Smart contracts bitcoin: what is it and how does it work?
Smart contracts are classified as a universal blockchain development. For the first time, the concept was described as far as in 1994. Later, the appearance of distributed register became a base for the idea elaboration.
The American cryptologist Nick Szabo is widely regarded as an author of smart contracts. He published a software design of the digital protocol capable of following terms of a contract agreed by parties. This idea was embodied only in 2009 with the introduction of the first blockchain. The cryptocurrency community appreciated all its advantages. Thus, first smart contracts bitcoin began to appear. Currently, it is Ethereum that takes the leading position but bitcoin blockchain remains a popular platform for smart contracts.
What is a smart contract and how does it work?
A smart contract is an algorithm that enables self-regulated blockchain-based contracts. It is a blockchain programming code not controlled by any central units. This form of contracts drawing is currently the most reliable and wide-spread across the globe.
So, what is a smart contract? In brief, these are contracts that transact assets between parties independently. There isn’t any intermediary tempted by bribes. You also cannot cheat or bypass the contract regulations, all transactions on smart contracts are fully transparent and irreversible. No banks, governmental bodies, and even parties are necessary — the smart contract will deal with everything.
Smart contracts bitcoin: obsolete technology or the only right solution?
To some extent, bitcoin fulfills the ideas of a smart contract. However, it is blockchain that ensures the existence of bitcoin and such contracts.
Primarily, smart contracts were established within bitcoin blockchain. Compared to modern ones, first smart contracts had limited functions where bitcoin blockchain worked on the simplest algorithms that processed transactions under the stated condition (if-then-else statement).
However, today’s developers see one considerable drawback in smart contracts bitcoin — the absence of state labels. This flaw made programmers look for new blockchains due to the limited freedom of available operations.
Smart contracts bitcoin are credited Turing incomplete. So is bitcoin blockchain. Turing completeness is a capability of the programming language to solve any computational task. That is the reason why programmers switched to Turing complete blockchains.
Notwithstanding, smart contracts bitcoin don’t lose their popularity. They have supporters that reject Turing complete blockchains. What is more, there exist a generation of bitcoin maximalists who reckon that Turing complete smart contracts overload the network and slow down the work of blockchain. Blockchain calculations is an expensive and energy-consuming process. Maximalists think that it is irrational to increase their amount.
The Turing completeness of smart contracts has been argued many times. The experts think that it complicates the process, and the system only has to verify the data.