What is a smart-contract? – Bitcoin – Bitcoin 2020

What is a smart contract?

If Bitcoin has offered the power to transfer value over time and space without any control body, the possibilities of its network are essentially over. If this point does not represent a drawback for its defenders, many believe that the real revolution that Bitcoin has brought about turns out to be the blockchain, which notably allows the deployment of smart-contracts (intelligent contrast) with multiple possibilities. But what are these smart contracts and what are they for? Let’s discover it all together in this article dedicated to smart-contracts.

Origins of smart contracts

It is Nick Szabo who for the first time used the term smart-contracts in 1994 to present digital contracts which can be executed automatically.

However, we will have to wait Ethereum to see the first implementation of these large-scale smart-contracts. Smart-contracts therefore allow interactions between different parties without the need for a trusted third party. Their uses can range from stand-alone betting contracts to the deployment of more complex systems such as decentralized exchange platforms (DEX).

A smart-contract consists mainly of instructions written in a programming language, unchangingly deployed on a blockchain. It is then up to users and applications in the ecosystem to interact with these contracts. Smart contracts make it possible to dispense with various third parties of trust and now have in France legal value coupled with blockchain. They can to transfer value but also in store as part of the possession of tokens for example. Their execution generally requires the support of fresh by the user in order to finance the platform on which they are deployed. For example Ethereum tokens are particular smart-contracts meeting a standard to be used everywhere, it is generally the standard ERC-20.

The development of smart-contracts

There are many different ways to develop one or more smart contracts. Indeed according to the needs and the objective it is possible to choose between different platforms like Ethereum or Tezos but also between multiple programming languages.

These can influence the duration and difficulty of development but also its security, which we talk about later in this presentation. The most well-known programming languages ​​are Solidity (Ethereum), Michelson (Tezos) or Miniscript which allows to develop smart-contracts Bitcoin.

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Everyone can now develop their own smart-contracts and deploy them on platforms. Ethereum seems to be the most suitable for beginners because of the simplicity of its Solidity languages ​​and the existence of some very useful tools. You can get started with Remix or Ethereum Studio for example which allow you to develop and deploy your first smart-contract in a web browser.

Security of smart contracts

Since smart-contracts are formally immutable scripts with which everyone can interact, it is possible to do so dishonestly.

Aggravating factor: smart contracts are more and more likely to manage large amounts of cryptocurrencies and therefore become targets for users wishing to exploit their faults. The security of smart contracts is therefore a very important variable in an ecosystem project. Exploitation of these faults can have serious consequences, such as the attack on the CAD Ethereum in 2016 which ultimately generated the split between Ethereum and Ethereum Classic.

Fortunately, project teams are more and more sensitive to the subject and to the various methods making it possible to reduce these risks, even if they do not disappear. Either way, make it open source the code, make realize audit by independent entities and offering rewards (bounty) to developers in the event of a breach are common practices in the ecosystem.

So much for this presentation of smart contracts and their challenges. These programs are therefore the supports of most decentralized applications of the ecosystem as well as their greatest vulnerabilities. Are you interested in the development of smart-contracts? Send me a message if you want to learn more about their development. If you have any comments or questions about this article, please let us know.

What is a smart-contract? – Bitcoin – Bitcoin 2020
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