1. The document discusses smart contracts and blockchain technology, explaining that smart contracts are self-executing agreements that use blockchain to verify and enforce the terms of a contract without third party involvement. 2. It provides examples of how smart contracts could work, such as a washing machine that can automatically purchase detergent using blockchain to ensure secure payment and delivery. 3. The document also outlines some challenges for smart contracts, such as how they can access external information to operate and how to ensure liquidity when funds are locked on the blockchain.

1. SMART
CONTRACT
林修平

2. CONTRACT
• What’s a contract?
• voluntary arrangement between two or more parties
• legally binding agreement
• buying, selling, renting, leasing, insurance, investment, etc.
• actively or inactively perform

3. “SMART” CONTRACT

4. • How to perform : self-enforcing , self executing
• preliminary: terms matched
• “SMART”? How?
• Smart Contract in real-life：
• vending machine
• U-bike, on-line gambling
• what’s the difference between smart contract and automated
service?
“SMART” CONTRACT

5. smart contract on blockchain

6. • What differences does it make?
• value of Blockchain
• whom to trust?
• a person?
• a company?
https://en.wikipedia.org/wiki/Financial_crisis_of_2007–08
• government?
https://en.wikipedia.org/wiki/Watergate_scandal
• or program and mathematics?
• its totally up to you
• reach an agreement with untrustful party
smart contract on blockchain

7. • https://www.thenewslens.com/article/11796
• a washing machine that can buy detergent itself if needed
• without blockchain
• cash flow :
• online payment -> companies that sells detergent -> transportation companies
• what’s the cost?
• time, efforts on checking status and verify
• what if something went wrong?
• how long does it take to find out the problem?
• who will find out the problem?
• how long do I have to wait?
smart contract on blockchain

8. • https://www.thenewslens.com/article/11796
• a washing machine that can buy detergent itself if needed
• with blockchain
• cash flow :
• online payment -> companies that sells detergent -> transportation companies
• what’s the cost?
• transaction fee
• what if something went wrong?
• how long does it take to find out the problem?
• who will find out the problem?
• how long do I have to wait?
smart contract on blockchain

9. BLOCKCHAIN + IOT

10. • IOT
• a device connecting to Internet?
• machine to machine
• how does it make sure it is not talking to a malicious node?
• can try
• how to make sure what it says is true?
• share same information
• distributed?
• can an IOT device provide such capability in its storage unit?
• decentralized?
BLOCKCHAIN + IOT?

11. • main problems in IOT
• Security
• hardware resource
BLOCKCHAIN + IOT?

12. CHALLENGE

13. CHALLENGE
• External Information
• Liquidity
• has no control beyond ledgers
• say you start a bet on tomorrow’s game score…
• how do you provide the score to smart contract?
• fetch the source from outside?
• which source to trust?
• can everyone fetch from the same source?
• will it expire? disappear? change from time to time?
• for now, smart contracts on blockchain can not fetch external information itself
• provided by third party

14. CHALLENGE
• External Information
• Liquidity
• has no control beyond ledgers
• suppose you start an insurance contract with insurance
company, is the money you pay monthly going to stay in there
indefinitely?
• no, like deposit in a bank, the company will make the best
out of the money which means the money will only be
there when something happened…
• then, how can the terms in smart contract be enforced?

15. CHALLENGE
• External Information
• Liquidity
• has no control beyond ledgers
• How do you enforce in the real world? probably by litigation
• but how is smart contract different from legacy contract?

16. Ethereum smart contract

17. Ethereum smart contract
• Turing Complete
• conditional branching
• loop
• ability to change arbitrary amount of memory

18. Ethereum smart contract
• Bitcoin
• Turing incompleteness
• OP_IF, OP_NOTIF, OP_ELSE, OP_ENDIF
• stateless
• stack-based language
• no loop
• made purposely
• prevent costly and infinite computation

19. Ethereum smart contract
• Turing Complete
• conditional branching
• loop
• ability to change arbitrary amount of memory
• powerful
• how to deal with malicious code, e.g. infinite loop?
• gas
• each operation has a price(gas)
• pay for gas where user decides how much to pay per unit gas
• pay with ether

20. Ethereum smart contract
• How does it work?
• 1. write your contract

21. Ethereum smart contract
• How does it work?
• 1. write your contract
• 2. compile it to byte code

22. Ethereum smart contract
• How does it work?
• 1. write your contract
• 2. compile it to byte
code
• 3. broadcasted and
mined

23. Ethereum smart contract
• How does it work?
• 1. write your contract
• 2. compile it to byte
code
• 3. broadcasted and
mined
• 4. invoke transaction

24. Ethereum smart contract
• contract language
• Serpent
• python-like
• Solidity
• javascript-like

25. Ethereum smart contract
• How does it work?
• 1. write your contract
• 2. compile it to byte code
• 3. broadcasted and mined
• 4. invoke transaction
https://ethereum.github.io/browser-solidity/
https://github.com/ethereum/go-
ethereum/wiki/Building-Ethereum
https://github.com/ethereum/mist/releases

26. living example : DAO

27. living example : DAO
• Decentralized Autonomous Organization
• by slock.it
• crowdfunding
• vote by your share
• profit by your share
• child DAO
• to prevent abuse of majority voting

28. living example : DAO
• Recursive calling vulnerability
• propose a split -> execute the split -> withdraw
• propose a split -> execute the split -> propose a split ->
execute the split -> withdraw

29. living example : DAO
• function splitDAO
problem1
problem2

30. living example : DAO
• function withdrawRewardFor
problem1

31. living example : DAO
• function payOut
problem1
• address.call.value(amount)
• supply with enough gas
• if address refers to a contract, it triggers fallback function
• do what whatever you want as long as enough gas remaining
• call to splitDAO again in fallback function

32. living example : DAO
• function splitDAO
problem2
• cleans up his/her balance after sending the money

33. living example : DAO
• counter measure :
• use address.send(amount)
• 2300 gas
• don’t execute address.call.value(amount) to untrusted code
• limit gas in address.call.value(amount)
• address.call.gas(gas_amount).value(amount)
• cleans up the balance before sending money
• then check if sending succed, if not ,rollback

34. living example : DAO
• what happens after?
• votes for hard fork
• choose to stay, becomes ETC
• choose to fork, becomes ETH
• Ethereum foundation, token holders, immutability believers
• too much money to fail? lawsuits?
• what do you believe?