NICK SZABO’S SMART CONTRACTS AND BIT GOLD
The term smart contract was first introduced in a paper released in 1994 by an American legal scholar and cryptographer named Nick Szabo, who created the term to refer to digitally self-executing legal contracts. Szabo also proposed the concept of Bit Gold, launching it 1998, twenty years before Bitcoin, which was a digital currency used to carry out complex legal clauses in the form of smart contracts. The idea was to take the functionality of electronic transaction methods to the digital realm. Some of these ideas came to fruition before the launch of cryptocurrency. For example, Szabo suggested implementing complex term structure derivatives trading using smart contracts. It was implemented before the creation of blockchain technology and is how derivatives trading commonly takes place.
Nick Szabo was able to realize the power of the decentralized ledger when it comes to executing complex terms and conditions. The clauses of a legal contract can be converted to computer code, which can then be stored and supervised by the network of computers that run the decentralized ledger. Again, this is all prior to the release of blockchain technology and is also why Nick Szabo is rumored to be the famously unknown creator of Bitcoin, Satoshi Nakamoto.