Smart contracts: the term, special features and characteristics

Home » CRYPTOPEDIA » Smart contracts: the term, special features and characteristics
Smart contracts: the term, special features and characteristics
2018-11-12 in CRYPTOPEDIA

There is a special type of lawyers who deal with the drafting and maintenance of contracts. The latter is written in legal language and are not always fully understood by the parties to the agreement. Traditional contracts are often so complex that they require the involvement of third parties to enforce them. In case of discrepancies, the parties are compelled to apply to the courts, and this takes a lot of time and money. How to write smart contract? What is smart contract? How to use it in real life? This article will answer all your possible questions.

The emergence of the blockchain technology has opened up the possibility of creating systems that allow for entering into and automatically fulfilling the terms of an agreement upon reaching predetermined parameters, bypassing centralized intermediaries.

Nevertheless, smart contracts are still far from perfect: the blockchain infrastructure is still underdeveloped, and there are critical bugs in the code. In addition, there are many gaps in the regulatory framework for smart contracts and oracles are not developed. This creates barriers to the integration of smart contracts into the daily activities of organizations and individuals.

With the proliferation of the distributed ledger technology, controversy is developing with particular force around the use of smart contracts, as well as the question whether they will be able to supplant traditional treaties in the future. As is often the case, there are two diametrically opposed points of view in this discussion.

Some advise lawyers to learn new, more useful and promising professions because, after a few years, the world will abandon traditional contracts and useless intermediaries, such as lawyers, lawyers, and notaries. Mentally, they transfer everything that comes to hand on the blockchain – from land cadastres to the schedule of tidying up at canteens of state institutions.

Another point of view is that the blockchain is “Bitcoin” and “pyramid”, and the smart contract is not a fiction regulated by law. In this case, it is jointly created by two people (a lawyer and a programmer), speaking different languages.

Due to the fact that a lawyer and a programmer do not have special knowledge, they do not understand each other. Therefore, a lawyer cannot check the correctness of the expression of the will of the parties by the programmer. The latter, due to the lack of basic knowledge in jurisprudence, may interpret the conditions indicated to it in its own way or skip some important nuance that will lead to extremely negative consequences.

In their opinion, the above problems make it impossible to widely use smart contracts in the future.

What is the reason for such different interpretations? Why it happened and what awaits smart contracts and lawyers in the future? In search of an answer, we shoveled a fair selection of scientific papers, a lot of various encyclopedias and reference books, codes and laws. Without pretending to the ultimate truth, we want to share our thoughts on this matter.

What is a smart contract?

A good algorithm allows solving several problems of smart contracts at once, which operate with large lists of user addresses. The fact is that putting a list of even several thousand addresses into a contract and allowing this set of addresses to do something in the contract will not work directly – the blockchain saves every byte and it is too expensive.

J. Stark indicates that the definition of “smart contract” is used to refer to legal contracts or elements of legal contracts that are presented or executed by software.

At the same time, he considers this definition no worse than the ones presented above, and we cannot blame him for this.

It seems that two points of view can be considered correct because each of them correctly reflects the essence of a smart contract. The only difference is in the vector of the view, the aspect from which it is viewed. Programmers, in this case, take as a basis the process that is planned for implementation using the principle of determinism. This refers to the general objective conditionality of phenomena due to causality. The latter is a relationship in which one phenomenon (cause) under certain conditions gives rise to another (action).

  • bitcoinBitcoin$5,058.86
  • ethereumEthereum$165.54
  • rippleXRP$0.328333
  • tetherTether$1.01
  • eosEOS$5.38
  • stellarStellar$0.114685
  • litecoinLitecoin$79.02
  • cardanoCardano$0.084039
  • tronTRON$0.027030
  • moneroMonero$67.79
  • iotaIOTA$0.317800
  • nemNEM$0.064364
  • dashDash$123.42
  • neoNEO$11.50
What is Cryptocurrency? How to Use, the Future of Crypto, the History of Bitcoin
Cryptocurrency market is actively developing and expanding. This relatively new industry is causing a lot of questions and attracting a huge number of investors, businessmen and ordinary people. “What is the future of cryptocurrency?”, “How to choose cryptocurrency exchange?”, “How to sell Bitcoins?” “What about cryptocurrency mining”? Millions of people read cryptocurrency news everyday and […]
2019-04-08 0 48
What is Bitcoin?
The cryptocurrency industry is becoming more and more popular all around the world. Despite the fact that there are more than 1000 different cryptocurrencies and the number keeps growing, cryptocurrency is often associated with Bitcoin. Bitcoin is the first modern cryptocurrency in the world; it attracts thousands of users and investors from different countries. Millions […]
2019-03-20 0 46
Bitcoin, Ethereum, Ripple, Monero, Dash, Tron: major differences and features
Investors see different names of cryptocurrencies and the movement of their courses, but typically don’t even know why the digital coins are so popular. Most of us have already Googled “How to buy Bitcoin” or “How to sell Ethereum”. Cryptocurencies are becoming more and more popular: Bitcoin price is fluctuating and its value is not […]
2019-03-19 0 45
What is Blockchain?
“Giving users easy access to many different kinds of digital assets on the blockchain and, particularly, tokens that are linked to assets in the real world, is crucial to seeing blockchain adoption reach the next level, and I applaud Digix Global’s initiative in being the first of many such projects to successfully launch” – Vitalik […]
2019-03-06 0 43
© 2017–2018