Smart contract

Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause. Smart contracts usually also have a user interface and often emulate the logic of contractual clauses. Proponents of smart contracts claim that many kinds of contractual clauses may thus be made partially or fully self-executing, self-enforcing, or both. Smart contracts aim to provide security superior to traditional contract law and to reduce other transaction costs associated with contracting.

Examples

Digital rights management schemes are smart contracts for copyright licenses, as are financial cryptography schemes for financial contracts. Admission control schemes, token bucket algorithms, and other quality of service mechanisms help facilitate network service level agreements. Some P2P networks need mechanisms to ensure that remote strangers contribute as well as consume resources, without requiring the overhead of actual legal contracts. Two examples of such protocols are the storage trading protocol in flŭd backup and the Mojo Nation filesharing auction. Cryptographic authentication of one product part by another has been used, in lieu of a contract between manufacturer and consumer, to enforce tying strategies.