This is the block chain 2.0 series of five articles. The previous article in this series we discussed how to implement block chain in the real estate industry . This article briefly discusses the intelligent contracts within the block chain and related technologies Smart Contract theme. Intelligent contract is to validate and create a new "block" the basic agreement on the block chain, it touted the focus of future development and application of that system. However, like all "panacea", as it is not the answer to everything. We will explore the basics of this concept, in order to understand what "smart contract" is and what they are not.
Contract growing
The world is built on contract (contract). In the current society, there is no use and re-use contracts, any person or company on the planet can not work. Enter into, maintain and enforce contracts task become so complex that the entire judicial and legal systems must be in the name of "Contract Law" set up to support it. In fact, most of the contracts are from a "trusted" third party monitoring to ensure that the final stakeholders are properly handled in accordance with the conditions agreed. Some contracts even related to the third party beneficiary. Such contracts are not aimed against third-party active contract parties have an impact (or participate in). Dispute resolution and contractual obligations accounted for most of the legal dispute involved in civil litigation. Of course, a better way to deal with contracts for individuals and businesses are a godsend. Not to mention it in the name of verification and proof of savings huge government paperwork 1 .
Most articles in this series have studied how to use the existing block chain technology. In contrast, this article will be more about the expectations for the next few years. Discussion on "smart contract" from the property discussed in the previous article raised. This article is intended to outline the current ability to block chain automatically performs a "smart" executable. Deal with this issue pragmatically means that we must first define and explore what these "smart contracts" are and how they adapt to the existing contract system. We will in the next article entitled "Block Chaining 2.0: ongoing projects," the article to view the current progress in the field of major applications and projects.
Intelligent defined contract
The first article in this series from the basic perspective on the block chain, which is seen as a "distributed ledgers" by the data blocks, the data blocks are:
◈ ◈ undeniable tamper-proof (meaning each data block is explicitly created by someone, and that person can not be denied the same responsibilities) ◈ security, and can fend off cyber attack methods ◈ almost permanent ( of course, it depends on the protocol layer block chain) ◈ highly redundant by a plurality of network nodes present in the system or a participant, in which a node failure does not affect the function of the system in any way, and, depending on the application ◈ It can provide faster processing speed.Because each instance of data is securely stored and accessed through the proper credentials, so the block chain network can accurately verify the facts and information provided simple basis, without the need for third-party supervision. Block chain 2.0 also allows the development of "distributed applications (DApp)" (this term we will introduce in the next article in detail). These applications require distributed on the network and run on its existence. When the user needs they will call them, and has been reviewed and the information stored on the block chain is performed by using them.
Above last paragraph provides the basis for the definition of intelligence contracts. Digital Chamber of Commerce, The Chamber for Digital Commerce provides intelligent definition of a contract Many experts agree.
"(Smart contract a) computer code, when the specified condition occurs, it can be run automatically according to a pre-specified function. The code may be stored and distributed on a classification process books, writing any changes of the generated distributed Category book " 2 .
Intelligent contract described above is a simple computer program, like the "if-then" or "if-else if" statement as work. About its aspects "smart" comes from the fact that the program's predefined input from the block chain ledgers, as described above, it is a safe and reliable source of information recording. If necessary, the program can call external services or sources for information, to verify the operational terms, and perform only after meeting all pre-defined conditions.
It must be remembered, with its name implies different, intelligent autonomous entity contracts are usually not, strictly speaking, not a contract. In 1996, Nick Szabo have long referred to the intelligence contract, which he accepted with payment and delivery of user-selected vending machine products were compared. Can in here to view the full text. In addition, it is developing into the legal framework contract allows intelligent use of mainstream contracts, so the current use of the technology is limited to legal supervision is not so clear and rigorous field 3 .
The main types of smart contract
It assumes that the reader has a basic understanding of contracts and computer programming, and based on our definition of intelligence contracts, we can be intelligent contracts and agreements are roughly classified into the following major categories.
1, intelligent legal contract
This is probably the most obvious one. Most (if not all) have a legally binding contract. In the case does not involve too many technical problems, intelligent legal contract is related to a strict contract legal recourse to prevent the parties involved in the contract does not fulfill the purpose of their transactions. The existing legal framework mentioned earlier, different countries and regions of the lack of adequate support for intelligence and automation contract on the block chain, their legal status is not clear. However, once enacted laws, we can enter into a contract intelligence to simplify the process currently involves tightly regulated, such as financial and real estate market transactions, government subsidies and international trade.
2, DAO
Decentralized autonomous organization Decentralized Autonomous Organization, namely DAO, can be roughly defined as the presence of the block chain community. The community can be defined by a set of rules, these rules to reflect and put in the code through the intelligent contracts. Then, every action of each participant will be bound by these rules, and the implementation of its mandate is to get recourse in the case of program interruption. Many intelligent contracts constitute the rules, they coordinated regulation and supervision of participants.
DAO entitled "Genesis DAO" is created by the participants Ethernet Square in May 2016. The community aims to become the all-time funding and venture investment platform. In a very short time, they managed to raise a staggering $ 150 million. However, since the hacker found loopholes in the system, and try to herd the hands of investors to raise money to steal Ethernet worth about $ 50 million. The consequences of failure lead to hackers Ethernet Square block chain split into two , Ethernet and Ethernet Square Square classic.
3, application logic contracts (ALC)
If you've heard of block chain and a combination of things, then it is likely related to the contract application logic Application logic contract, namely ALC. Such contracts include intelligent application-specific code, the code can work with other intelligence contracts and procedures on the block chain. They communicate with the device and facilitate communication between the verification device (in the field of networking thereof). ALC is a critical part of every contract of multi-functional smart, and most of them are working in a management program. In most of the examples cited here, they can be found everywhere application 4 .
Because this field is still in development, so now we said that any definition or standard can only be said to be a change and vague.
How smart is contract work?
For simplicity, let's use an example to illustrate.
John and Peter are two controversial soccer match score of people. They hold conflicting views on the results of the competition, they support different teams (this is the background). Since they both need to go elsewhere and not watching the game, so that if John A beat B team in the game, and he paid to Peter of $ 100. Peter consideration after accepting the bet, but made it clear that they must accept these terms. However, they did not honor the bet of mutual trust, there is no time and money to designated third party monitoring bet.
John and Peter assumptions are used like Etherparty intelligent platform such contracts, it can automatically bet settled at the time of contract negotiations, they will be linked to identity-based block chain of the contract, and set the terms, made it clear that once the end of the game, the program who will identify the winner is and the amount is automatically classified as winners from the losers in the bank account. Once the game ends and the media reported the same results, the program will search for the source of the provisions on the Internet, to determine which team wins, it will be linked to the terms of the contract, in this case, if Team A wins from Peter John where to get the money, that will be transferred to US $ 100 John Peter's account. After machining, unless otherwise stated, the contract will be terminated and intelligence are inactive in all future time.
Despite simple example is not to say that this case involves a classic of the contract, and the participant chose to use a smart contract to achieve the same purpose. All intelligent contracts basically follow similar principles, a program code, for execution on predefined parameters, and only throw the expected output. External sources of intelligence consulting contract may be sometimes referred to as the oracle Oracle IT world. Oracle is a common part of many of today's global smart contract system.
Using Smart contract in this case so that the participants can obtain the following benefits:
◈ than it together and manually clearing faster. ◈ Delete from which the issue of trust. ◈ eliminate the need for all parties concerned the settlement on behalf of a trusted third party. ◈ when executed without any cost. ◈ In terms of processing parameters and how sensitive data is secure. ◈ relevant data will be permanently retained in the block chain platform they are running in the future bets can be set by calling the same function and provide more input. ◈ Over time, assuming that John and Peter become gambling addicts, the program can help them develop reliable statistics to measure their winning streak. Now that we know what is smart contract and how they work , we have not resolved why we need them .Need intelligent contracts
As the previous examples we highlighted before, for various reasons, we need intelligent contracts.
transparency
Counterparty very clear terms and conditions involved. In addition, since the implementation of the program or contract involves some clear intelligence inputs, so users can directly verify the very factors that affect them and the beneficiaries of the contract.
Time efficiency
As mentioned above, once the contract is intelligent control variables or user invokes the trigger, they begin to work immediately. Since the data is available to the system through other sources of real-time block chain and the network, and therefore do not have any time to verify and process information and solve transaction. For example, the transfer of land title deeds, this is a manual process to verify a lot of paperwork and take several weeks involved, can even handle files and related parties through intelligent program contract within a few seconds in a few minutes.
accuracy
Since the platform is basically just a computer code and predefined content, so there is no subjective errors, all results are accurate, there is no human error.
Safety
A block chain is an inherent feature of each data block is encrypted security. This means that in order to achieve redundancy, even if the data stored on multiple nodes on the network, only the owner can access to view the data and use the data . Similarly, the use of block and chain store important variable results in the process, all the process will be completely safe and tamper-resistant. Also provided by chronological order of the original, unaltered version of the data and undeniable as auditors, simplifying audit and regulatory affairs.
trust
This article series begins when it comes to the Internet and block chain service running on a much-needed increase of trust level. Intelligent contract in any case will not show bias or subjectivity in the implementation of the agreement, which means that all parties involved of the results are fully binding and may not attaching any conditions to trust the system. This also means that required in a conventional contract of great value in the "trusted third party" is not required here. Foul and supervising between the parties will be the last question.
Cost-effectiveness
As examples highlighted using smart contracts at the lowest cost needs. Businesses often have specialized in making legitimate transaction and compliance executives. If the transaction involving multiple parties, it is inevitable duplication of work. Intelligent contract is basically the former does not matter, and the elimination of duplication, since both can be done simultaneously due diligence.
Application of Intelligent contracts
Basically the situation, if two or more participants use a common block chain platform, and agree on a set of principles or business logic, they can create a smart contract on the block chain together, and in the absence of human intervention under execution. No one can tamper with the set conditions, if the original code allows, any changes are time-stamped and editors with a fingerprint, thereby increasing accountability. Imagine a similar situation on a larger scale, enterprise-class, intelligent you will understand what power contracts is, in fact, from the beginning of 2016, Capgemini study found that smart contract may actually be "the next few years." 5 commercial mainstream. Commercial applications involving insurance, financial markets, Internet of things, the use of credit, identity management systems, hosting accounts, employment contracts, and patents and royalties contracts. Such as Ethernet Square block chain platform, is a system designed to take the smart contract, which allows individuals to private users free intelligent contracts.
By discussing the company's intelligent handling of the contract, the next article in this series will be more comprehensive overview of the application of intelligent technology on the current contract in question.
Well, it's what are the disadvantages?
This is not to say that the use of intelligent contracts do not have any concerns. Such concerns are actually slows the development in this area. Tamper-proof nature of the block chain essentially makes all parties involved if required in the absence of major reforms or legal recourse in the case, almost impossible to modify or add new provisions of existing provisions.
Secondly, even if the activity on the chain is open to the public, everyone can see and observe. Trading in personal identity of the parties involved are not always known. This anonymity cause in any case one party defaults legal guilt issue of impunity, especially since existing laws and lawmakers are not fully adapted to modern technology.
Third, intelligent block chain and contract security flaws still exist in many ways, because it involves so technology is still in its early stages of development. Lack of experience with the code and platform events eventually led to DAO 2016.
All of which may lead to business or the company needs to be adjusted for the block chain requires large initial investments when their use. However, these are the initial time investment, and followed by a potential savings, this is of interest to people.
in conclusion
The current legal framework does not really support a comprehensive social intelligence contracts, and obvious reasons, in the near future will not support. One solution is to select a "hybrid" contract that combines a traditional legal texts and documents in conjunction with smart contract code that runs on the block chain designed for this purpose. However, even the hybrid contract is still to a large extent has not yet been explored, because the need for innovative legislative bodies to implement these contracts. Applications, and more will be briefly mentioned here in this next article in the series discuss in detail.
1. S. C. A. Chamber of Digital Commerce, “Smart contracts – Is the law ready,” no. September, 2018. ↩
2. S. C. A. Chamber of Digital Commerce, “Smart contracts – Is the law ready,” no. September, 2018. ↩
3. Cardozo Blockchain Project, “‘Smart Contracts’ & Legal Enforceability,” vol. 2, p. 28, 2018. ↩
4. F. Idelberger, G. Governatori, R. Riveret, and G. Sartor, “Evaluation of Logic-Based Smart Contracts for Blockchain Systems,” 2016, pp. 167–183. ↩
5. B. Cant et al., “Smart Contracts in Financial Services : Getting from Hype to Reality,” Capgemini Consult., pp. 1–24, 2016. ↩
via: https://www.ostechnix.com/blockchain-2-0-explaining-smart-contracts-and-its-types/
Author: ostechnix topics: lujun9972 Translator: wxy proofread: wxy
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