The first Smart Contract was used long before the Bitcoin creation. Learn about the technology and its history in Throwback Thursday by BTCMEX Blog.
Throwback Thursday by BTCMEX
Did you know that the first Smart Contract was used in 1997? The technology was suggested even earlier, in 1994, by a computer scientist, law scholar and cryptographer, Nick Szabo, who is also known in a crypto world as the creator of Bit gold. He was the first who suggested to use the distributed ledger to store contracts.
Technically the Smart Contracts are the same as the material world contracts with the only difference that they are completely digital. It is a tiny computer program that is stored on a blockchain. The main goal of Smart Contracts is to be self-executed and eliminate the third party between sides making a deal. Because the Smart Contracts are stored on the blockchain, everything is completely distributed. With this technique no one is in control of the contract’s terms, that is to say, the two parties put their trust in technology, and not in the third party.
Today Smart Contracts guarantee autonomy, trust, secure backups, and accuracy. They are used to automate operations in a number of industries.
The creator and co-founder of the Ethereal Foundation, Vitalik Buterin, explained Smart Contracts mechanism as “an asset or currency is transferred into a program and the program runs this code and at some point, it automatically validates a condition and it automatically determines whether the asset should go to one person or back to the other person”.
What’s the role of cryptocurrency here? All the Smart Contracts are powered by the digital currency, in a form of transactions on a blockchain. Another interesting fact that it can support multiple participants, for example, to instantly register multi-ownership, which makes the traditional buy-sell approach outdated.
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Please, note, that the article is a part of BTCMEX Blog, the views and opinions expressed here are the contributing author’s only, and do not necessarily represent the views of the company.
Julia Bulakh for BTCMEX
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