An Introduction to Machine Readable Blockchain Smart Contracts

1. Alex Norta, PhD.,
Department of
Informatics, TTU.ee
Tallinn, Estonia
What can Smart Contracts Do?

2. Agenda
 Introduction & DIY Blockchain/Bitcoin learning
 Current state in smart contracts/blockchain-tech
– Unsuitable smart-contract languages -> ADOPTION FAILURE
– Lifecycle management lacking for smart contracts -> INSECURE
 Business-collaboration model
– Master/client- vs. P2P-collaboration
– Detailed collaboration model
 eSourcing Markup Language (eSML)
 Complete lifecycle for smart-contract management
– Setup
– Rollout of decentralized governance infrastructure
– Disrupting and calming rollbacks for conflict management
– Termination
 Startups and projects around Smart Contracts
 Conclusion and future work

3. Introduction
 My own journey towards Smart Contracts
– an accident

4. Introduction
 What is a contract?
 A contract is a written, or spoken agreement
especially one concerning employment, sales,
or tenancy that is intended to be enforceable
by law.
– voluntarism
– non-initiation of force
– consensus

5. Introduction
 What a contract really currently is?
 Dumb paper and ink (or now a dumb PDF)
 Underspecified
 Not process aware
 Can not be automated
 Hard to enforce
 Hard to trust

6. Introduction
 What are blockchains all about?
 Blockchain
– a distributed database (hash table)
– maintains a growing list of data records
– secured from tempering and revision
– Main technical innovation for bitcoins

7. Introduction
http://www.en.bitcoinr.cz/includes/img/bitcoin.pdf

8. Introduction

9. Introduction
 Bitcoin as teaser only!! -> Smart Contracts
 Bitcoins vs. Blockchains
 Bitcoin’s protocol layer underdeveloped
 Smart-contract languages have Turing
complete languages on the protocol layer
 The latter realize smart contracts technically

10. Introduction
 Smart Contracts
– machine readable code
– legally valid

11. Introduction
 My own Smart-Contracts publications

12. Introduction
 Many solutions emerge where smart contracts matter:
Digital anarchy is coming
Law/business changes with smart contracts
ProofOfExistence service replaces notaries
Blockchain ID as new stateless passports
UltraCoins to eliminate old financial system
BitHalo for smart contracts
Ethereum for smart contracts and next-generation
distributed Internet systems
Vitali Buterin won awards
Forefront of digital currency
Bitnation for DIY country in clouds

13. Introduction

Many sociotechnical applications where
smart contracts matter
– e.g., cyber-physical systems
Cyber-Physical
system
A. Norta, M. Mahunnah, T. Tenso, K. Taveter and N. C. Narendra, "An Agent-Oriented Method for Designing Large
Socio-technical Service-Ecosystems," 2014 IEEE World Congress on Services, Anchorage, AK, 2014, pp. 242-249. doi:
10.1109/SERVICES.2014.50
Blockain case

14. DIY Learning
 Open-source learning about Blockchains:
– Satoshi Nakamoto's paper about Bitcoins/blockchain
– More papers at the Satoshi Nakamoto Institute
– Many blockchain-tech publications now on scholar.google.com
– Lectures:
• Harvard free Bitcoin and Cryptocurrency Technology Online Course
• Princeton Bitcoin and Cryptocurrency lecture
• Khan Academy has many videos about bitcoins
• University of Nicosia Master Studies about Bitcoins/Blockchain
– Books:
• Mastering Bitcoin by Antonopoulos, A.M.
• Bitcoin and Cryptocurrency Technology, Narayanan, A. et al
• More on Amazon

15. Sociotechnical Collaboration
BPaaS Contracting-
HUB

16. Gap Detection
 Gap: Existing smart-contract languages do not take into account
sociotechnical suitability and expressiveness.
– Lack of interaction-recognition between acting humans in organizations with
technology in workplaces
– Suitability: concepts/properties to formulate real-world business-collaborations
– Expressiveness: semantic language-construct clarity for uniform enactment
 Research question: How to systematically develop a language
and governance platform for cross-sociotechnical and contract-
based system collaboration?
– What is the collaboration context and model the specification language must cater
for?
– What are the main suitability- and expressiveness concepts and -properties?

17. Business-Collaboration Model

18. P2P-Collaboration Model

19. Suitability Exploration
 Pattern-based
http://www.worldscientific.com/doi/abs/10.1142/S0218843007001664

20. Smart-contract ontology
 Smart-contract based Collaboration concepts & properties

21. Suitability Exploration
 Smart-contract based collaboration
– Who-concept

22. Suitability Exploration
 eContract-based collaboration
– Where-concept

23. Suitability Exploration
 eContract-based collaboration
– What-concept

24. Expressiveness Exploration
 eXchangable Routing Language (XRL)
– Instance-based workflow language
– Petri-net semantics and XML syntax
– Control-flow patterns give strong expressiveness
 Every routing element has WF-net (Petri-net variant) semantics
– Allows for soundness verification with tool support
 Syntax is a tree
– root element with exactly one routing element
– Simple routing: no children routing elements
– Complex routing: child-routing elements of specific order

25. eSourcing Markup Language
 Econtracting Markup Language ECML
is foundation
 ECML delta towards eSouring
– Incomplete suitability/expressiveness
 Bold eSML definitions are extensions
– Resource definition
– Data definition
 Who-extensions
– resource/data-definition
 What-extensions
– Control-flow-patterns
 Lifecycle definitions
– Tasks/processes of collaborating parties
– Mapped ontologically

26. Smart-Contract Platform
 Preventing another DAO hack scandal
 Lifecycle of a smart-contract Governance-as-a-Service
(GaaS) platform:
– Startup phase: paper
– Rollout & enactment phase: paper
– Rollback & termination: paper
 We use Colored Petri Nets for designing the GaaS
– CPN is a graphical oriented language
– design, specification, simulation and verification of systems
– CPN-notation comprises
• states, denoted as circles
• transitions, denoted as rectangles
• arcs that connect states and transitions
• tokens with color, i.e., attributes with values
• CPN-ML expressions inscripted on arcs
• modules in CPN are non-atomic place-holder nodes for
hierarchic refinements

27. Startup Phase: top-level lifecycle

28. Rollout Phase
Establishing a
decentralized
governance
infrastructure
(DGI)

29. Rollback Phase
http://ieeexplore.ieee.org/xpls/abs_all.jsp?arnumber=6337270&tag=1

30. Rollback & Termination

31.  New enabling concepts and technologies for Smart Contracts
– Blockchains in many variations and flavors
– Service-oriented cloud computing (SOCC)
– Business Process as a Service (BPaaS)
– Cross-organizational eSourcing framework
– Big data, mobile devices
eSourcing Reference Architecture

32. eSourcing Reference Architecture

33. Conclusion
 Smart contracts miss the application layer -> INSECURE
– Primarily technicalities driven bottom-up realization, e.g., Ethereum, Lisk, Synereo
 eSML for smart contracts evolves out of systematic research
– Top-down sociotechnical suitability/expressiveness exploration
 Real-life contracting foundation for eSML
– Process-views are subsets of larger in-house processes
 The GaaS in a Cloud serves for managing the smart-contract
lifecycle
– Establishing a decentralized governance infrastructure
– We choose CPN Tools with formal, graphical modeling semantics
 Stages of the DGI-establishment lifecycle
– Copy local smart-contract copies per decentralized autonomous organization
– Extract local policies, monitors, BNMA
– Configure local services & communication endpoints
 Mapping of lifecycle to eSRA architecture
 Qtum Smart-Contracts theme in Tallinn

34. Thank you for listening!
Q&A