Eliminating the toll to directly bridge its users

“Contracts have been an important document for every organization to sustain in the market. This sole document gives them a
legal support to challenge any upcoming, or to identify any fraudulent deals. While digitizing them might not be enough, there is
an evident example of eliminating the need of a third party to do your work.”

As we move towards expanding the use of decentralization across different domains and ideas, an eye-catching application is
making its way to the top. While researchers are mostly working on the issues attached with it, the overall acceptancy is bound to
shake the economy, given the security issues are dealt with. Nick Szabo, a computer scientist and cryptographer, in 1994
introduced the term Smart Contracts through a fine example of a digital vending machine, highlighting that a network (machine)
could transfer value (snack/drink) from one person to another.

As a convention, transactions take place through a centralized body. We may consider this to be trustworthy, but faults and
common issues like single point of failure and high transaction fees are complimentary. Blockchain, on the other hand, eliminates
the third party, and hence a direct peer-to-peer transaction can occur saving on resources with less security threats. The shared
accounting ledger uses cryptography and a network of computers to track the ledger and secure it from tampering.

Smart Contracts emerge from the same canvas of decentralized computing. Most of them are written on the Ethereum blockchain
because of their unlimited processing capabilities. But, there is no restriction on encoding them on any other blockchain like
Bitcoin. These autonomous agents provide functionalities like agreement between users, and sanction of a calculated amount
based on the number of users signing the contract, or transfer of funds. Indeed, it looks like the future of corporate, and law
replacing lawyers but providing efficiency concurrently.

So, what do they actually give us than just a way out of cumbersome paperwork? Blockgeeks Inc. highlighted seven essential
advantages as follows:

Autonomy: The contracts take the middlemen out of the process, avoiding any manipulation, or reliability issues

Trust: The contracts are on a shared ledger, avoiding the hassle of losing them

Backup: The document is duplicated many times

Safety: Cryptography keeps your documents safe. Though blockchains are decentralized, the level of encryption is high
enough for a hacker to move ahead somewhere else

Speed: Manual paperwork and processing could be tiresome. Smart Contracts are automated, so you will be saving many
hours

Savings: A large chunk of funds is reserved for your business, rather than spending the same on legal documentation

Accuracy: Errors and transactional faults are avoided because of a shared ledger

We do feel that Smart Contracts will revolutionize the way we work, and agreed they were thought of like this; a beneficial concept
to help people. But, one cannot avoid the bane of loopholes and spaces of technical security hackers and crackers take advantage
of:

Transaction-ordering dependency: Given there are two dependent transactions that invoke a contract, and the order of
execution is decided by the miner. If these transactions do not take place in the right order, a hacker might attack to cause
disruptions or inconvenience to the peers

Timestamp dependency: The occurrence of this problem is a consequence of the use of block timestamp as a condition to
trigger and execute transactions which might be manipulated by dishonest miners

Mishandled exception vulnerability: If a contract calls another contract without checking the value returned by the callee, this
security issue arises leading to results like botched up transfer of funds, or acquisition of property

Re-entrancy vulnerability: When a hacker uses a recursive function call to conduct multiple repetitive withdrawals, but the
balance is deducted only once.

“The plan was for participants to receive DAO tokens, then vote for which projects to fund. For selecting projects to invest in, it relied on the "wisdom of crowds."

Anyone with internet access could hold DAO tokens or buy them
DAO creators could set whatever rules they voted on

Blockchain Based Smart Contracts: A Systematic Mapping Study by Maher Alharby and Aad van Moorsel
Smart Contracts: The Blockchain Technology That Will Replace Lawyers by Blockgeeks
How Do Ethereum Smart Contracts Work? by Coindesk
Ethereum’s smart contracts are full of holes by Mike Occult, MIT Technology Review

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