Smart Contracts

In brief, smart contracts are modular, repeatable and autonomous scripts, usually
running on a blockchain, which represent unilateral promises to provide a
determinate computation. These scripts are stored in the blockchain at a particular
address, which is determined when the contracts are deployed to the blockchain.
When an event prescribed in the contract happens, a transaction is sent to that
address and the distributed virtual machine executes the scripts operation codes
(or clauses), using the data sent with the transaction.

Smart Bonds
Our experiment with the smart bonds requires also payment of coupon and
we have to create an external schedular to automate the coupon payment,
which effectively stimulate the smart contract. Clearmatics have a
scheduling capability.
that a technology tie-up with decentralised clearing specialists Clearmatics
has given birth to a "utility settlement coin
The Clearmatics system is palatable to banks because it is a permissioned
system where the validators behind the consensus process are known and
legally accountable parties.
Intuitively the idea of distributed ledger is a distributed record of who owns
what, or who owes what to who. And smart contracts are an automatic,
programatic way of amending a distributed ledger.
"In our model both the distributed ledger and the smart contracts are
implemented in something called a distributed virtual machine; they are both
implemented in virtual machine code."
UBS said it is not planning to actually distribute the virtual currency but will
look to partner with financial service players like regulators, asset managers
and clearing houses to implement the technology
its prototype coin will be linked to real-world currencies and connected to
central bank accounts, meaning that within seconds after a trade the funds
would be registered at a Central Bank.

What will happen when all the bitcoins are mined?

It is true, once all the bitcoins have been mined, transaction fees will be the sole source
of income for miners. The main concern, then, is whether or not transaction fees will be
enough to keep miners financially afloat.
t is entirely possible that mining chips will become so small and cheap that they can be
installed on all electronic devices similar to the goal 21 Inc. hopes to achieve. This
development would turn mining from a purposeful business decision to an after

thought, surviving in the background of daily life. Furthermore, mining hardware may
become so energy efficient over the next century that transaction fees prove to be
plenty to keep miners in business
It may also be the case that transaction fees simply rise to a level sufficient for mining
profitability. If, once all the bitcoins have been mined, the entire world uses the digital
currency as its primary medium of exchange, then it is possible that transaction fees
will rise due to an increase in the demand for transactions.
However, the likelihood of fees rising to such a rate is uncertain at this point, since the
consensus in the community at present is to have a gradually increasing block size to
ensure network scalability. This means that, if the block size continues to grow, people
will always be able to have their transactions confirmed at low fees. This prospect may
seem like a threat to the network on the surface, as it entails forcing miners to survive
on low fees after the block reward is gone

Incentive for mining might diminish, but the generation of new blocks is important
to provide the publicly available, network-distributed ledger of transactions.
Miners will still be able to turn a profit from transaction fees.
Still, one notable effect posed by some is that once the mining reward has been
reduced (or no longer exists), so will the demand for security.
How the bitcoins are mined?

thats how miners seal off a block. They all compete with each other to do this,
using software written specifically to mine blocks. Every time someone
successfully creates a hash, they get a reward of 25 bitcoins, the blockchain is
updated, and everyone on the network hears about it. Thats the incentive to keep
mining, and keep the transactions working.
The problem is that its very easy to produce a hash from a collection of data.
Computers are really good at this. The bitcoin network has to make it more
difficult, otherwise everyone would be hashing hundreds of transaction blocks
each second, and all of the bitcoins would be mined in minutes. The bitcoin

protocol deliberately makes it more difficult, by introducing something called

proof of work.
The bitcoin protocol wont just accept any old hash. It demands that a blocks
hash has to look a certain way; it must have a certain number of zeroes at the
start. Theres no way of telling what a hash is going to look like before you
produce it, and as soon as you include a new piece of data in the mix, the hash
will be totally different.
Miners arent supposed to meddle with the transaction data in a block, but they
must change the data theyre using to create a different hash. They do this using
another, random piece of data called a nonce. This is used with the transaction
data to create a hash. If the hash doesnt fit the required format, the nonce is
changed, and the whole thing is hashed again. It can take many attempts to find
a nonce that works, and all the miners in the network are trying to do it at the
same time. Thats how miners earn their bitcoins

Bitcoin mining may be open, but it is also extremely difficult. In order to create a block, a miner must
win a global race to solve a pointless and tricky computational problem, which consumes a lot of
electricity (and therefore money). These days mining is performed by specially optimized hardware,
but this doesnt make it any cheaper, because the network regularly adjusts the problems difficulty to
maintain a steady rate of 1 block every 10 minutes. This makes it hard for any single actor to seize
control of the chain and, so far at least, the scheme has worked.
In exchange for the hard work and expense, the winning miner receives a reward, currently 25 newlyminted bitcoins per block (to halve during 2016). Miners also receive a little extra from the fees
attached to transactions, although for now these play a minor role. And here are some shocking
numbers: During 2015, bitcoin miners raked in $375 millionin rewards and fees, in exchange for
confirming 45 million transactions. That comes out to over $8 per transaction, even ignoring the
fact that many of these werent genuine transfers of funds.

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