One of the more interesting presentations at the Scaling Bitcoin workshop at Stanford University over the weekend was MIT Digital Currency Initiative Research Scientist Tadge Dryja’s talk on discreet log contracts. Through this type of smart-contracting system, Bitcoin smart contracts that rely on the use of an oracle can potentially be made more secure than they are today, and the less-trusted oracles can also be used off-chain by way of the Lightning Network.
What are Smart Contracts?
During his talk, Dryja described a smart contract as a “payment conditional on some external data”. He also indicated that another way to view this kind of conditional payment is as a sort of bet.
The example smart contract used by Dryja throughout his talk was Alice and Bob betting on tomorrow’s weather. Dryja explained that, in this type of smart contract, an entity outside of the Bitcoin network is needed to share the data related to the weather. This entity is known as an oracle…