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What makes them such a big deal? Why not have an API to send and request money and then just use any language of your choice with said API to manage money?

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Smart contracts are programs on the blockchain itself.

While it's definitely possible to create an API as you described, you have to trust that the program is running as the creator claims it does. In the same way, it's simple enough to create a monetary system in any language--but how do you trust it?

With a smart contract, every node verifies its execution, in the same way that every node verifies every monetary transaction. This means that, theoretically speaking, the operation of a smart contract cannot be interfered with by any party. This isn't infallible (see: bugs, hardforks, the DAO) but it's unique compared to the average off-chain program.

  • Why is trust such a big issue here? You ethier get the money you were expecting or you weren't and then the API is exposed. I'm just playing devils advocate here. Is trust the only thing smart contracts has going for it? – Nonlin May 26 '17 at 2:01
  • Suppose you want to lock up 100 ETH for a year, to be released under certain circumstances. (Some kind of insurance, for example.) If you can't trust that your wishes (in code) will be respected, how are you going to risk that 100 ETH? – Matthew Schmidt May 26 '17 at 12:52

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