In the context of digitalization, “everyone” or “many“ talk about ”smart“. If we are talking smart applications, the smart contract plays an important role.
Such talk gives me pause and, again, I would like to say “no more buzzwords”! Because if technological progress is per se smart, then this sounds too easy to me. For me, digitalization is simply technological progress. I want to know the real meaning of the word “smart“ and what a “smart contract“ is supposed to be.
For me, the first step towards knowledge is that I ask people who (would have to) know about it. If that is not good enough, I will start hunting for knowledge online.
The first person I ask is a very highly esteemed (German) employee of a Chinese concern that sells exclusively “smart” products. Her reply to my question “What is the meaning of smart?” is simple and sounds reasonable.
”If a product has a WLAN interface and can access the internet, then it is smart in the eyes of the Chinese.“
So: everything that does IoT (Internet of Things) is smart. Very easy. Basically, IoT is smart. She also has a good example for me:
”A set of scales is a set of scales. But as soon as it is part of the wonderful IoT world, it is a smart set of scales “.
I can understand that. Now I know the meaning of the word “smart”. At least mostly.
A computer science professor provides me with the explanation of the term “smart contract“ and with information about what a central role the so-called “oracle“ plays. He is good at explaining and I understand it. At the end of this article, I will relate it to you.
Yet, I am not totally satisfied. After all, I would also like to explain to other people what “smart” and a “smart contract” means. And I certainly would not wish to tell lies. How would I know if the Chinese are correct? And how did the professor gain his knowledge?
He may simply have used one source that looked plausible to him, but said source might not really be a relevant one. How thoroughly did he examine said source? Or maybe he invented the explanation himself and nobody else knows it?
And the many Chinese on this world define “smart contract“ totally different from how my processor defines it.
So I now start travelling through the internet and hunting knowledge. Certainly, Wikipedia will have an entry. If there is no German Wikipedia entry, then there will certainly be an English Wikipedia entry.
It must be said about wikipedia that it happens quite often that the entries are nowhere near perfect. That is no surprise. I know no encyclopaedia that is totally free of nonsense. When I was young, I had two dictionaries – one from the FRG and one from the GDR. There was a lot of nonsense to be found in both of them – as I, as an citizen of the FRG, saw it, even more so in the GDR dictionary than in the FRG dictionary. But then, people living in the GDR may have seen this differently.
Incidentally, I really enjoy looking for “nonsense“ in a heavy encyclopaedia. I often find great entries. Perhaps the task that remains for the old encyclopaedia is to show people how much nonsense they used to believe and still believe today.
Now I really want to know the meaning of “smart“ and the definition of a “smart contract“. So I look online. On typing Smart, I find a link to wiktionary and the definition of “smart“ as: adept, cuning, cute, resourceful, elegant, good-looking and spirited along with synonyms such as keen, diplomatic, experienced, adept, agile, polished, experienced, cultivated, clever, experienced, sure, tactical, extensive, open-minded, urbane, agile, distinctive, chic, elegant, fine, posh, classy, attractive, dashing, spirited, stylish and courtly. Isn’t that nice? Except – I ask myself the probably stupid question what all this has to do with digitalization.
So I continue with my search, this time I type smart contract. And in the German Wikipedia, I find an article that I would not necessarily call total nonsense, but perhaps a little incomprehensible.
The second entry on google gives me a much-read Bitcoin page with an actual explanation of what a smart contract is. The heading is:
“Smart Contracts are the central part of block-chain technologies. They are responsible for a decentralized execution of contracts and are supposed to make the network consistent.“
And the article is in the same vein. Ouch! Perhaps this is actually more nonsense than just incomprehensible. This is not what I have been looking for.
I remember the example of my friend the computer science professor. He explained it like this:
Let us assume that the partners who signed a contract are “one” car insurance and a “car owner”. A normal contract about the insurance of a car becomes a “smart” contract if the contract contains a special condition that depends on a third element – the so-called “oracle”. The oracle is an important part of the contract. It informs both partners about changes, its publication automatically causes a change in the content of the contract.
The Flensburg Federal Office for Motor Traffic can be the oracle. If there is something in the contract about the regular fees being dependent on how many bad points the owner of the car has in Flensburg and if the insurance can automatically change the account of the insured party by using a fixed “algorithm” after something in his Flensburg account has changed, then we have a “smart contract”.
This is how all companies that insure cars in Germany could automatically do business with a provider and diverse oracles. They would no longer need clerical assistants. That is certainly a “smart idea“.
But we already have this. It is called RPA (robotic process automation) and it could help reduce costs. And it could help to make employees redundant, because they are what costs most. And it does not have anywhere near as much to do with algorithms – as many think – as with programming.
Well, I like abbreviations even less than buzz-words (after all, they were spread by the Nazis). And I do not feel like further elaborating about RPS and similar things. I will soon do so. Let me put an end to this article at this point!
(Translated by EG)