History

Nick Szabo first theorized smart contracts in the 1990s, in an article called Formalizing and Securing Relationships on Public Networks. This theory was presented almost 20 years before the real potential and benefits of smart contracts were appreciated, that is, before the invention of Bitcoin and the subsequent development of other more advanced blockchain platforms, such as Ethereum.

Smart contracts are described by Szabo as follows:

"A smart contract is an electronic transaction protocol that executes the terms of a contract. The general objectives are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries. Related economic goals include lowering fraud loss, arbitrations and enforcement costs, and other transaction costs."

The original article that was written by Szabo is available at http...