What is smart contracts?
Smart contracts are computer protocols intended to facilitate, verify, or enforce the negotiation or performance of a contract.
The aim with smart contracts is to provide security that is superior to traditional contract law and to reduce other transaction costs associated with contracting. The most prominent smart contract implementation is the Ethereum blockchain platform.
As Vitalik Buterin explains, in a smart contract approach, an asset or currency is transferred into a program “and the program runs this code and at some point it automatically validates a condition and it automatically determines whether the asset should go to one person or back to the other person, or whether it should be immediately refunded to the person who sent it or some combination thereof.”
Plasma: Scalable Autonomous Smart Contracts
Today, Vitalik Buterin shared a link leading to a description of Plasma Smart Contracts - the new born child of Joseph Poon and Buterin himself:
— Vitalik Buterin (@VitalikButerin) August 10, 2017
There's no website for the project yet, however, there's some essential information about Plasma provided. Thus, according to the report, Plasma is "a proposed framework for incentivized and enforced execution of smart contracts which is scalable to a significant amount of state updates per second (potentially billions) enabling the blockchain to be able to represent a significant amount of decentralized financial applications worldwide".
The very first sentence of the abstract, however, seems so complex that most of the users have difficulty understanding it:
Plasma Smart Contracts discussed on reddit.com
As Buterin and Poon continue, these smart contracts are "incentivized to continue operation autonomously via network transaction fees, which is ultimately reliant upon the underlying blockchain (e.g. Ethereum) to enforce transactional state transitions".
We propose a method for decentralized autonomous applications to scale to process not only financial activity, but also construct economic incentives for globally persistent data services, which may produce an alternative to centralized server farms.
Plasma Team (Buterin & Poon)
Furthermore, Plasma is composed of two key parts of the design: Reframing all blockchain computation into a set of MapReduce functions, and an optional method to do Proof-of-Stake token bonding on top of existing blockchains with the understanding that the Nakamoto Consensus incentives discourage block withholding. As the developers claim, this construction is achieved by composing smart contracts on the main blockchain using fraud proofs whereby state transitions can be enforced on a parent blockchain.
We compose blockchains into a tree hierarchy, and treat each as an individual branch blockchain with enforced blockchain history and MapReducable computation committed into merkle proofs. By framing one's ledger entry into a child blockchain which is enforced by the parent chain, one can enable incredible scale with minimized trust (presuming root blockchain availability and correctness).
Plasma Team (Buterin & Poon)
Plasma also has mitigations for the issue of the greatest complexity around global enforcement of non-global data revolving around data availability and block withholding attacks. Thus, it allows for exiting faulty chains while also creating mechanisms to incentivize and enforce continued correct execution of data.
On top of that, Plasma enables persistently operating decentralized applications at high scale.
In case this explanation seems too complex to you, too, here's an easier one kindly provided by one of the reddit.com users:
Plasma Smart Contract discussion on reddit.com
According to the Plasma project team, the draft is in-progress and may be frequently updated in the next week(s).