Smart contracts introduction thread.
What are smart contracts?
What are the fundamental concepts to understand as a Developer?
Let's see them in 2 minutes.
↓
What are smart contracts?
What are the fundamental concepts to understand as a Developer?
Let's see them in 2 minutes.
↓
Table of Contents
Definition
Term's Origin
Goals
An analogy
Legal status
Smart legal contracts
Smart contracts as programs
Smart contracts a stored procedures
Workings
On Ethereum
Randomness on Blockchain
Security issues
The DAO (June 2016)
Issues in Ethereum
💯Days of Web3
↓
Definition
Term's Origin
Goals
An analogy
Legal status
Smart legal contracts
Smart contracts as programs
Smart contracts a stored procedures
Workings
On Ethereum
Randomness on Blockchain
Security issues
The DAO (June 2016)
Issues in Ethereum
💯Days of Web3
↓
Definition
A smart contract is a contract with additional blockchain features.
It's a computer program or a transaction protocol to automatically execute, control, or document legally relevant actions/events according to some contract terms.
A smart contract is a contract with additional blockchain features.
It's a computer program or a transaction protocol to automatically execute, control, or document legally relevant actions/events according to some contract terms.
Term's Origin
Nick Szabo coined this term in 1990, referring to it as:
"a set of promises, specified in digital form, including protocols within which the parties perform on these promises".
Nick Szabo coined this term in 1990, referring to it as:
"a set of promises, specified in digital form, including protocols within which the parties perform on these promises".
Goals
The goals of smart contracts are the reduction of:
- arbitrations and enforcement costs.
- need in trusted intermediates.
- accidental exceptions.
- malicious attacks.
- fraud losses.
The goals of smart contracts are the reduction of:
- arbitrations and enforcement costs.
- need in trusted intermediates.
- accidental exceptions.
- malicious attacks.
- fraud losses.
Vending machine analogy
To understand the basic concept of what is a smart contract, we can make an analogy with a vending machine:
By just inserting the coin and selecting what you need, it reduces the need for an intermediate to get your snack.
To understand the basic concept of what is a smart contract, we can make an analogy with a vending machine:
By just inserting the coin and selecting what you need, it reduces the need for an intermediate to get your snack.
Ethereum whitepaper
in 2014, the Ethereum Whitepaper describes the Bitcoin protocol as a "weak version" of the smart contract concept.
Nowadays, there are many blockchain technologies that allow you to create smart contracts: Ethereum is one of them.
ethereum.org/en/whitepaper/
in 2014, the Ethereum Whitepaper describes the Bitcoin protocol as a "weak version" of the smart contract concept.
Nowadays, there are many blockchain technologies that allow you to create smart contracts: Ethereum is one of them.
ethereum.org/en/whitepaper/
Legal status
Some legal academics say that smart contracts are not legal agreements
They are obligations deriving from agreements, such as:
- tech means for payment' automation
- token transfer obligations
Some legal academics say that smart contracts are not legal agreements
They are obligations deriving from agreements, such as:
- tech means for payment' automation
- token transfer obligations
Smart legal contracts
A smart contract is not necessarily legally enforceable as a contract.
But a smart legal contract has all the elements of a legally binding contract in the jurisdiction where applicable.
A smart legal contract can be enforced by a court of law.
A smart contract is not necessarily legally enforceable as a contract.
But a smart legal contract has all the elements of a legally binding contract in the jurisdiction where applicable.
A smart legal contract can be enforced by a court of law.
Smart contracts as programs
A smart contract can be any kind of computer program.
It can be viewed as a collection of code and data (program) deployed using cryptographically signed transactions on the blockchain.
A smart contract can be any kind of computer program.
It can be viewed as a collection of code and data (program) deployed using cryptographically signed transactions on the blockchain.
Smart contracts a stored procedures
For database experts, a smart contract can be viewed as a secured stored procedure.
Its execution and effects are strictly enforced.
They can not be manipulated after a transaction (they
are stored in the blockchain).
For database experts, a smart contract can be viewed as a secured stored procedure.
Its execution and effects are strictly enforced.
They can not be manipulated after a transaction (they
are stored in the blockchain).
Workings 1/3
A smart contract occurs by sending a transaction from a wallet.
Transactions include the compiled code for the smart contract and a receiver address.
Smart contracts can store arbitrary state and execute arbitrary computations.
A smart contract occurs by sending a transaction from a wallet.
Transactions include the compiled code for the smart contract and a receiver address.
Smart contracts can store arbitrary state and execute arbitrary computations.
Workings 2/3
Once a smart contract is deployed, it cannot be updated.
Transactions must be included in a blockchain block
The smart contract's code will execute to establish the initial state.
End-clients interact with a smart contract with transactions
Once a smart contract is deployed, it cannot be updated.
Transactions must be included in a blockchain block
The smart contract's code will execute to establish the initial state.
End-clients interact with a smart contract with transactions
Workings 3/3
Transactions can invoke other smart contracts.
Transactions might result in changing the state and sending coins from one smart contract to another or from one account to another.
Byzantine fault-tolerant algorithms secure the smart contract to prevent attacks.
Transactions can invoke other smart contracts.
Transactions might result in changing the state and sending coins from one smart contract to another or from one account to another.
Byzantine fault-tolerant algorithms secure the smart contract to prevent attacks.
Programming languages
On Ethereum:
- Solidity
- Vyper
- Yul
Solana:
- Rust
Other programming languages:
- JavaScript (Hyperledger Fabric)
- Simplicity
- Scilla
- Ivy
- Bitcoin Script
These are just examples and this is not meant to be an exhaustive list
On Ethereum:
- Solidity
- Vyper
- Yul
Solana:
- Rust
Other programming languages:
- JavaScript (Hyperledger Fabric)
- Simplicity
- Scilla
- Ivy
- Bitcoin Script
These are just examples and this is not meant to be an exhaustive list
Randomness on Blockchain
Real-world applications such as lotteries require secure randomness.
Blockchain randomness can be implemented by using:
- block hashes/timestamps
- oracles
- commitment schemes
- special smart contracts
- sequences from mixed strategy Nash equilibria.
Real-world applications such as lotteries require secure randomness.
Blockchain randomness can be implemented by using:
- block hashes/timestamps
- oracles
- commitment schemes
- special smart contracts
- sequences from mixed strategy Nash equilibria.
Security issues
A blockchain-based smart contract is visible to all the blockchain's users.
This can lead to a situation where bugs (including security holes), are visible to all, but they are not easily fixable.
An example is what happened in DAO in June 2016.
A blockchain-based smart contract is visible to all the blockchain's users.
This can lead to a situation where bugs (including security holes), are visible to all, but they are not easily fixable.
An example is what happened in DAO in June 2016.
The DAO (June 2016)
An example is what happened in 2016.
Such an attack, difficult to fix quickly, drained ~50 million of $ worth of Ether at the time, while developers attempted to come to a solution.
If you want to know more:
coindesk.com/learn/2016/06/…
An example is what happened in 2016.
Such an attack, difficult to fix quickly, drained ~50 million of $ worth of Ether at the time, while developers attempted to come to a solution.
If you want to know more:
coindesk.com/learn/2016/06/…
Issues in Ethereum
Issues in Ethereum smart contracts include:
- ambiguities and easy-but-insecure constructs in Solidity
- No central source documenting known vulnerabilities
- Blockchain network attacks
- Bugs immutability
- Compiler bugs
- EVM bugs
Issues in Ethereum smart contracts include:
- ambiguities and easy-but-insecure constructs in Solidity
- No central source documenting known vulnerabilities
- Blockchain network attacks
- Bugs immutability
- Compiler bugs
- EVM bugs
💯Days of Web3
I am posting one Web3 content every day.
Here is the GitHub repository with all the posts, day by day.
Day 81
Stars: 306⭐
github.com/FrancescoXX/10…
I am posting one Web3 content every day.
Here is the GitHub repository with all the posts, day by day.
Day 81
Stars: 306⭐
github.com/FrancescoXX/10…
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