Announcing a Return to our Roots: The All-New Bitcoin Magazine

Ripple Labs CTO Designs Smart Contracts

by

         Ripple Labs CTO Designs Smart Contracts

Stefan Thomas is one of the more talented and respected developers in the space. An old hat at this young technology, he has been making waves as the CTO of Ripple labs. In a recent effort he has set his sights on smart contracts technology. The designs and implementation he and his team have come up with are interesting, to say the least.

In a white paper entitled Smart Oracles, we see described a novel, simple, and flexible approach to smart contracts.

In such a system, rules can be written in any programming language, and contracts can interact with any service that accepts cryptographically signed commands. The paper also includes an implementation of smart oracles, called Codius (based on the Latin “ius” meaning “law”).

Smart contracts are an exciting new frontier for technology, business, and law that have the potential to usher in a wave of innovation and serve as a building block for a next chapter of the internet.

The concept of a smart contract is to formally encode the conditions and outcomes of a legal agreement into a computer program. Rather than rely on another party to enforce the terms of the arrangement, the obligations of a smart contract are settled automatically and autonomously through the execution of its code.

As such, math-based currency networks like Bitcoin and Ripple provide an important building block for smart contracts by allowing the transfer of digital assets with a cryptographic signature. The benefits of using smart contracts instead of traditional contracts are increased speed, efficiency, and trust that the contract will be executed exactly as agreed.

Most proposals for smart contracts depend on independent entities to inform contracts about the state of the outside world. Bitcoin contracts rely on “oracles” to attest to facts from the outside world by introducing signatures into the network if and only if specific conditions are met.

For instance, the smart contract for a will would need to know whether or not someone had died. Such a system typically requires the smart contract code to be executed on the consensus network itself. But encoding advanced logic and executing untrusted code is complicated to integrate. Until now, this has been one of the primary obstacles for creating a viable smart contract system.

Smart oracles take the concept of oracles a step further by placing the untrusted code execution in the oracles’ hands. Smart oracles, then, are trusted or semi-trusted entities that can both provide information about the outside world and execute the code to which the contracting parties agreed.

By decoupling the execution of untrusted code from the consensus databases and other services that track and transfer asset ownership, smart contracts can be achieved without increasing the complexity of existing consensus networks like Bitcoin and Ripple.

Without being tied to any single consensus network, contracts created using smart oracles can interact with multiple networks at once as well as virtually any type of online service. This means that a single smart contract could interact with Bitcoin and Ripple, web-based services like PayPal, Google, Ebay, etc. or even other Internet protocols, such as SSH, LDAP, SMTP and XMPP.

The Codius implementation of smart oracles is designed to provide developers with a robust and familiar platform to build smart contracts and hit the ground running. Because Codius uses Google’s Native Client to sandbox untrusted code, developers can write contracts in any programming language.

Codius and smart oracles in general open up new possibilities for developers, entrepreneurs, and enterprising legal and financial professionals. Agreements that previously required lengthy legal contracts can be translated into code and run automatically by smart oracles.

Smart contracts hold the potential to empower people to build a fairer, more affordable and more efficient legal system and smart oracles are one of the simplest ways to realize that dream. Potential use cases include bridges between value networks, escrow, cryptocurrency wallet controls, auctions for digital assets, derivatives, debt and equity, smart property and voting.

Since the system is extensible, the functionality will continue to expand as the ecosystem develops.

Recommended

Ten Years Later, a Reflection on Bitcoin’s Genesis and Satoshi’s Timing

Rather than focusing simply on what the genesis block is, today is a day to reflect on what the genesis block represents.

Colin Harper

Op Ed: From Gray To Black and White: Traditional Regulations Come to Crypto

For the crypto industry, recent developments — at both the federal and international levels — signal that the time for plausible deniability or unregulated freedom is coming to an end and more traditional regulations are moving to the forefront.

Courtney Rogers Perrin and Joshua Lewis

Bitcoin Price Analysis: Blowing Through Support Levels on the Way to $3,000

Bitcoin continues to tumble lower and lower as it struggles to claim any footing in the market. It’s down almost 50% in three weeks and it’s showing very little sign of stopping. It’s currently clutching onto the $3,500 values but it doesn’t look like it can hold on much longer.

Bitcoin Schmitcoin

Op Ed: SEC’s Latest Declaration Creates Legal Minefield for Digital Assets

This broad, authoritative declaration is not unexpected, as, to date, the SEC has stated that all digital assets — regardless of whether they function as alt coins or utility tokens — are securities at least initially and, thus, subject to its jurisdiction.

Huhnsik Chung and Nicholas Secara