Smart contracts, oracles and token standards

In 1994, an American lawyer and computer scientist named Nick Szabo offered an image that has become famous. A vending machine, he wrote, is a rudimentary contract built into the machine. You insert the exact amount, you press a button, the can drops. No seller, no lawyer, no court. The clauses execute themselves. Szabo called smart contracts those agreements whose terms would be written into a computer program capable of enforcing them automatically.

The idea waited twenty years for its tool. With Ethereum, launched on 30 July 2015, a blockchain became able to host and run arbitrary programs. The shared ledger described in the previous chapter gained a shared computer. This invention made RWA possible in their current form. A token representing a bond, a fund unit or a building is always a smart contract, that is, a small program that keeps the list of holders and sets the rules by which those holders can change.

What a smart contract is

A smart contract is a program deployed at an address on a blockchain. It has a memory, in which it keeps information such as each holder’s balance, and functions that users can call by sending a transaction. Once deployed, its code is visible to all and runs exactly as written on every computer in the network, all of which must reach the same result.