Some crypto-currencies, Ethereum is the figurehead – which include in their design the contracts intelligent, or Smart Contracts in English. But what is it, exactly ? This article offers a simple explanation of what a Smart Contract or agreement intelligent, as well as the many possible applications.
Definition of a contract smart
Contract smart is a protocol to it that allows the automatic execution of the contracts the clauses of which have been defined programmatically. The degree of complexity is specific to each Smart Object. It can be a very simple condition (if x is true, then the contract is executed) or of a complex set of criteria for eligibility for a full or partial execution of the contract. This concept has been proposed for the first time in 1996 by Nick Szabo. In short, we can say that a contract smart is the computer equivalent of the contract paper classic, both from the point of view of the mode of registration and execution.
What are the benefits of Smart Contracts ?
The concept of intelligent contracts can open up new horizons for the development of applications that reside on the chain of blocks. A contract recorded electronically on a register distributed (DLT) may not be altered, destroyed, or disputed.
The execution of the Smart Contract is not linked to interpretations : only the code decides on the full or partial execution of the contract. The intelligent contracts will also allow to decrease substantially the costs incurred by the award of a contract.
And what are the drawbacks ?
The major drawback of the Smart Contract is the risk of piracy (a disadvantage that is not clean, because it applies to tell you the truth, the whole crypto-currencies, and even applications in general). Security flaws in open source code could be exploited to modify the terms of the contract, and therefore siphoning off of funds. Such hacking has already been carried out on The DAO, which has lost to a few tens of millions of Ethers in the adventure.
If the prospects opened up by Smart Contracts are huge, the technology must further evolve in order to deploy all its potential. The legislature must also take a position given that for the time being, no legal basis not to legitimise.
Contract smart : a few examples of applications
The possibilities opened up by the intelligent contracts are nearly endless. This can range from the simple platform of forecasts as Gnosis, that allows users to take bets on events that are very diverse (sports, politics, etc) to contracts of the type consumer credit.
In the context of landlord and tenant, a security deposit may be filed on the chain of blocks to be then released at the end of the lease, after agreement with the owner due to the condition of the premises. The intelligent contracts could also be used on many sectors of the rental. For example, the payment of the rental of a car via a crypto-coin Smart Contract would automatically open the vehicle concerned by the agreement.