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Smart Contracts - a 2 minute read
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<blockquote data-quote="bronson" data-source="post: 11367" data-attributes="member: 1148"><p>The name "smart contract" is actually really misleading and the guy who coined it, Nick Szabo, regretted calling it that because of what its actual function is - it is not a legally enforceable contract. A smart contract its essentially a bit of code that is designed to automatically produce a certain result when certain events happen. So the action of X and Y happening = the result of Z. A more practical example is say when the temperature on a farm remains above forty degrees for a period of five days then this would trigger an insurance payout to the farmer for any damage to their crops. Or when a manufacturer acknowledges receipt of materials then then this automatically triggers the release of funds from their bank account to the material provider with no manual human intervention needed.</p><p></p><p>So it isn't a written legal contract, but it can have certain <strong>basic</strong> (very basic at the moment) legal obligations coded into it. But for the purposes of this example let's use the example above of a manufacturer and a producer. The manufacturer and material provider may enter into a written legal contract to provide materials. They agree that they will use a blockchain for this transaction to track materials and then release funds on delivery of goods. Let's say that in our example they use a permissioned blockchain (private, see above) and only they can see what goes on. Both the manufacturer and materials provider would be able to see where their goods were (i.e. processing, customs, in transit). The smart contract itself wouldn't necessarily promote transparency, because this is literally a bit of code which most likely only the developers of the blockchain would be able to understand. It is more the transparency of the blockchain itself and the stages of the transaction that blockchain derives its benefits from, and the smart contracts are the driving force behind it.</p><p></p><p>IBM and Maersk (the shipping container company) have slowly been expanding their blockchain platform to improve efficiency of shipping cargo and provide a good real-world example <a href="https://www.coindesk.com/ibm-maersk-finally-sign-up-2-big-carriers-for-shipping-blockchain" target="_blank">https://www.coindesk.com/ibm-maersk-finally-sign-up-2-big-carriers-for-shipping-blockchain</a>.</p></blockquote><p></p>
[QUOTE="bronson, post: 11367, member: 1148"] The name "smart contract" is actually really misleading and the guy who coined it, Nick Szabo, regretted calling it that because of what its actual function is - it is not a legally enforceable contract. A smart contract its essentially a bit of code that is designed to automatically produce a certain result when certain events happen. So the action of X and Y happening = the result of Z. A more practical example is say when the temperature on a farm remains above forty degrees for a period of five days then this would trigger an insurance payout to the farmer for any damage to their crops. Or when a manufacturer acknowledges receipt of materials then then this automatically triggers the release of funds from their bank account to the material provider with no manual human intervention needed. So it isn't a written legal contract, but it can have certain [B]basic[/B] (very basic at the moment) legal obligations coded into it. But for the purposes of this example let's use the example above of a manufacturer and a producer. The manufacturer and material provider may enter into a written legal contract to provide materials. They agree that they will use a blockchain for this transaction to track materials and then release funds on delivery of goods. Let's say that in our example they use a permissioned blockchain (private, see above) and only they can see what goes on. Both the manufacturer and materials provider would be able to see where their goods were (i.e. processing, customs, in transit). The smart contract itself wouldn't necessarily promote transparency, because this is literally a bit of code which most likely only the developers of the blockchain would be able to understand. It is more the transparency of the blockchain itself and the stages of the transaction that blockchain derives its benefits from, and the smart contracts are the driving force behind it. IBM and Maersk (the shipping container company) have slowly been expanding their blockchain platform to improve efficiency of shipping cargo and provide a good real-world example [URL]https://www.coindesk.com/ibm-maersk-finally-sign-up-2-big-carriers-for-shipping-blockchain[/URL]. [/QUOTE]
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