Background known as the distributed ledger. This development

Background to Smart contractsThe idea of Smart contracts was first developed by Nick Szabo in 1996. Szabo’s concept was to create protocols to transfer data using complex mathematical algorithms. These algorithms would automatically process transactions if certain conditions were met. The process would be a fully automated one.

In 1996 the technology did not exist for the concept to be fully realized and put into practice.In 2008 Bitcoin cryptocurrency was conceived and with it came blockchain technology which was a digital, distributed and decentralized database also known as the distributed ledger. This development would lead to the platform for the creation and development of Smart contracts.

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A few years later the Ethereum platform appeared and this would make it possible for Smart contracts to be developed, used and put into practice. Smart contracts were designed to be stored on the blockchain, be fully automated and could either replace or substitute traditional contracts. Program languages like C++, Python and Java amongst others can be used to program Smart contracts. The same rules that apply to any legal contracts also apply to Smart contracts i.e.

the same legal obligations, penalties, rules and benefits. Smart contracts also provide additional security, reduces costs and delays that can be associated with traditional contracts.


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