What Is a Smart Contract?
A smart contract is a computer program or code whose execution does not require the intervention of a trusted third party. In the context of blockchain, it is a program that automatically activates on a distributed network when certain conditions are met on the shared registry.
Smart contracts were conceptualized by Nick Szabo from 1994, but it was not until 2009 and Bitcoin to see their first implementation in a viable system. These autonomous contracts are now widely implemented on the specialized platform Ethereum, launched in 2015 for this purpose.
Origin of Smart Contracts
Nick Szabo, cryptographer, lawyer and computer scientist, was the first to give the description of a smart contract idea. In his first public writing on the subject in 1994, he described this as "a computerized transaction protocol that executes the terms of a contract". He subsequently refined his idea in various writings such as Smart Contracts: Building Blocks for Digital Markets in 1996 orFormalizing and Securing Relationships on Public Networks in 1997.
The term "smart contract", invented by Szabo himself, is a little confusing, because a smart contract is not really smart, nor really a contract in the legal sense, but is a program that runs under simple conditions. Szabo has shaped this expression for communication: the word smart is indeed regularly used to press the clever and scalable side of a new technology. A multifunction phone is called a smartphone. A smart card is a smart card, we talk about smart city for a connected city, smart bombs for guided bombs, etc.
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Although it attracted the attention of many cypherpunks in the 1990s, the concept of smart contract was not implemented because no technology then made it possible to implement it in a sufficiently robust way. Although its ability to manage contracts is limited, the latter is indeed a programmable currency system.
The real revolution came in 2015 with the launch of Ethereum, which makes it possible to build more complex autonomous contracts, in particular by using a specific programming language called Solidity.
This emergence has allowed many other platforms based on the same model to appear, such as Tezos, Cardano, EOS, NEO or TRON. The rise of these protocols has allowed the idea of the smart contract to be reborn to automate and improve many processes.
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Summary
Smart contracts are computer programs that run without the intervention of a trusted third party, usually on a blockchain like Ethereum's. They consist of clauses, which are the conditions that must be met for part of the contract to be applied. These conditions are defined in advance by the creator of the contract and are immutably written on the blockchain. The contract can be automatically activated when definite circumstances are gathered on the line.