Demystifying Smart Contracts
- 1. Demystifying Smart Contracts Bernard Peh (Founder - Whale Tech)
- 2. About Me 201 1 2013 2015 2017
- 3. Why Whale Tech? Whale Tech is an Australian Based Blockchain development and education company aiming to help the companies adapt to the new Blockchain revolution.
- 4. What is a Smart Contract? Smart: Digital automation. Disputes is enforced by code and immutable. Contract: an agreement between multiple parties which could be used as evidence should dispute between the parties arises.
- 5. We are living in the world of contracts We exchange services everyday. We make agreements - verbal, physical or digital.
- 6. Formula for a contract to work A contract requires 4 criteria in order to work: ● Identity verification ● Immutability Evidence ● Commitment by staking something of value to you ● Enforcement of rightful behaviour.
- 7. Blockchain + SC = Matchmate in Heaven ● Blockchain (aka DLT) - Identity and Immutability ● Smart contracts - Staking of value and Rules enforcement
- 8. The Blockchain Revolution “The technology of tomorrow has expired today.” •Blockchain 1.0: Store of value (Cryptocurrency). Eg Bitcoin, Ripple •Blockchain 2.0: Store of value and Smart Contracts (Distributed Apps or DAPPS in short). Eg Ethereum, EOS, Cardano, Neo •Blockchain 3.0: Store of value, Smart Contracts, IOT, AI, Scaling solutions and Inter-chain Operability.
- 9. 3 Types of Smart Contracts •Value to value: Exchanging one cryptocurrency to another (ICO, Atomic Swaps) •Value to Service/Service to Value: Paying a service with cryptocurrency. Example Smart City parking, parcel delivery, voting for the next president. •Service to service: Exchanging a service with another service. Example creating a website in exchange for free medical treatment.
- 10. Value to Value - Blockbid ICO
- 11. Value to Service - Uber Post
- 12. Service to Service - Labour exchange
- 13. Anatomy of a Smart Contract •What is the Purpose? •How to get Commitment from Parties Involved? •What are the Moving Parts? •What Constitute a Successful Outcome? •How to Validate Successful Completion of Task? •What Constitute an Unsuccessful Outcome?
- 14. Anatomy of a Smart Contract •What Happens After the Deal? •Any Punishment for Malicious Behaviour?
- 15. Upgradable Smart Contracts Unlike typical Software design, upgrading Smart Contracts poses many monetary and philosophical dilemma which puts a lot of stress on Smart Contract developers to get it right the first time.
- 16. Upgradable Smart Contracts •Pros: Save space. Efficient code. Bug fixes. •Cons: Break immutability law and decentralisation. What are people going to think if you have the ability to upgrade the business rules in the middle of an ICO?
- 17. The Dangers ● immeasurable success criteria ● Unexpected behaviours ● Unaudited code (writing test isn’t enough) ● Assets being hacked ● Assets being frozen
- 18. The Wins ● Automation: Saves time and money because there are no middle man. ● Nothing to hid. Contract is open for the public to scrutinise. ● Forces you to think of all possible outcomes and things that could go wrong. ● Forces you to define all conditions and play fair.
- 19. Blockchain + SC + IOT + AI at work ● Your washing machine has a part that needs repair. ● As your machine is also a node and connected to the internet, it is also connected to the Blockchain of the company. ● Your machine creates a Smart Contract onchain describing the problem and asks for repair quotes from different vendors also connected to the same Blockchain.
- 20. Blockchain + SC + IOT + AI at work ● Each vendor submits a quote and your Smart Contract chooses the best quote based on some intelligent criteria. ● The vendor comes to your house and repair the machine. ● If Machine is happy with the repair (working for the next 3 months), it will release the funds in the Smart Contract to the vendor.
- 21. Conclusion ● Plan well ahead before even before starting to code. Remember its not like building a website where you can tweak and patch all the time. ● All conditions in the Smart Contracts must be measurable and codable.
- 22. Conclusion ● KISS principle applies. Less ambiguity in successful/failure conditions -> lesser logic -> lesser code -> lesser chance to be hacked -> more smiling faces.
Editor's Notes
- #4: Today many people mix blockchain smart contract together but the fact is they are 2 different technologies. We’ll talk about blockchain later but we’ll be focusing on Smart contract in this seminar.
- #5: A Smart contract is just a digital contract enforced digitally.
- #6: You exchange money for food You exchange time and energy for knowledge You exchange your life for someone you love.
- #7: Take marriage for example, its a contract between 2 person. To get married, you will need 1) Your identity card/Passport 2) Immutable proof like Witness, certificates, ring. 3) Shown commitment: Staking your time and money in your partner. 4) You can’t marry someone else unless you are divorced.
- #8: We will be covering some basic terminologies like centralised and decentralised exchanges, soft and hard fork and most important, know how to use a hardware wallet.
- #9: Blockchain 1.0 - 2009. (bitcoin) Blockchain 2.0 - 2014. (ethereum)
- #11: Buy other tokens for Ethereum. It is sad that more and more ico are not using smart contracts for ICO because that means no transparency.
- #14: Things to consider when writing smart contracts
- #15: Things to consider when writing smart contracts
- #22: If you are a smart contract developer, make sure all the conditions are well defined before starting to code. And always get an auditor
- #23: If you are a smart contract developer, make sure all the conditions are well defined before starting to code. And always get an auditor