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The origin of the smart contract we are going to introduce to you today can actually be traced back to 1995. It was a concept proposed by Nick Szabo, a prolific cross-field legal scholar. In the original concept, the definition of a smart contract is a set of commitments defined in digital form, and includes an agreement on which contract participants can execute the commitments. The digital form means that the contract will be written into computer-readable code, and everything is executed by the computer network. The protocol is the basis for technical implementation. Many investors will want to know what are the characteristics of smart contracts? Let the editor of the currency circle introduce the characteristics of this smart contract to you.

 What are the characteristics of smart contracts?

Characteristic 1: Consistency, smart contracts need to be consistent with the contract text and not conflict with existing laws. Before each contract is released, technical personnel and professional lawyers need to ensure the consistency of the contract.

Feature 2: Customizable. Smart contracts should be customizable. Complex contracts can be obtained by combining simple contracts.

Feature 3: Observability. Both the contract itself and its execution process should be observable to support supervision and credibility.

Feature 4: Verifiability, the validity of the contract’s records can be tested.

Feature 5: Self-enforcement, smart contracts can prevent and punish breaches of contract without relying on legal force.

Feature 6: Access control, allowing only people related to the contract to view information about the contract. Only when a conflict occurs, the third-party interface is opened to allow third-party verification.

 What is the use of smart contracts?

As we said in the previous article, the core of the public chain is cryptocurrency. The entire public chain serves cryptocurrency. Blockchain is just the carrier of cryptocurrency, and cryptocurrency is the core and essence.

Cryptocurrency is also a currency. For a currency to be successful, of course, the more holders the better, and the wider the application scenarios, the better. Therefore, as the creator of currency, we have the obligation to promote the currency so that more people can use it and use it in more scenarios. This is why the country must protect the RMB and it is illegal to refuse RMB payments.

However, for cryptocurrency, it does not have the power of a sovereign state, and all scenarios can only be based on the voluntary basis of users. So there are cryptocurrencies to support better anonymity and are suitable for some shady transactions. Ethereum innovatively provides an on-chain programming capability that allows people to write programs in advance and then spend money in transactions in the manner specified by the program. This on-chain programming capability is a smart contract.

With smart contracts, the cryptocurrency (Ether) on Ethereum can be spent by people in various ways. Not only can you transfer money, but you can also implement any function you want to achieve. For example, it can be used to invest in other tokens, used for gambling, etc. Among them is the scene where Ethereum really shines, which is Initial
Coin Offering (ICO for short).

The above content is a detailed introduction by the editor of the currency circle on the characteristics of smart contracts. In fact, after such a long period of development, the development of smart contracts is still in its infancy. It is very meaningful for us to tap the potential of the digital society in the future. We may say goodbye to lawyers and banks one day, and the preparation and review of new contract templates will become the new focus of work. The significance of smart contracts is that they can subvert and improve existing business models, and can also greatly Reduce intermediary fees. In the future, smart contracts may have many informal definitions. Generally speaking, they are a set of promises defined in digital form.