Blockchain-Based Smart Contracts for beginners

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Blockchain-Based Smart Contracts for beginners*



Riet Pier Luigi**


The paper aims to provide a clear explanation of the concepts of blockchain and smart contracts to non-technical readers. Despite being one of the main topics debated worldwide, a law-oriented person may still struggle to comprehend these technologies. To understand these concepts, this study will trace the historical roots of blockchain and smart contracts. When analyzing the former, one will note that it is embodied within philosophy and cryptography. By using the same study-method with the latter, one will see why they have been developed. There will be also two described examples, one for both the technologies. The last paragraph aims to clarify some related concepts, in order to enlarge the understanding of the present topic.


Issue 2/2020


* This paper was approved by the referees.

** J.D. Trieste.



1. The first step by Haber and Stornetta

During the 1990s the digital world grew at an incredible speed rate. In 1991 CD Audio appeared on the market[1], about 20% of American families bought a personal computer[2], and within the aisles of Geneve’s CERN headquarters, the very first website was developed[3]. In these circumstances, two cryptographers, Dr. Stuart Haber and Dr. W. Scott Stornetta, recognized that all of these new digital entities needed an urgent timestamp solution, as every single digital data, just as it stood, could be copied. According to these two scientists, this was mainly a copyright problem[4]. Consequently, they began working on a cryptographic method to guarantee everyone the authorship of their efforts.  The two scientists purposely imagined a naïve system to stress the critical issues that affected the timestamp solutions known at the time, calling it the “digital-safety deposit box”. By using this system, all authors had to send their work to a centralized entity that kept a copy of that data and the date of the dispatch. However, this process revealed serious shortcomings: privacy was heavily undermined, costs would have been very high to send great data, and no one could ensure that the system would actually save the correct date[5].  To overcome these problems, Dr. Haber and Dr. Stornetta suggested the application of two different tools: hash functions, and digital signatures. With the first tool, it is possible to dwindle any data into a given-length “new” one[6], so every author may be able to “transform” their work into a sort of string that would then be sent to a centralized system. The safety box would later apply its digital signature and the date of the dispatch onto the string. The document created by the usage of these three previous documents would then be sent to the author. In this way, privacy would be preserved more efficiently, but no one could still guarantee that the system would certify the exact date. 




[3] D. Raggett, J. Lam, I. Alexander, Html 3.0: Electronic Publishing on the World Wide Web, Addison-Wesley, Boston, 1996.

[4] S. Haber, W. S. Stornetta, How to time-stamp a digital document, in Journal of Cryptology, 1991.

[5] Ibidem.

[6] D. Carboni, Le tecnologie alla base della blockchain, in Raffaele Battaglini, Marco Tullio Giordano (curr.), Blockchain e Smart Contract, Giuffrè Francis Lefebvre, Milano, 2019.


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