OK so we're all talking about them or reading about them in most of the online tech sites... but for some people (like me) you're struggling. Well I'm here to help!
Welcome to 2018 and the year I feel Smart Contracts are going to pickup the pace! Don't get me wrong... Smart Contracts aren't anything new - in fact a guy called Nick Szabo coined the term back in 1994.
Personal note: Oh now different the web looked back then! :)
Wikipedia defines a Smart Contract as:
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.
After doing a little more research from sites such as Blockgeeks Investopedia, I decided I'd give my own version of them in (hopefully) simple terms.
A smart contract is a piece of code which is executed when conditions have been met.
I know that might open up the doors for many more questions, but bear with me for a little, and I'll elaborate a litte further.
Piece of Code?
The code will basically contain the information and details about the contract. The logic, conditions, agreements and outcomes when the specified terms are met. When conditions you speficy are met, it triggers the next step in the contract. Once that's met, onto the third, forth, fifth etc etc. They can be simple or as complex as you like. There's no limit as far as I'm aware about how detailed a Smart Contract can be.
So WHAT can they do?
To put it bluntly... quite a lot! I've been researching them for a while now and I've still not touched on them fully. I think the best way to understand what they are and more importantly, how we can use them, are by examples... and lucky for you lot... I've bookmarked a few of my favourite ones.
Buying a Home
OK so while I'm sure the little image above explains a lot... I'm still going to walk you through it. Currently, you want to buy a home... so you go looking online, via Estate Agents (or Realtors if you're from the other side of the pond) and you find a property you like. Before this stage however, someone who had a property and wanted to sell... made a little trip down to their preferred Estate Agents (or Realtors) and told them they wanted to sell their property. They would have received a visit and would be told a guide price what they think they would be able to sell the house for. They would have also been told the % or fixed cost amount they were going to charge them. However, as we just established, you LOVE this new property and want it now! You call the company in-charge of the listing. They get in touch with the seller - they then get back to you - you then haggle the price further, they then get back in touch with them... until... BOOM... you agree a on a price! #Winner
It's not over just yet however. The chances are it's going to need verified by various legal teams, additional costs and time are involved, people sometimes don't sleep due to stress or excitement (depending which way you look at it) and it's not a straight-forward process. Eventually, you change contracts, and you're good to go! Congrats... you're a homeowner now.
Even that example, I missed out looking for a mortgage, getting deposits, agreeing terms, interest rates - but you get the idea it's NOT a simple process and can take a long, long time.
Welcome Smart Contracts
You want to buy a house, and you look online just as you would before. However, this seller has a Smart Contract to facilitate the sale of his/her home. You think "Awesome!" as you know you're BOTH going to save a lot of money in fees/charges by people we just don't need to get involved. You talk via Skype/Phone/SMS/Twitter or however else and haggle directly between yourselves and agree on a price. Once decided, the seller activates a smart contract by inserting an agreed price for the property. You send the money electronically to the seller and this is verified automatically by the Smart Contract. Then, it transfers the property deeds and all legal ownership to you - possibly, within seconds. #HomeownerInSeconds
NOTE: For those of you who are interested, that image is for a property which is for sale: Tell Lisa Paul send you - not that I get any commisson... but I love her properties! :)
OK so the above was an example of what a Smart Contract is capable of. But what about some other, not as 'big' examples? Here's some great ones I've found online:
The image above shows you how Smart Contracts can effect just 6 random industries. To put it simply, they can effect every single industry I can think of and I truly believe this is the way forward. They're smart, non-bias, logical. They do/execute what they're programmed to do. Nothing more - nothing less. They're immune from corruption - and as a result - are way more secure, cost effective and useful. They don't sleep, they don't care about race, background, sexuality or anything else.
To sum up:
Smart Contracts I suppose can be thought of "If This Then That" contracts. Meaning, If X happens, then X must happen as a result. They can be simple or complex as the contract is coded, but one thing is the same... it is NOT able to be altered without the other party knowing. It's the future of how we're going to implement technology into our everyday lives. If England win the World Cup, then I want to distribute 100 XRP to each of my 10 Twitter followers... OR... I want to search for the history of my car.
There's no doubt in my mind this is going to revolutionize everything we do, and with platforms like Codius to host Smart Contracts, we're just getting started!