Smart contract

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Smart contracts are computer logs that can map or check contracts or provide technical support for negotiating or processing a contract. A written fixation of the contract (on paper or in a file) may thus be superfluous. Smart contracts usually also have a user interface and technically map the logic of contractual regulations. Proponents of smart contracts claim that as a result, many types of contract clauses will become partially or fully self-executable or self-enforceable, or both. Smart contracts try to achieve a higher level of contract security compared to traditional contract law while at the same time reducing transaction costs. The use of smart contracts enables new business models and improved contract processes. Manual contract processes with documentation gaps can be avoided and the speed and quality of the basic business processes can be increased.

Examples

Smart contracts can, for example, map copyright licenses in digital rights management / rights reduction or map transactions in the financial sector . Access control , token-bucket algorithms and other quality-of-service mechanisms can be used to map service level agreements . Some peer-to-peer networks require mechanisms to ensure that distant partners contribute as much as they consume, without creating the overhead of written contracts.

history

In the 1970s to 1980s, the term " agoric computing " was coined to map market mechanisms such as auctions and resource management in software. In the meantime, public key cryptography has revolutionized the possibilities for this.

The term "smart contract" was coined around 1993 by computer scientist Nick Szabo to emphasize the connection between highly developed contract law and related disciplines with the design of e-commerce protocols. Szabo, who was inspired by researchers like David Chaum , expected that specifications based on clear logic, verification based on cryptographic protocols, and other digital security mechanisms could bring a significant improvement over traditional contract law, even for some traditional areas of application.

However, most of the examples cited above have likely evolved independently of each other and from the lines of development mentioned above, and in fact some proponents see smart contracts as a necessary advancement of many independent efforts to improve transactions in different industries based on digital technologies. Various formal languages ​​have been developed or proposed to represent contract clauses in software. The IEEE has already held two workshops on electronic contracting that support these efforts.

Since 2015, UBS has been experimenting with smart bonds , which use a Bitcoin blockchain as “bonds” and in which payment flows could hypothetically be fully automated, creating a self-paying instrument. In 2018, the World Bank commissioned the Commonwealth Bank of Australia to manufacture the world's first blockchain-based bond.

Replicated titles and contract execution

An infrastructure for smart contracts can be implemented through a replicated asset register and contract execution via cryptographic hash chains and fault-tolerant replication.

Each node in the peer-to-peer network acts as a register and trustee who changes ownership and automatically maps verifiable rules about these transactions. All transactions are always audited by all other nodes. Askemos implemented this approach in 2002 with Scheme and in later versions SQL as the contract description language . Askemos only describes a concept for the mutual audit of a number of independent registers of any assets (values) without coupling these registers to a money-like resource. Cryptocurrencies like Bitcoin have implemented special cases of such registers; there the asset is money. Bitcoin and many of its offshoots contain mechanisms that enable the management of more general assets and contracts. A replicated Domain Name Registry ( .bit ) is implemented in Namecoin; Replicated titles for any type of asset are implemented in the applications Crypti , Ripple , Mastercoin and Ethereum . NXT implements replicated property titles based on proof-of-stake in the underlying currency.

Smart Contracts in Popular Culture

The science fiction novel Permanence (2002) by Karl Schroeder describes a “rights economy” in which all physical objects are provided with a “nano tag”. These tags contain the contractual regulations and enforce them, so that z. B. has to justify a military mission in space on an ongoing basis through its “cost-benefit ratio”, otherwise the spaceship will be stopped.

See also

• Process management
• Code and Other Laws of Cyberspace
• workflow

Web links

• The Idea of ​​Smart Contracts
• erights.org: Smart Contracts
• The E Language: Cryptographic Capabilities for Distributed Smart Contracting
• The Digital Path: Smart Contracts and the Third World
• "Late on payments? Device won't let car engine start."
• Open transactions: open source smart contracts

Individual evidence

1. ↑ Schüffel, Patrick; Groeneweg, Nikolaj; Baldegg, Rico: The Crypto Encyclopedia: Coins, tokens and digital assets from A to Z . Friborg University of Economics / Growth Publisher, Bern August 2019.
2. ↑ Dr. Jörn Heckmann, Dr. Markus Kaulartz: Smart Contracts: source code as contract text , c't, 24/2016, p. 138. online at heise.de
3. ↑ Markus Kaulartz: From Blockchain to Smart Contract , Frankfurter Allgemeine Zeitung, March 16, 2016, No. 64, p. 16.
4. ↑ For an overview of the legal assessment of smart contracts cf. Lukas Müller / Reto Seiler, Smart Contracts from the Point of View of Contract Law - Functionality, Use Cases and Performance Disruptions, Current Legal Practice, 27 (2019) pp. 317-328 .
5. ↑ Michael Möhring, Barbara Keller, Rainer Schmidt, Anna-Lena Rippin, Janine Schulz: Empirical Insights in the Current Development of Smart Contracts . In: PACIS 2018 . AIS, Yokohama 2018.
6. ^ Nick Szabo: Smart Contracts. (No longer available online.) 1994, archived from the original on June 20, 2016 ; accessed on June 13, 2016 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
7. ^ The First IEEE International Workshop on Electronic Contracting (WEC) of July 6, 2003
8. ↑ https://www.newsweek.com/smart-money-blockchains-are-future-internet-329278
9. ↑ https://www.ifre.com/story/1378466/bitcoin-technology-will-disrupt-derivatives-says-banker-qv3qsx1w13
10. ↑ World Bank Mandates Commonwealth Bank of Australia for World's First Blockchain Bond , dated August 9, 2018
11. ^ Jörg F. Wittenberger: Askemos a distributed settlement . 2002.
12. ^ Proceedings of International Conference on Advances in Infrastructure for e-Business, e-Education, e-Science, and e-Medicine on the Internet .
13. ↑ Martin Möbius: Creation of an archiving concept for the storage of traceable databases in the Askemos system . 2009.
14. ↑ Tom-Steve Watzke: Development of a database interface as the basis for shop systems under the Askemos operating system . 2010.
15. ↑ Smart Property . Bitcoin Wiki. Retrieved January 12, 2014.
16. ↑ Ethereum: A Next-Generation Generalized Smart Contract and Decentralized Application Platform . Archived from the original on January 11, 2014. Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved January 12, 2014. 
17. ↑ Bitcoin Descendant NXT Features 100% New Code, Green Mining, Decentralized Trading, More . Yahoo Finance. December 23, 2013. Retrieved January 12, 2014.