Smart Contracts – a bringer of salvation, or a better database Trigger? (Part 1)

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Since Vitalik Buterin Ethereum has developed, are Smart Contracts without the block Chain Ecosystem. But what is behind the “smart contracts”? In five Parts, Ingo Rammer explored for us the implications of the technology. Today: The technical Background of Smart Contracts.

The technical Background of Smart Contracts

Anyone who has asked around in the last few months in the business environment of block chains, the in the know: Smart Contracts are almost solver magical problem of the automated billing of solar power and other goods deliveries to the self-employed to Trigger contract payments met in closely monitored areas such as the agreed maximum temperatures of a cooling chain. The application possibilities are versatile, seem even endless. But what’s true and what’s Hype? And most importantly: What is technically really behind it?

To understand the role of Smart Contracts, it is important that we first outline what a Blockchain actually is. At the most basic level of content is a list of signed statements of the individual participants. These statements can not be changed at a later point in time, either technically or deleted. In practice, the detect used for this purpose, a machine-readable transactions Is a transaction log of a database, the current state of all the data of the overall system. Each individual Node in a Blockchain-network stores – also just like a database – the current state Is in a second Format that is easier for queries.

So far, So good. But why use a Blockchain, instead of a replicated database? The short answer lies in the Timing of the rule verification (on a technical and on a business level) and in the error handling. This is pushed in a Blockchain in comparison to the database forward in time and is already carried out at an early stage during the transaction and not later when you Replicate. That is precisely the task of Smart Contracts, the run is distributed in a Blockchain network.

A block chain, suitable for application would be the porting of telephone numbers between mobile operators. A section of it gives a deeper insight into the underlying processes: in simple terms, in Germany, a Central database is the assignment of numbers to the underlying mobile operator. How should you proceed if you want to manage this information and the underlying processes, instead, on a decentralised basis in a Blockchain network?

Example Number Porting: The Network

For the present application, it is useful to establish a private Blockchain network as an implementation platform. Unlike a public network such as Ethereum, access to a private network is only allowed to selected participants. In our example, both the Federal network Agency as well as the larger mobile providers, participants in the private Blockchain network. Each participant runs a complete Node in the Blockchain network. Smaller suppliers who do not want to engage in these efforts, they would use the service by connecting to one of these network participants.

As a technical platform for such a private Blockchain-network, Open-Source-Tools, Hyper Ledger Fabric [1] or Parity [2] (Ethereum derivative), for example. Both infrastructure variants can now be run in a Proof-of-Authority-configuration. This consensus algorithm works differently than the well-known CPU-intensive Proof-of-Work Mining Algorithms that, for example, uses Bitcoin.

Ingo Rammer is a Speaker at the Blockchain Technology Conference from November 19-21. November in Berlin. There you can collect practical experiences with international experts. In addition, there are Live Demos and case studies of real implementations, individual interaction with experts and Networking opportunities with people from various industries. It also has a variety of Sessions, Workshops and lectures of international speakers.

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