Mastering Blockchain - Second Edition

Contracts

As defined in the Bitcoin core developer guide, contracts are basically transactions that use the Bitcoin system to enforce a financial agreement. This is a simple definition but has far-reaching consequences as it allows users to design complex contracts that can be used in many real-world scenarios. Contracts allow the development of a completely decentralized, independent, and reduced risk platform.

Various contracts, such as escrow, arbitration, and micropayment channels, can be built using the Bitcoin scripting language. The current implementation of a script is very limited, but various types of contracts are still possible to develop. For example, the release of funds only if multiple parties sign the transaction or perhaps ...