Looking at blockchain first, it is a database that is
specifically protected against subsequent changes to its content.
Falsifications or manipulations of data are thus virtually impossible to
accomplish. On a technical level, this is made possible by storing a hash value
of a previous data set in the new data set when the data is changed. Applying blockchain
technology is particularly relevant when used as a distributed database (peer-to-peer).
This eliminates the need for a central server system of a third party that
needs to be trusted (such as money transfers to the server of a bank).
This kind of application is generally known as Bitcoin,
which was established in 2009, making it the oldest blockchain application in a
peer-to-peer network. Smart contracts are independently monitored in real time
and automatically enforced according to previously defined terms between
contract partners.
Smart contracts can independently monitor contracts in real
time and automatically enforce previously defined rights of contract partners. When
combined with blockchain technology, they can ensure that all transactions are
legal and self-monitoring. This is particularly important when the contract
parties are not familiar with each other and therefore have a trust issue.
