Smart Contracts with Street-Smarts
A smart contract is a digital agreement that enforces itself. The common example is a vending machine. You insert money and you can either (1) get your money back, or (2) acquire merchandise. Like a smart contract, vending machines are programmed once and then run forever.
Smart contracts have many advantages. They’re written in unambiguous computer code and are entirely self-contained. Unlike legal contracts, there is absolutely no need for an external authority to make decisions — smart contracts are run by a group of equal peers. No judges, no juries, no mediators. However, smart contracts are very hard to write correctly, once written are irreversible, and their influence is limited to cyberspace.
A smart contract is a way of making a deal by unambiguously specifying the parties and conditions involved. But what if some details about the past, present, or future are unknown? Like yesterday’s exchange rate of BTC/USD (according to the top 5 exchanges)? Or whether your flight will land on time tomorrow? This is where oracles enter into the equation. Smart contracts need oracles to resolve details that cannot be precisely known at the time the contract is written.
With an oracle, we can give our smart contracts street smarts. Like a vending machine that only dispenses hot chocolate if the oracle says the temperature dropped below freezing. Or a flight insurance agency that gives instant payouts if the oracle says that the flight was delayed by more than 30 minutes. By including a connection to real world events, smart contracts get much smarter. (…)
Via Hacker Noon (Doug von Kohorn) – read full article here: http://ow.ly/ri4A30jvHiI