Author name: @nobumei (https://twitter.com/nobu_mei)
<aside> 💡 This page describes smart contracts.
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In the previous sections, we learned that copy-prohibition technology has given rise to "tokens," a medium of value that can be called an an upwardly convertible form of stock. This section describes "smart contracts," which are programs that handle those tokens.
When copy-protection technology is used against a program, it is called a smart contract. Recently, QR payment and credit card payment have become popular in Japan because of the cashless trend, but the major difference between these electronic payments and cash payments is the ability to program money. It is commonly known as programmable money.
This programmable money and blockchain technology are the most powerful combination.
In Chapter 1, we talked about how BTC was created when copy-prohibition technology was applied to "currency". Now, what happens if we apply program to copy-protection technology?
The program itself becomes copy-prohibited, making it impossible to falsify the program itself. Programs can be written inside to do jobs like "send data when you pay," and once written, they will execute them reliably without making mistakes, unlike humans.
The reason why things like "the destination for paying money has been changed" or "I paid money but the product was not sent" happen on phishing sites is because the site has been hacked and falsified. However, if the program cannot be falsified, such an incident will not occur.
This program with a copy-protected status is called a smart contract. A transaction that "delivers the goods when paid" can be regarded as a kind of contract, and once written, it is a "contract" that is fully executed automatically.
The general flow of a contract until it is executed involves the following four steps.
If you work in a company, this may be very easy to imagine. A smart contract is a program that automatically executes the 2 and 3 steps of contract execution, invoicing, and settlement when the event indicated in the contract occurs.
If this procedure is done by a human, there is room for human error, and if it is only automated by a program, there is a risk of hacking. So using smart contracts is safer for both parties to the contract.
Contract Execution Flow
Imagine the scope of this effect. First of all, tasks such as invoicing and transferring funds are eliminated, reducing the labor costs associated with these tasks. Furthermore, cash flow will be dramatically improved because the event occurs at the same time as the settlement is completed.