In 1996, Nick Szabo came up with this interesting idea that was called a smart contract
As you can tell, the guy was feisty from the very beginning
Smart contracts, are they like vending machines?
They are, but very cool ones. In this piece, Nick Szabo goes into detail. But what you need to know is that, to explain his idea, he made an analogy to a vending machine. What does this device do? It facilitates the conditions of a very straightforward agreement.
- You put $2 in, Cola comes out.
- You do not put $2 in, Cola doesn’t come out.
- Also, if you do not put $2 in, but Cola comes out, it’s bad.
- Plus, the machine comes with a mechanism secure enough for $2 Colas.
Now, in the digital world there is, of course, no physical hardware to facilitate the terms of a certain agreement, yet, there are programs. A smart contract is this very secure program that directly controls digital assets and, too, facilitates the conditions of a very straightforward agreement.
Say, you want your cat to get your inheritance money after your death. What a fun blog, right? So, the conditions are the following:
- You die, Mr. Fluff gets money
- You do not die, Mr. Fluff doesn’t.
- Also, if you do not die, but Mr. Fluff gets money, it’s bad.
- Plus, the code is well-written, and you’re sure that no other cat will get the contract performed.
Meaning, this smart contract has the ability to control when and even why the money goes where it goes. Everything depends on what the program wants. So, once you have something programmed into it, there is no going back…
Because any smart contract is a piece of code, you can implement it into different blockchains. The most significant competitors of Ethereum are EOS, Stellar, Cardano, but Vitalik Buterin’s blockchain was the first one to take advantage of Nick Szabo’s technology.
So, what’s that much innovative about smart contracts?
The fact that distributed data bases can help you get rid of middle men, illuminate the fraud, store the data securely and globally and, of course, guarantee the terms of your contract to be fulfilled.
Find out more from this video!
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