What is smart contract?

~Basic presentation 1.Basis, 2.Usage, 3.Society~

Tomoaki Sato Smart Contract Japan

1.Basis2.Usage3.Society of smart contracts

Today, quickly go through

Basis

Smart Contract

*much simplified

Reference: https://github.com/ethereum/wiki/wiki/White-Paper

Smart + Contract

• “Smart” means efficient.

• “Contract” doesn’t mean legal document, and it is difficult for smart contract to be legal document.

• “Contract” means “Proof of Agreement”

* Notice there are many definitions for now

Proof of Agreement ?• Legally enforceable agreement is difficult to

write.

• However, we need a lot of agreements in a daily business.

• So if we have The Place to put agreements between Things/Things, Humans/Things, Humans/Humans, our life will be easier?

Proof of agreement should Not

• Be at one place

The Place

Proof of agreement should

• Be at decentralised places

The Place

Before Blockchain age

• No reliable replicated database system.

After Blockchain age

• We have replicated databases.

• Bitcoin proves Blockchain actually works.From:https://bitcoin.org/bitcoin.pdf

Again Smart Contract is

• Smart Contract is “Proof of Agreement”

• And basically, Smart Contract is on blockchain.

• To make it more useful from just proving agereements, agreements are wanted to be executed on Blockchain.

Usage

How can we use smart contracts?

We have 2 choices.

Directly or Via apps.

Direct use

• Make, publish smart contracts, “Proof of Agreement” in decentralized database.

• Trading smart contracts, sounds like trading tokens.

Proof of Agreement itself can be made, developed, traded.

references:http://ether.fund/https://www.rocketlawyer.com/https://www.prosper.com/

Such as

• Make, publish smart contracts, “Proof of Agreement” in decentralized database.

• Trading smart contracts, sounds like trading tokens.

Proof of Agreement itself can be made, developed, traded.

references:http://ether.fund/https://www.rocketlawyer.com/https://www.prosper.com/

NxT based Smart Contract ServiceOn chain document timestamp service

Or Use via DApps

• DApp is short-called Decentralised Applications, and in most cases using smart contracts

• Why ? because “Proof of Agreement” should be decentralized as we talked.

• So apps using smart contracts are ? Yes, it is better to be decentralised for “Proof of Agreement”Here is the reference about State of DApps on Ethereum

• So the app using smart contracts are ?

DApp = Decentralized Applicatoins

Such as

Here is the reference about State of DApps on Ethereum

• So the app using smart contracts are ?

Decentralized Transportation systemSharing economy to ride

Decentralized Prediction market

Decentralized POKER ADEPT ~IBM & Samsung IoT app

Applications• Financial Derivatives.

> Option trades are smart contract trades

• Insurance > Insurances can be automated.

• Voting> Ban voting double time from one address easily. However currently it needs ID & reputation system.

• ID & Reputation > Economically creating ID or Reputation should be high cost.By using smart contracts, they can be high cost.

• Crowdfunding> Make your tokens and sell it to the crowd.

From Users’ point of view

1. No censorships - From centralized servers.

2. Get revenue- Cryptographic proof, 100% satisfied as smart contract.

3. Can play a many role, join in the app.-Developer, Miner(Minter), Stake holder, Smart Contractor(Legal), etc…

From Developer point of view

Society

Government

• Will accept smart contracts as legal document ? Or admit smart contracts as proof for legal level ?

• Generally if someone bribe the money to there, and can get more return from the bribing, the function/ section is better to be more decentralised position,

Decentralized Centralized

Social authorityFinancial system

Places for who don’t have power

Voting systemLand registryID & Reputation systemDomain Name (ICANN)

E.g. Developing countries

>"This also gives owners of the nearly 60 percent of undocumented land, an incentive to register their property officially.” from REUTERS

Regulations

• In many cases, smart contracts using cryptographic tokens, Bitcoin.

• And smart contracts will make localized rules. So one country can ban certain smart contracts in the area.

• We focus on researches, not news, but legal information can’t be ignored in today’s world, and is valuable to businesses.

Reference: Legality of Bitcoin by country,: Coindesk report 2013

Agreement for public good

• Make decentralised “Proof of Agreement”, at the same time moving from (A, A) to (B, B) programatically. No body suffer (A, B) or (B, A) minus,

• Blockchain is good at Coordination, and Proof of Agreement.

Nuke No Nuke

Nuke 0, 0 1, -1

No Nuke -1, 1 1, 1

Reference:Vitalik Buterin: Cryptoeconomic Protocols In the Context of Wider Society

Punishment for public good

Public punishment also possible for those choosing the (0, 0)

Nuke No Nuke

Nuke0, 0 => -1, -

11, -1

No Nuke -1, 1 1, 1

Reference:Vitalik Buterin: Cryptoeconomic Protocols In the Context of Wider Society

Research topicsBasis• Relationships between Identification and “Proof of Agreement”. If there are no

identification system, what is possible/impossible by “Proof of Agreement” ?• Bitcoin/ Ethereum difference, what applications would be affected by 3 things.1.Lack

of Turing Completeness, 2. Value-Blindness,3. Lack of state, 4. Blockchain-Blindness• Next consensus algorithm especially for smart contracts.• Zero knowledge proof and smart contracts relationships.• How will Pre ID & Reputation Blockchain age services be changed to Post ID &

Reputation Blockchain age services?

Usage• Business model of pure ‘Proof of Agreement’• Business model of Decentralised Applications which using smart contracts.

Society• Relationships between Identification and “Proof of Agreement”. If there are no

identification system, what is possible/impossible by “Proof of Agreement” ?• Public good implementation ideas and to what that can be implemented in the

society.• Smartcontract local regulations, such as in Japan.

Today we will research

State of smart contracts

SmartContract.com

• Allowing move Bitcoin transactions, but the programmable agreement using NxT in order to store data. One of the NxT merit is 2 minutes block time.

• Tradin smart contracts, sounds like trading tokens.

Escrow, stabilized payment, smart property on NxT

references:http://ether.fund/https://www.rocketlawyer.com/https://www.prosper.com/

Orisi

• Quorum way, have to trust some nodes, on

• Trading smart contracts, sounds like trading tokens.

Orisi is a distributed system of oracle nodes whichh validates smart contract safely.Such contracts, unlike blockchain onu ones, can rely on external conditions ~from github.

references:http://ether.fund/https://www.rocketlawyer.com/https://www.prosper.com/

Codius

• Codius stops the development, because “Codius is just a way to make decentralization easier” ~ from Bitcoin Magazine. There are small needs for the hosting.

• Not as decentarlized because of oracle needs, even if they have significant number of inquiries they stop the development.

Codius is an open hosting protocol. It makes it very easy to upload a program.~from Codius site.

references: https://bitcoinmagazine.com/20985/ripple-discontinues-smart-contract-platform-codius-citing-small-market/

Hedgy

• They have 2 services for elimiinating Bitcoin Volatility with the use of smart derivative contracts.1. BitForward, 2.BitLock

• 1. BitForward- Allows speculators to gain consistent exposure to the price movement of Bitcoin without buying or selling the underlying asset.

• 2. BitLock Timelock in order to eliminate volatility, and using various oracles to settle contracts automatically

To eliminate Bitcoin volatility using smart contracts.

references:http://hedgy.co/http://hedgy.co/bitforward.htmlhttp://hedgy.co/bitlock.html

Symbiont

• Counterparty Founder Adam Krallenstein is CTO and Founder of the team.Medici project developers went to Symbiont, supported by former CEO at the NewYork Stock Exchange.

• 1. $1.25 mil raised.

• 2. Decentralized trading, p2p settlement, build in Escrow and clearing.

Symbiont is building the first issuance and trading platform for smart securities on blockchain technology

references: https://github.com/symbiont-io

BitHalo

• Without bloat.

• With easiness

BitHalo aims to allow users to use smart contracts on Bitcoin blockchain, OS X, Window, Linux client has already released.

BitHalo: https://bithalo.org/update/

Mirror

• Hedging and Risk Management for Bitcoin.

• Smart Financial Contracts.

• Problems for now, Transaction malleability, and normalised transaction Hardfork/Softfork for Bitcoin is needed.

Mirror aims to be smart contracts platform that democratizes access to financial markets.

Mirror: https://mirror.co/Mirror Tech blog: https://medium.com/mirror-blog/why-bitcoin-transaction-malleability-is-still-a-problem-and-how-to-solve-it-89edbb47d4bf

Hyper Ledger (Digital Asset Holdings)

• Will be tens of thousands of transactions per second for financial transactions

• Trading smart contracts, sounds like trading tokens.

Hyper ledger don’t use crypto currencies at all.Their smart contracts will be run ontheir asset manageement protocol hyper ledger.

reference: http://hyperledger.com/

Eris Industries

• DB and Server they provides, then engineers don’t need to care about a lot of things.

• The founder, Casey Kuhlman is a lawyer and an engineer.

Eris industries make the foundation to develop DApps for all engineers.

reference: https://erisindustries.com/

Ethereum

• Wiki is the best place to know official information. https://github.com/ethereum/wiki

• You know many, you can write a contract easily as you write normal programming language.

• Also they have next wen3.x platform vision.

Ethereum is creating new blockchain, virtual machine, programming language, for modular, stateful, turing-complete scripting contract platform

Ethereum wiki: https://github.com/ethereum/wiki

We have nodes!