An Overview on Smart Contracts: Challenges, Advances and Platforms (1912.10370v1)

Abstract: Smart contract technology is reshaping conventional industry and business processes. Being embedded in blockchains, smart contracts enable the contractual terms of an agreement to be enforced automatically without the intervention of a trusted third party. As a result, smart contracts can cut down administration and save services costs, improve the efficiency of business processes and reduce the risks. Although smart contracts are promising to drive the new wave of innovation in business processes, there are a number of challenges to be tackled.This paper presents a survey on smart contracts. We first introduce blockchains and smart contracts. We then present the challenges in smart contracts as well as recent technical advances. We also compare typical smart contract platforms and give a categorization of smart contract applications along with some representative examples.

• The paper provides a comprehensive survey on smart contracts, detailing blockchain integration, efficiency gains, and cost reduction mechanisms.
• It categorizes development challenges across creation, deployment, execution, and completion, while discussing tools for improved contract reliability.
• The study compares platforms like Ethereum, Hyperledger Fabric, and Corda, offering actionable insights on scalability, security, and industry-specific applications.

An Overview on Smart Contracts: Challenges, Advances, and Platforms

This paper provides a comprehensive survey of smart contracts, focusing on the integration of blockchain technology and the subsequent impact on various industries and business processes. Smart contracts, conceptualized in the 1990s by Nick Szabo, have found practical application in modern blockchain systems. They permit the automatic enforcement of contract terms without requiring a trusted third-party intermediary. This capability significantly enhances business efficiency by reducing administrative costs and risks.

Key Aspects of Smart Contracts

The paper begins by covering the fundamentals of blockchain technology, which underpin smart contracts. Blockchains allow for decentralized, secure transactions by maintaining immutable records. These properties enable smart contracts to be stored, replicated, and updated within blockchain systems, mitigating the need for central oversight.

An illustrative example is provided, detailing a sequence where a smart contract facilitates an agreement between a buyer and a supplier. The transparency of blockchain ensures all parties can trust transaction authenticity and security, eliminating traditional intermediaries.

Advantages and Applications

The authors outline the notable advantages of smart contracts over conventional agreements:

• Risk Reduction: Blockchain's immutable nature ensures that contract terms cannot be altered post-issuance. This immutability increases transaction traceability and auditability, thereby minimizing financial fraud risks.
• Cost Reduction: Smart contracts operate on decentralized consensus mechanisms, removing the necessity for costly third-party services.
• Increased Efficiency: By automating execution and settlement procedures, smart contracts substantially speed up processes like supply chain management.

The paper categorizes applications into various sectors, including IoT, finance, and public services. Examples include automatic payment systems in IoT, enhancing capital markets and banking operations, and ensuring data provenance accuracy.

Challenges and Technical Advances

Smart contracts, while promising, present several challenges that the paper categorizes across their lifecycle: creation, deployment, execution, and completion.

1. Creation Challenges: Issues such as readability and functional reliability need addressing. The paper reviews methods to improve code transparency, such as reverse engineering tools and human-readable translations.
2. Deployment Challenges: Ensuring contract correctness before deployment is critical. The paper discusses bytecode and source code analysis techniques and machine learning models for vulnerability detection.
3. Execution Issues: Challenges include ensuring trustworthy data input (using oracles) and achieving transaction consistency. This area has seen solutions like decentralized oracle systems and enhanced transaction sequencing methods.
4. Completion Challenges: Privacy and security of transactions are major concerns. Smart contracts need mechanisms like the Hawk framework or SABRE network to ensure privacy without compromising security.

Platforms and Future Perspectives

The paper compares several major platforms, such as Ethereum, Hyperledger Fabric, and Corda, highlighting differences in execution environments, supported languages, and consensus algorithms. Ethereum, with its Turing-complete capabilities and broad utility, represents a significant developmental focus, while platforms like Corda cater to specific sectors like finance with optimized features.

Conclusion

Smart contracts are poised to drive significant innovation across numerous domains. Ongoing challenges around program correctness, execution efficiency, and security must be systematically addressed to exploit their full potential. Future research will likely focus on refining smart contract platforms, enhancing their scalability, security, and integration with traditional systems. The intersection of blockchain with smart contracts heralds a transformative era in how digital agreements are formed and managed.

This paper is a valuable resource for researchers interested in the evolving landscape of blockchain technology and its role in shaping smart contract applications.