Blockchain Smart Contract Commentary



What is smart contract?

Referring to an important element of blockchain, we have to talk about the concept of smart contract. This term was first proposed in 1995 by a prolific cross-sector legal scholar, Nick Szabo, who published the term himself. The article defines a smart contract as: “A smart contract is a set of promises defined in digital form, including agreements on which contract participants can execute these promises.” It also means that In this environment, smart contracts are of great potential. Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and agreements contained therein exist across a distributed, decentralized Blockchain network. Smart contracts permit trusted transactions and agreements to be performed among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.

Maybe someone still doesn’t understand it enough. For example, in a general contract, assuming that companies A and B signed a contract, A breached the contract during the contract period, causing great losses to B. B wanted to get back his own rights and then he sued the court. Even if B wins, after the judgment comes into force, he needs to apply to the court for enforcement, including filing a case, providing property clues, and so on. Each participant was very tired throughout the whole process, especially the B who was the victim. But smart contracts can make it become easier. The difference between a smart contract and the traditional contract is “intelligence.” It does not imply in human subjective thoughts. Instead of acting by code. Once an event triggers the terms of the contract, the code is automatically executed. Namely, if the conditions are satisfied, it will be implemented and whether the person agrees or not.

The necessity of smart contract.

In the real world, contracts are deemed to be effective only after they are printed in black and white; while in the network, contracts are recorded in code. However, whether in the real world or in the network, there is a shared loophole in the contract — — trust. No matter it is a bank or any institution, it is not a 100% risk-free object. Once they breed the idea of doing evil, the consequences are unbelievable. Now we use a system that can solve the trust problem while guaranteeing contract performance. Blockchain technology has the characteristics of decentralization, irreversibility, and high reliability, which perfectly constitutes the necessary conditions for real smart contracts.

The principle of smart contract

Blockchain technology brings us a system with decentralization, trust, no falsification, and high reliability. In this environment, smart contracts include transaction processing and preservation mechanisms, as well as a complete state machine for accepting and processing various smart contracts; and transaction preservation and processing are dealing with the blockchain. Processing mainly contains these data that need to be sent; but events are descriptions of these data. After processing and event is passed to the smart contract, the resource status of the contract resource will be updated, then triggering the smart contract to perform state machine judgment. If one or more actions of the trigger condition in the automatic state machine are satisfied, the contract is automatically executed by the state machine according to the preset information. According to the trigger condition contained in the event description information, the smart contract system automatically sends out preset data resources and events including trigger conditions from the smart contract when the trigger condition is satisfied; the core of the whole smart contract system lies in the smart contract, The way the transaction and event is handled by the smart contract module, going out or a group of transactions and events; the smart contract is just a system consist of transaction processing modules and state machines. It does not generate smart contracts, nor does it modify smart contracts; it exists only for the sake of a set of complex digital promises of triggering conditions can be properly implemented according to the participants’ will.

Blockchain-based smart contract construction and execution are divided into the following steps:

1. Multi — users participate in formulating a smart contract;

2. The contract is spread through the P2P network and stored in the blockchain;

3. Smart contracts built by blockchain are automatically executed.

the Smart Contract of InterValue

Built upon the smart contract and the Moses Virtual Machine (MVM), InterValue takes a similar idea as the hierarchical design of the computer storage system and supports both the Declarative Turing-incomplete smart contract and the Advanced Turing-complete smart contract. The users choose between the two kinds of smart contracts taken into account their experience and trade demands, hence achieve the balance between the safety, functionality, complexity and cost. The declarative contract is easy to deploy, with a high level of safety and close to legitimate contract statements. The advanced contract is more difficult to deploy, and mostly used for developing the DApp with a logic of higher complexity. The two smart contracts have different charging schemes. The declarative contract charges according to the number of bytes being made, while the advanced contract charges according to the number of INVE tokens being consumed. Smart contracts, we design Moses virtual machine (MVM) which supports declarative non-Turing complete contract as well as advanced Turing-complete contract programmed in Moses language. MVM is able to access off Blockchain data conveniently and securely, and supports issuance of third-party assets, which can be integrated into applications in terms of public, permissive (private) or consortium (hybrid) Blockchain.

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