and smart contracts are no exception. Next, the editor would like to talk about the current problems of smart contracts.

Problems faced by Smart contracts

At present, the smart contract is not particularly smart, nor is it a contract in the strict sense. In theory, smart contracts can divert the problem of fraudulent opponents, and this is one of the reasons for intelligent contract design: at any time, the contract can reliably monitor the performance of the participants in the contract, and the participants can not cheat. Smart contracts have many uses, so the editor will not enumerate them one by one.

It's just that the smart contract is still in its infancy, and there has been no real progress. The key issue is trust, similar to the one that affects blockchain implementation: these systems are designed to be trust-free, which means that errors cannot be corrected. For example, in a blockchain, if you send currency to an address, this operation is irrevocable. Therefore, if you trade with the fraudster-or if you have sent the currency to the wrong address-then the loss of money is irreparable. In addition, when designing a contract, it is difficult to ensure that the contract itself is not fraudulent.

At present, the problem of trust has not been well solved, but with the development of the block chain, various problems in the development process will certainly be solved. After all, what we see at the moment is only the dawn of the future. The editor believes that a little bit of dawn will eventually become the scorching sun at noon!