What is a Smart Contract and Why It Should Contain Less English

The reason we love smart contracts is that they can enforce themselves through the execution of code. The problem is that English appears in smart contracts, but computers can’t execute in human language. Nevertheless, we need English to have contracts about real-world stuff.

Now, let’s get something out of the way. When we say “English,” we mean any spoken human language with which contracts are written.

If a smart contract contains English and there is a dispute, humans must resolve the English portions of the smart contract. This means the smart contract can’t enforce itself solely through the execution of its code. As long as that is the case, the reason for the smart contract’s existence is diminished. This is why smart contracts should contain less English.

Or is it fewer English? Let’s ask Ser Davos.


Enough kiddin’ around. This is serious stuff.

In the least painful way possible, we’ll explain to you three things:

  1. What exactly is the difference between a smart contract and a regular contract,
  2. How we, Smarter Contract, configure these contracts to minimize the use of English, and
  3. Why our approach is better than the alternative… a smart contract using more English.


What is a Contract?

A contract is basically the following:  If VARIABLE then OUTCOME 

Example:  If YOU PAINTED MY HOUSE then I PAY YOU $100.

If you’ve used Excel or have written any code, you’re familiar with “if-then” formulas.

In the example, YOU PAINTED MY HOUSE is the VARIABLE, whose value can be TRUE or FALSE (either you did paint my house or you didn’t).

If it is TRUE, then the OUTCOME of I PAY YOU $100 is executed.

A regular contract expresses this structure in English.


Smarter Contract’s Approach

Keeping in mind the contract structure above, Smarter Contract requires the “if”, “then”, and OUTCOME to be represented in computer code, and the VARIABLE to be represented in English.  

If there is a dispute on a VARIABLE (e.g. whether you painted my house), then through Smarter Contract, human experts determine the value of the VARIABLE (whether it is TRUE or FALSE). Once the VARIABLE’s value is determined, Smarter Contract passes it through the “if-VARIABLE-then-OUTCOME” logical structure, which then generates an OUTCOME.

Real-life smart contracts can have logical structures more complicated than “if-VARIABLE-then-OUTCOME,” but the basic idea is the same. For instance, if a smart contract has multiple disputed VARIABLES, then multiple sets of human experts determine the values of those VARIABLES.


Smarter Contract vs. Alternate Approach (More English)

An alternative to Smarter Contract’s approach is that the contract is written entirely using English (without any code). That English-language contract is copy-and-pasted into a smart contract. If there is a dispute, then human adjudicators review the entire English-language contract and determine the proper OUTCOME. The smart contract then generates the OUTCOME determined by the adjudicators.

The Smarter Contract approach is NOT to determine the OUTCOME of an English-language contract. The approach is to determine only the value of the VARIABLES within a smart contract and to require that the smart contract terms be written in program code. The benefits of this structure are explained below.


Benefits of Smarter Contract’s Approach

It is easy — but wrong — to make a smart contract that is simply an English-language contract pasted into a smart contract.

That would be like creating a website by pasting an image into a website editor. Neither requires more than entering a non-machine-readable object into a computer program. That is clumsy and anachronistic, like a horse-drawn automobile.

As shown in the image below, that type of website fails to take advantage of functionality that would allow it to be dynamic. In the same way, an English-language contract within a smart contract fails to take advantage of the functionality of smart contracts that allows them to execute automatically.


Image-Only Website

To make a contract execute automatically, the terms of the contract must be coded into the smart contract, as required by Smarter Contract’s approach.

  • The power of a coded contract is that the parties to the contract can be more certain that (a) the agreed-upon outcomes will occur and (b) the cost of enforcing the contract will be low. The reasons for these benefits are explained below.
  • Creating a contract in this way — the correct way — is like creating the dynamic websites we are accustomed to seeing, as shown in the image below.

Dynamic Website


Bottom Line

Smarter Contract:

  1. avoids the need for humans to interpret the law, and
  2. minimizes the scope of human involvement.

With Smarter Contract’s approach, the interpretation of smart contracts is more certain and comes at a lower cost compared to traditional methods. This is because it is governed by computer code. Compared to humans, computers are lower cost and produce exact outcomes. That said, although smart contracts are governed by computer code, determinations of the values of VARIABLES (e.g. percent of work completed) must be made by humans and fed into smart contracts.

Smarter Contract is selling up to $2.5 million (USD) of SMTR tokens, which are required in order to use its smart contract dispute resolution service. Learn more at www.smartercontracttoken.com.

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