The History Timeline Of Smart Contracts: How They Came To Be

history of smart contracts cryptocurrency future

Digital technology continues to improve and transform daily to address society's evolving needs and challenges. It has been over a decade since cryptocurrency started booming and showing its potential across different countries. However, this already promising industry still welcomes improved methods to maintain security, sustainability, and accountability. 

The crypto industry had already stepped to the next level when smart contracts were created and implemented to strengthen accuracy in every transaction. 

A smart contract is a digital contract stored and encoded on a blockchain with the terms and agreement between buyer and seller. This can also systematise a workflow, starting the next actions when conditions are met. 

Smart contracts function by following simple "If/When… then…" statements encrypted on a blockchain. A network of computers is needed to execute a transaction when programmed conditions have been verified. A transaction could be storing a patient's profile, releasing funds, or issuing a ticket, and these are rendered to be traceable, permanent, and transparent. 

History Of Smart Contracts

In 1994, smart contracts were first proposed by Nick Szabo. He is an American computer scientist who is also best known for his proposed project, Bit Gold, in 1998. 

In his paper, smart contracts are compared to vending machines. Vending machines take in coins and dispense change and product according to the displayed price—making it a contract with the bearer. This means anybody with coins can participate in an exchange with a vendor. But still, smart contracts go beyond the vending machines since their encoded terms and agreements are controlled by digital means. 

In 2008, the first cryptocurrency, Bitcoin, was introduced by Satoshi Nakamoto. This digital coin was invented based on blockchain technology. Although the design of the technology initially stores information on the transaction, it still served as a motivation for developing smart contracts. 

In 2015, Ethereum was launched. It is a decentralised, open-source blockchain that elevated smart contracts to a foundational element of blockchain. 

In 2017, Belarus became the first ever to introduce and legalise smart contracts. 

In 2018, several states in the U.S. had passed the legalisation of smart contracts. The states include Arizona, Nevada, Tennessee, and Wyoming. 

In 2020, the Iowa House of Representatives passed a bill that seeks to legalise blockchain smart contracts. The bill's implementation would eventually lead to broader cryptocurrency regulation, suggested by Democratic Representative Steve Hansen. 

In 2021, the U.K. Jurisdiction Taskforce (UKJT) published the Digital Dispute Resolution Rules to be used for on-chain digital relationships and smart contracts in Britain. 

Today, the second-largest cryptocurrency, Ethereum, ranks first among the top smart contract tokens by market capitalisation. Behind this crypto are Cardano (ADA), Chainlink (LINK), Stellar (XLM), VeChain (VET), EOS (EOS), Neo (NEO), Tezos (XTZ), Algorand (ALGO), NEM (XEM), and more

Advantages 

● Speed And Efficiency – Once a condition is met, the contract is immediately executed. In most cases, it does not involve in-person contact to process paperwork, which also saves valuable time manually. 

Paper Free – In support of our first point, smart contracts empower the "go green" movement since these remove the need for many reams of paper. 

Security – Since the transactions use the highest level of data encryption, this makes them very hard to hack. 

Clear Communication – There can be no room for misinterpretation since there is a need for accuracy in detailing the terms and conditions between two parties. 

Trust And Transparency – Smart contracts are fully visible and accessible to all appropriate parties; no third party involved. This also removes any possibility of manipulation, error, or bias. 

Savings – Smart contracts remove the need for lawyers, witnesses, banks, and other intermediaries. 

Application 

As both blockchain technology and cryptocurrency continue to attract many industries, there are several of them that are exploring the implementation of smart contracts to their current operations: 

● Finance 
● Healthcare 
● Travel and Mobility 
● Real Estate 
● Publishing 
● Entertainment 
● Business and Corporate Governance 

Smart Contracts Conclusion

The future is bright for smart contracts. If you enjoyed this article, you might want to continue reading about the history and products of Bitcoin hard forks.

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