Chapter 0 Introduction
I read the white paper of Ethereum, and now I am reading the white paper of the root chain. Both books mention smart contracts a lot. In this article, I will explain as clearly as possible what a smart contract is.
Chapter 1 Traditional Contract
The various economic behaviors we are doing in this society now involve a large number of contracts. The contracts we use mainly have the following four parts:
Contract subject: Party A and Party B. This includes natural persons, as well as legal persons and institutions.
Contract terms: stipulate the rights and obligations of both parties. The terms of the contract are written in as much detail as possible outside of the legal provisions.
Arbitration institutions and law enforcement agencies: When there is a breach of contract, or the parties to the contract have ambiguities on the terms of the contract, the arbitration institutions and law enforcement agencies are required to determine the ownership of rights and obligations.
Object of arbitration: rights and obligations defined in the contract (or the current law protects the rights and obligations not mentioned in the contract).
Chapter 2 Smart Contract
Corresponding to the current contract system, smart contracts also have four parts of the current contract system:
Contract subject: Party A and Party B who have digital identities.
Contract terms: The rights and obligations of Party A and Party B are defined by the code. Traditional contracts are also compatible with content stipulated by the law, but smart contracts do not accept the constraints of current laws and are completely defined by code unless the smart contract is overturned.
Arbitration platform: The smart contract is installed on a certain platform (such as Ethereum or the root chain) by the main body of the contract, and then the code automatically judges and executes all the terms of the contract, including the default and contract terms, which are all given by the code . No other agency is required for the judgment process.
Law enforcement objects: digital assets or smart properties agreed in the contract.
Chapter 3 The Four Core Concepts of Smart Contracts
Digital identity: How to map our living people into the code, this is by far the most confusing part of the smart contract. In our current economic activities, the state obtains and establishes national identity information through legal means. It also stipulates the rights and interests relationship between property and natural persons through the property rights law. In the smart contract, a digital identity authentication service must be constructed first, for example, it can be constructed using unique characteristic information such as fingerprints. Only with this thing can the contract body be constructed.
Digital assets and smart assets: There is a clear way of possessing certain rights and assets in current economic activities. Mine is mine, or it is placed in my home, or registered with a certain government. Institutions or other institutions. If you want to remove these centralized registration institutions from the smart contract, you must find a way to digitize the rights and assets in the contract, or at least you need to have a digital identity, and this digital identity can affect the use of assets.
Smart property can be constructed by embedding smart contracts into certain hardware and software. For example, a car wash device embedded in a digital identity activation device can be constructed as smart property.
With the digital identity and the digitization of assets, the mapping relationship between the two can be constructed, and the digital identity can be used to lock the digitized assets. Only then can the form of code be used to enforce the law.
There are two other important concepts
- Contract arbitration platform: I thought that any smart contract should have independent code to specify the basis for contract execution. But from reading the white papers of Ethereum and Rootchain, I found that they actually include an arbitration platform. Ethereum has written a Turing-complete code that does not require third-party trust for users to build smart contracts, and the root chain requires an arbitration federation called a 50% trust system. This arbitration is still not a living person to arbitrate, but also a code. I still don't understand the difference between Ethereum and root chain. But there is no doubt that the execution of the smart contract is to be delivered to the arbitration platform to complete the execution. The responsibility of this arbitration platform is to "discover" the smart contract, or the parties involved in the contract install the contract on this platform, and deliver or escrow it to the arbitration platform to execute the contract.
The concept of this arbitration platform is similar to the courts in our current economic activities.
- Digital asset custody: There are such institutions on the root chain and Ethereum. The root chain uses a mechanism called two-way anchoring to lock Bitcoin in a certain public key, which is to treat the Bitcoin blockchain as a custody of digital assets (that is, Bitcoin). Other digital assets and smart properties in smart contracts require some kind of code or some kind of blockchain for safekeeping.
The digital asset custodian is similar to the housing management office of our current economic activities.
Chapter 4 Implementation of Smart Contract
Blockchain technology is an ideal technology platform for smart contracts. Both Ethereum and Rootchain want to do this. But I still don't fully understand how they are going to make such a great smart contract, and I will write it when I understand it.
