A holistic definition of Smart Contracts

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In my last post I closely followed Nick Szabo’s definition of smart contracts. In this post I’d like to give you a wider picture of the…

Smart contracts

… and the two phases of contracting

In my last post I closely followed Nick Szabo’s definition of smart contracts to elaborate on the meaning of the term. In this post I’d like to give you a wider picture of the concept. To accomplish this, we will have to venture outside the boundaries of what might be called the “Crypto Scene”[1]. 

This wouldn’t be a decent article on smart contracts though, if it wouldn’t start with a reference to Nick Szabo. In “phases of contracting” Szabo proposes the following model of the temporal phases of contracting:

1) Ex-Ante
Search
Negotiation
Commitment

2) Ex-Post
Performance
Adjudication

Before, I only looked at the second phase of contracting, i.e. what happens after a contract has been closed (“ex-post”)[2]. However, there lies a big land full of exciting mysteries in the ex-ante phase of contracting as well: 

  1. How can parties with complementary needs find each other?
  2. How can parties negotiate the terms of an agreement?
  3. How is the agreement transformed from its intangible state as a ‘platonic agreement’ into the language and medium of the execution environment?

Szabo resembled those 3 questions with the terms ‘search’, ‘negotiation’ and ‘commitment’. Each one is a separate challenge that touches upon a multitude of fields of research which I intend to introduce to you as much as I am capable.[3]

Search is the act of creating a match between the right parties at the right point of time.

Generally, 

  1. decentralized or centralized model?
  2. human or non-human agent?

Negotiation

Commitment

Anyone successful smart-contracts platform has to ‘solve’ both phases

The equation is actually pretty simple: no customers, no business. 

Realistically-speaking, solving phase 1 is “the killer app” — solving phase 2 is an implementation detail.

this, is that since very recently there are have been made significant advences 

[1] There are certainly many names to choose from and each one has its merits. I chose a term that is hopefully relatively neutral.

[2] I referred to those points as “execution” and “enforcement”.

[3] I’m more a generalist.

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Exported from Medium on January 3, 2025.