Smart Contracts…Still Waiting

Allan, COO of Medallion XLN

For those of you who are history buffs, 1994 was an amazing year. Full of memorable events in pop culture, sports, world politics, and technology. Consider these milestones:  

• Brazil wins the World Cup in the United States

• Some guy evades police in a white Ford Bronco

• The world falls in love with Tonya Harding

• Computer scientist, Nick Szabo, introduces Smart Contracts

Nick Szabo

The best analogy I have heard to describe Smart Contracts is that of the gas station pump. Let’s say that you are going on a long road trip. After desperately searching through your seat cushions to come up with $100, you pull up to your local gas station, ready to fill up your tank. As you step out of your yellow Pontiac Aztec, before you, stands a series of Smart Contracts in physical form. Follow me on this conceptual journey. The gas pump is a machine that has been programmed to facilitate a particular transaction. You submit your payment, select the gas type, transfer the gas from the pump to your car, and expel a few choice words to the gas gods about these crazy prices. Because we are not in New Jersey or Oregon, there is no third party gas attendant to help facilitate this transaction. It is a trusted system that is encoded into the machine. Conceptually, this is a Smart Contract.  

The Smart Contract concept is becoming more and more popular. When was the last time you gave money to a toll taker? Are you noticing more self-service checkout machines at your local grocery and big box store? So why hasn’t the popularity of Smart Contracts risen in the blockchain space? The answer…it's too freaking complicated.

• Are there any transactions that require another person to validate the quality of an item to ensure the user is getting what they paid for?

• A lay person cannot easily review the terms of the contract unless they are an expert in code (e.g. Solidity)

• Parties cannot make adjustments to the Smart Contract if needed

• Transactions are facilitated via cryptocurrencies, which may be too complicated to average users

• Fees associated with Smart Contracts and blockchain may deter users 

These issues are not insurmountable. Each year breeds new innovations, forward thinkers, and practical solutions. We didn’t even have the World Wide Web in 1994, but look how far we have come. We just need a few smart people to make Smart Contracts more accessible in the blockchain. Just don't have me wait another 28 years!

The internet in 1994

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