The Idea of Smart Contracts by Nick Szabo (1997)

Nick Szabo's 1997 essay "The Idea of Smart Contracts" argues that formalized relationships, especially contracts, provide a blueprint for ideal security. It uses the vending machine as a primitive ancestor of smart contracts, since its security mechanisms make breaching the exchange costlier than the potential gain. The essay extends this idea to digital property, using a hypothetical automobile example in which a "smart lien protocol" returns control of the car's keys to a bank if the owner stops paying. It concludes that a security system, through successive redesign, increasingly approaches the logic of the contract governing the property it protects.