There is a word that doesn’t fall out when talking about blockchain. It’s a ‘smart contract’. A contract is a contract, but it is a ‘smart’ one.
With the development of blockchain technology, many often mistake smart devices to be one of the bodies of blockchain. Some people misunderstand that blockchain technology has created smart devices. Of course, it’s not true. If a smart device is a single word before the explanation, it will automatically process the data if the programmed data meets the conditions set by the data.
The first person to introduce the concept of smart devices is a cryptologist Nick Szabo. He has steadily developed the concept since he first introduced the concept of smart devices in 1994.
Nick predicted that traditional contract methods will not be valid in the digital age. He defined smart trade as ‘a computerized transaction commitment that automatically enables what is necessary for a contract realization through code.’
That is, if the conditions set up by the program are correct, the contract is automatically signed without third-party intervention.
The Smart Contract in cryptocurrency trading
About 14 years after Nick’s announcement, Bitcoin emerged. Satoshi Nakamoto announced Bitcoin in 2008, advocating a decentralized financial system.
As Bitcoin announced, blockchain became popular and a foundation established to realize Nick’s smart device. However, Bitcoin has the purpose of focusing on its role as a currency, so it could not apply the smart device other than a very simple contract.
With the advent of Etherium, all forms of smart trading have become possible through blockchain. Ranging from financial transactions to real estate and identity authentication. By using this smart app, many DApp can be created. It can be seen as providing a foundation for the blockchain industry to grow in earnest.
Therefore, if Bitcoin is the first cryptocurrency and can replace the legal currency, Etherium has the symbolism that it has greatly expanded the blockchain industry by creating DApp.
This smart contract, of course, has its own weakness especially with the oracle problem as it has a heavy relation with the lightning network.
