Smart Contracts and Ricardian Contracts

This article hopes to serve as an introduction to Smart and Ricardian Contracts, two blockchain related technologies that are gaining a lot of deserved attention.

Smart contracts were first proposed in 1994 by Nick Szabo. They were envisioned to be computerised transaction protocols executing contract terms, or, self-executing contracts with the terms of the agreement written directly into code, once agreed upon this code is added to a distributed blockchain network, making it tamper proof and verifiable. This process allows buyer and seller to interact directly over a trusted medium.

We can see variations of Smart Contracts all around, with vending machines being a great example. When you interact with the vending machine you press the drink selection, if the minimum balance condition has been fulfilled (You’ve put money in), then you will receive your selected refreshment. Although much simpler than Blockchain related Smart Contracts, the essence is the same, if conditions are met, an event will be fired.

The difference between Smart and Ricardian Contracts is that Ricardian Contracts aim to focus solely on legal related matters.

Ricardian contracts