Applications of smart-contracts and smart-property utilizing blockchains

Abstract

Bitcoin, one of many cryptocurrencies, has in the last couple of years grown into a multi billion dollar industry. It is fully decentralized and utilizes a public ledger (blockchain), which allows for the currency to function without a central authority. As the Bitcoin protocol contains a programming language, it has potential to be used for much more than exchanging currency. This thesis is about exploring the possibility of combining cryptocurrency with a concept called 'smart-contracts'. The term smart-contracts was coined in a paper written by Nick Szabo in 1997, thus predating Bitcoin by 12 years. In contrast to paper based contracts, these are computer protocols facilitating an agreement between parties. We have put extra emphasis on two types of contracts: a generic type called `Double-Deposit- Escrow' (DDE), and one involving `smart-property'. DDE achieves a double deposit escrow within the blockchain, allowing users to perform business with untrusted parties with minimum risk of losing money. Smart-property may be described as the ability of property itself to be part of a contract. By refining Szabo's ideas using current technology, we have implemented a selfenforcing smart-contract executing the trade of smart-property referred to as the Smart-Property Ownership Exchange Protocol (SPOEP). It was implemented in Python and supports anonymous trades using Bitmessage, as well as NFC. We have analyzed our proposed protocol in terms of security and scalability, and compared it with related projects such as Ethereum and Colored coins. There are several viable approaches for creating smart-contracts using cryptocurrency. Albeit not perfect, we have deemed Bitcoin to be the currently most suited cryptocurrency to be used for this purpose.