Szabo is undoubtedly a cult figure amongst the crypto community. He coined the term “smart contract” back in 1994, was the creator of the Bit Gold project in 1998 and a prominent member of the infamous cypherpunk mailing list – where Satoshi Nakamoto first published the Bitcoin whitepaper in late 2008.
Our very own Coin Rivet contributor Dominic Frisbey also called out Szabo as Satoshi in 2014 by concluding “there is only one person in the whole world that has the sheer breadth but also the specificity of knowledge and it is this chap.” Szabo replied by saying “Thanks for letting me know. I’m afraid you got it wrong doxing me as Satoshi, but I’m used to it.”
One thing that is certain is Szabo’s commitment and contributions to the field of cryptography and computer science over the last 25 years. These have laid the foundations on which many cryptocurrencies are built on top of today.
Who needs contracts
Szabo’s Blockchain Live 2018 talk started out by explaining the concept of social scalability for trust. He spoke about trust breaking down across a social fog after the number of participants in a group got too large. To maintain a high level of trust over a bigger scale, groups of actors naturally turned towards the creation of contracts between participants.
Contracts have enabled the ability for participants to agree on win-win arrangements but they also have their shortcomings. These include the need for third-parties and other intermediaries to enforce clauses and resolve disputes.
A smarter way?
Smart contacts, on the other hand, are hard-coded rules-based contracts enforced solely by code. An example of a smart contract live today on the Bitcoin blockchain is Multisig transactions (Bip11). Multisig works by requiring more than one participant to provide a private key signature to enable a transaction to happen. Without the correct combination of digital signatures, the contract will not allow any funds to move no matter what.
Szabo’s talk went on to discuss the different ways smart contracts could be customised. He spoke about the types of financial products (loans, bonds, futures, options, swaps) offered today that could be ripe for disruption through the coming wave of smart contracts, built on top of public blockchains.
After the talk concluded I was left thinking to myself: if I ever had a choice between a smart contract or a smart lawyer, what would I want to choose?
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.