What is a Smart Contract?

In this episode, we are going to dive, in more detail, into smart contracts. We have discussed them in many many episodes but we thought we would dedicate an episode in order to really understand them and discuss ideas for us small business owners.

Ethereum – https://ethereum.org/en/
Open Sea – https://opensea.io/
Solidity – https://soliditylang.org/ 
Precisely Contracts – https://preciselycontracts.com/

Nick Szabo – https://twitter.com/nickszabo4
Olga Mack Ted Talk – https://www.youtube.com/watch?v=pA6CGuXEKtQ

7. What is blockchain? https://www.womenofthemetaverse.co.uk/what-is-the-blockchain/
21. What is the FlyFish Club? https://www.womenofthemetaverse.co.uk/what-is-the-flyfish-club/


We hope you enjoyed the show and that it inspired some ideas. Join us next week to delve further into the Metaverse

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This podcast is for entertainment and education purposes only. We do not give any investment or financial advice and we strongly recommend you always DO YOUR OWN RESEARCH.


Show Transcript

[00:00:00] Cheryl: Welcome to Women of the Metaverse. I am Cheryl Laidlaw. 

[00:00:08] Angela: I am Angela Harkness. We have been and are still on a journey to discover the Metaverse with 3.0 NFTs and anything that we are required to know to join this world 

[00:00:20] Cheryl: from. From this podcast, we will help you to unlock how the manifest is going to impact your brand.

[00:00:27] Cheryl: Your business and even your personal life. 

[00:00:31] Angela: Join us as we take the mystery out of this new digital universe.

[00:00:38] Angela: Welcome to Women of the Metaverse. In this episode, we are talking about smart contracts. We have mentioned this many, many times in any episode where we have discussed NFTs and the blockchain. We would also have talked about smart. In this episode, we wanted to go into them in more detail so you can [00:01:00] understand how they really work.

[00:01:02] Angela: I am continually amazed when we start to do research for each episode on how old some of these concepts or ideas are. Smart contracts are a perfect example of this. Nick Szabo have no idea if I’m saying that right or not, is considered a pioneer of modern day computer. and he put forward the idea in the 1990s.

[00:01:23] Angela: So Cheryl was still at school then? I was not. But you were , so that’s how long ago it was. So, and also a little bit of, this is very nerdy gossip, but Sat Tashi. Nakamoto is the inventor of Bitcoin. We have showed you the white paper. It’s on one of our show. But nobody actually knows who this person is, and it’s rumored that Nick Szabo is actually Satoshi Nakamoto, which he has denied, but the rumor still exists, so we may find out anyway.

[00:01:56] Angela: Cheryl, what is a smart contract? [00:02:00] As 

[00:02:00] Cheryl: per all contracts, it is an agreement between two or more parties. If someone sells their house, there is a contract between the buyer and the seller. If I agree to create a website for you, there are terms. To that agreement, you provide your information and pay the fee as part of the contract, and I build and deliver a working website for you.

[00:02:25] Cheryl: So basically you could not go through life without having to deal with contracts. The difference with smart contracts is that they are coded on the blockchain. There is no piece of paper to sign between two parties and in her TED Talk how smart contracts will change the world by Olga Mac. She explains that they have only three functions.

[00:02:52] Cheryl: They store rules, they verify rules. And they self execute rules. [00:03:00] Simply put, a smart contract is code that does something. If something else happens, like if this, then that. The perfect example of this as Olga, Goes on to explain is if you think of a vending machine programmed into the vending machine is the amount you need to pay against the code.

[00:03:25] Cheryl: For example, you press D two, pay you a pound or dollar, and you get the goody. For that code, what is happening in the background is that vending machine verifies that the amount paid matches what is required for the code, and it executes by releasing whatever’s is in whatever’s in that slot without any intervention by a third party.

[00:03:48] Cheryl: That is how a smart contract works. So Angela, why smart contract? 

[00:03:56] Angela: So the way that current contract works means that [00:04:00] there is always a third party that is required. If you buy a house, there is a huge amount of paperwork that needs to be gathered and signed, and you require the help of a solicitor and lawyer, particularly if you are in England.

[00:04:14] Angela: It’s a nightmare. Any time you have to go somewhere, sign documents, or wait for contracts to be created. It is time consuming and cost. Within both of our businesses, Cheryl and I have terms and conditions, and if we do business with someone and they don’t meet those terms and conditions, it would require us to get a third party involved.

[00:04:36] Angela: It could mean a letter sent from a solicitor, or in the worst case, taking someone to court. Basically smart contracts work on the basis of removing third party involvement. If this, then that you meet a requirement, the contract is execut. . For example, if you are a coach, you could use smart contracts in a way that the client pays the upfront fee, which [00:05:00] executes the paperwork to be sent for them to complete.

[00:05:03] Angela: Maybe something about themselves, any paperwork you require to help with the coaching, and then once the paperwork complete and return, it prompts the smart contract to open up the calendar for the client to book their allotted. , this is a very simplistic view, but that kind of process could mean that you do not spend time chasing clients or it stopped the backwards and forwards.

[00:05:28] Angela: That is so time consuming. What about you and because this is always a problem for you with websites. Yeah, I mean 

[00:05:35] Cheryl: automation and systemizing everything, um, does require lots of backwards and forwards. So yeah, this would be fantastic to have set up. And the fact that I haven’t even got something set up at the moment, it’s only a matter of 

[00:05:51] Angela: time.

[00:05:51] Angela: Yeah, yeah. It could make a big difference cuz people could then, Set times they have to do something by, or if they don’t do it, they don’t, they [00:06:00] can’t move on to the next day. I do 

[00:06:01] Cheryl: like a deadline, 

[00:06:02] Angela: Angela, I know you do Cheryl . I know, but also I think for clients it becomes helpful anyway. I think creating a website is like redoing your CV or you know, upgrading your cv.

[00:06:17] Angela: It’s one of those tasks where, for example, having to write the content for your website. you. It’s one of those things you put off and you put off, and I think maybe those deadlines could be helpful to clients anyway, couldn’t 

[00:06:29] Cheryl: they? They’re massively helpful. Yeah. For any, I love a 

[00:06:32] Angela: deadline. Yeah. Love a deadline.

[00:06:34] Angela: Okay, so what are some of the advantages of smart contracts then? 

[00:06:39] Cheryl: Smart contracts are more, more secure because they sit on the blockchain. If you want to understand, then listen to episode seven. What is the blockchain? The link will be in our show notes. As with anything on the blockchain, smart contracts cannot be changed once they’re coded.

[00:06:56] Cheryl: That is it. But because of the way in which the blockchain works, it [00:07:00] means that there is a record of everything that happens. Also the same thing goes for transparency cuz if they sit on the blockchain, they are very easy to find and 

[00:07:10] Angela: read. Another obvious one, which we really just kind of talked about is speed.

[00:07:16] Angela: The fewer people involved increases efficiencies and cost savings. From a small business view, as in the example I gave about coaching, there is a cost saving to not have to chase clients for the information you need or payment. and potentially it could mean you either take on small clients or from a small business perspective, it could mean you can create more balance.

[00:07:40] Angela: Cuz as we all know, small business owners, it can just be so time consuming and all consuming that you never seem to get a break. If you think about the Fly Fish Club membership, which is episode 21, you purchase the membership as a token. The smart contract activates to say [00:08:00] you are now a member and what that entitles you to.

[00:08:03] Angela: There is no signing of forms or getting pictures for a membership card, and at any point anyone can see that smart contract to show that you are a member and what you en you are entitled to as part of that membership. There is also an accuracy element to this. The completion of several forms can help to eliminate or can help be eliminated by smart contract.

[00:08:26] Angela: It is one we talk about all the time as well, tokens in your business. It just opens so many doors to so many ideas that the use of smart contracts and tokens could really upgrade your business. We’ve talked about the advantages, but what are the disadvantages, Cheryl? 

[00:08:47] Cheryl: The need for legal contracts and agreements by people and organizations that understand the law is 100% still required.

[00:08:58] Cheryl: Contracts do not override [00:09:00] law. So if someone challenged it, the ease and speed at which you can complete a transition transaction may be an advantage, but it could cause problems further down the line. Also, you now involve a different third party as someone will need to code a smart contract for you.

[00:09:20] Angela: Yeah, you maybe not get rid of them so much at the moment. The other thing that could be seen as a disadvantage, but we also talked about it as an advantage, is that smart contracts cannot be changed. As we explained. Once they are coded, you cannot go back and correct them. The only way to change them is to write another smart contract that cancels the previous one and puts a new one in.

[00:09:47] Angela: This can be frustrating, especially if it was for something minor. The advantage as we discussed, however, is that’s on the blockchain, so every different revision is there for you to see, [00:10:00] so there’s no discrepancies around the change and what happened and when it happened. Okay, so what other disadvantages are there, Cheryl?

[00:10:12] Angela: A disadvantage 

[00:10:13] Cheryl: is that smart contracts are very rigid. There is no way in which to negotiate a lot of them because there is no face-to-face or third party. If you don’t like the terms, you may be forced to walk away from something that you want, or risk terms that you are not a hundred percent sure 

[00:10:30] Angela: about.

[00:10:31] Angela: You know what this reminded me of? We talked about this before. There was, I think it might be Tiffany that brought out a jewelry line using crypto punks. Mm-hmm. so you can have your, your crypto punk made into a piece of jewelry. , but there was something in the contract that said they then had the right to use that in a commercial way.

[00:10:54] Angela: And I was thinking, Hmm, if you didn’t like that, there was no way to go back [00:11:00] And changing it. Say of changing it. Yeah. That’s what we are talking about with smart contracts say it’s very set, which it happens in most cases in life. There’s the most contracts or you can’t really negotiate, but you have to be very aware again with smart.

[00:11:16] Angela: you might even not know who to go to to say, I’m not happy with this contract, cuz it’s just there on the blockchain. Yeah, 

[00:11:23] Cheryl: no it’s good. Also because smart contracts are coded on, if this, then that principles, it is difficult to write and code terms that are not set. So for example, anything that is fluid, like dates and shipping costs makes it more difficult to code.

[00:11:42] Cheryl: Another disadvantage is that blockchains cannot communicate outside of their networks. So developers use Oracles which pull in information from the outside world. So for example, volumes of products or stats from a report. The problem [00:12:00] with Oracles is that you are relying on the outside data to be correct, that could cause 

[00:12:07] Angela: problems.

[00:12:08] Angela: So one of the ones. , um, I was doing some research round is people talk about insurance in terms of smart contracts and the information you rely on for insurance companies to say, yes, this didn’t happen on this date, or this did. For example, whether if say you are a farmer and you get a payout, if your crops are ruined because of an extreme heat wave or flooding or so,

[00:12:37] Angela: If the Oracles aren’t correct based on the weather on that day in your area, then that could cause problems. So again, it, it sort of could be something that is. Needs to be dealt with. I guess Oracles need to be more up as up to date as possible. Mm-hmm. , 

[00:12:58] Cheryl: well, there’s always [00:13:00] advantages and disadvantages to anything we use.

[00:13:02] Cheryl: And smart contracts in their use are relatively new and the whole process, the system experience, knowledge and tools to be able to use them are developing. So therefore over time they become more accurate. and more advanced, and I’m sure we’ll be able to have a piece of software that we’ll be able to create smart contracts really easily.

[00:13:26] Cheryl: In fact, uh, it’s a matter of time. 

[00:13:30] Angela: Yeah. I mean it, when we talk about it, we are talking. This is almost weeks at toddlers stage, isn’t it? Yeah. You know, it’s so new. So at the moment, the most common place for smart contracts to sit is Ethereum. We have talked about this so many. , which is a blockchain network, and solidity is the most common smart contract programming language.

[00:13:54] Angela: The one we have mentioned the most if you are interested in tokens is opens. See, to upload [00:14:00] your NFTs and use their smart contracts is really easy. Precisely. Contrast is actually a company I found that enables businesses to use smart. with a very simple interface. It is worth having a look at their website just to see how they operate.

[00:14:17] Angela: I think they’re set up not so much for small businesses, for bigger businesses. Okay. But again, it actually looks quite simplified, so it’s worth having a look. If you are serious about using smart contracts, then you want to look for website web designers that understand tokens and smart contracts. So you can go to all of these, Cheryl.

[00:14:37] Angela: In the same way, you might want to get small jobs done by a graphic designer. You can hire smart contract developers from all the user places where you would go to for graphic designs or logos or whatever. 

[00:14:51] Cheryl: As with all of this, as Angela said, we really encourage if you do nothing else, but do some research around it because again, it is [00:15:00] technology that is going to grow, and the more informed you are about it, the more and more willing you are to use it.

[00:15:08] Cheryl: We hope you’ve enjoyed this episode. Join us next week as we continue our journey into the meta. Bye for now. 

[00:15:15] Angela: Bye.

[00:15:19] Angela: Thank you for listening to this episode of Women of the Metaverse. 

[00:15:24] Cheryl: You can find all information, links and people we talked about in the show notes on our website. 

[00:15:30] Angela: If you have enjoyed this podcast, please comment and 

[00:15:33] Cheryl: subscribe. Join us again in the next episode as we continue this exciting metaverse journey.