Definition and design

The smart contract was formally defined by Nick Szabo in his 1996 paper titled, Smart Contracts: Building Blocks for Digital Markets. He described it as follows:

"A Smart contract is a set of promises, specified in digital form, including protocols within which the parties perform on these promises."

Yup, that's it. That's the definition. Duh! What's so exciting about it? Let us spice it up a little bit. If we closely observe the definition, we will see that it consists of four specific elements:

  • A set of promises: These are basically business conditions. For example, Judy and Ashley are business partners who jointly own an auction company. A simple business condition could be as follows:
    • IF the auction sale results ...

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