Smart Contract is a term used to describe a computer coded program that can self-execute the exchange of money, content, property, shares, or anything of value.
It is arguably the most important application on the Ethereum blockchain, and is probably why Ethereum has grown to become the monster it is today, but what exactly is a smart contract?
History of Smart Contracts
Smart contracts were first proposed in 1994 by computer scientist, Nick Szabo, who also created a virtual currency back in 1998 called ‘Bit Gold’.
This has led many to conclude Szabo is actually Satoshi Nakamoto, something the computer scientist denies.
Back then, Szabo defined smart contracts as ‘computerized transaction protocols that execute terms of a contract.’ (Szabo, 1994).
He also claimed that smart contracts built into cryptographic infrastructure would ‘minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries.’
He went on by saying smart contracts could represent all synthetic assets, such as bonds and derivatives, and could even be embedded into smart house and car ownership.
The smart contract would be a legal representation of the home ownership certificate that we have today, whereas the car smart contract could even be programmed to actually work the car. Read More at Ethereum Nexus