Learning Smart Contracts for Business Environment

Luís Silvestre

, Francisco Pires

and Jorge Bernardino

1,3 a

Polytechnic of Coimbra – ISEC, Rua Pedro Nunes, Quinta da Nora, 3030-199 Coimbra, Portugal

Individual Consulting Research, Rua Arlindo Vicente, 3030-298 Coimbra, Portugal

CISUC - Centre of Informatics and Systems of University of Coimbra, Pinhal de Marrocos, 3030-290 Coimbra, Portugal

Keywords: Blockchain, Smart Contracts, Business Environment.

Abstract: Currently the search for a decentralized data model in companies for its big advantage in removing the

middleman has been increasing. For that reason, DLT (Distributed Ledger Technology) technologies have

gained a lot of visibility in the business world, the most well-known being Blockchain and its emerging Smart

Contracts. The identified problem is the lack of knowledge and skill of companies in the domain of the rising

Smart Contracts. In this paper, we propose a generic model that could increase the competence of companies

in this field by creating a step-by-step tutorial on how to set up the development environment of Smart

Contracts.

1 INTRODUCTION

Although Blockchain has arisen for some time now,

there are still many developments to be achieved with

this technology and more and more are the uses of this

technology reflected on the most varied topics

(Maxmen, 2018; Baynham-Herd, 2017; Ahmed,

2017) since its use with Artificial Intelligence (Salah,

2019) to its advantages in IoT (Internet of Things)

(Makhdoom, 2019). Like Blockchain, Smart

Contracts are also revolutionizing the industry with

its potential for decentralized applications. Given its

recent appearance, however, there is still a very large

lack of knowledge and skills in this area, especially

from companies that want to enter this market

(Casino, 2019).

This work aims to reduce this gap by creating a

step-by-step tutorial guide on how to prepare an

environment for developing Smart Contracts and

giving some background. We intend answering these

questions: (i) How Does Blockchain work? (ii) What

are Smart Contracts, and what do they do? (iii) How

to start Developing Smart Contracts? (iv) How to

apply a Smart Contracts guide to Companies?

In this paper, we propose a training model

following the ADDIE (Analyze, Design, Develop,

Implement and Evaluate) model.

https://orcid.org/0000-0001-9660-2011

To this end, we first explore the concept of

Blockchain and Smart Contracts, providing some

background to what is going to be explored. After this

phase of learning concepts and what will be studied,

we will enter the guide itself on how to create the

environment for the development of Smart Contracts.

At this stage, it will be necessary to understand not

only what is necessary to obtain to create the

environment, but also why it is necessary.

The main contribution of this work is the creation

of a step-by-step tutorial as a learning model to apply

in training actions in a business environment.

The remainder of this article is structured as

follows. In section 2 it is given a contextualization

and a brief explanation about Blockchain and Smart

Contracts. In section 3 it’s described the preparation

of the development environment, and in section 4 it’s

made an overview of the state of the art. Section 5

serves as a brief introduction of the ADDIE (Analyze,

Design, Develop, Implement and Evaluate) model

and its application in this work. In section 6 we

describe the Learning-Transfer Evaluation Model

(LTEM) and the advantages of its application in our

learning model, as well as some future ideas on how

the model will evolve. Finally, section 7 discusses the

results and presents the main conclusions.

188

Silvestre, L., Pires, F. and Bernardino, J.

Learning Smart Contracts for Business Environment.

DOI: 10.5220/0007959301880195

In Proceedings of the 16th International Joint Conference on e-Business and Telecommunications (ICETE 2019), pages 188-195

ISBN: 978-989-758-378-0

2 BACKGROUND

In this section, an introduction to the Blockchain

domain and the Smart Contracts is given by providing

a brief explanation of some important concepts, such

as DLT (Distributed Ledger Technologies),

Blockchain and Smart Contracts.

2.1 DLT – Distributed Ledger

Technology

Distributed Ledger Technologies as the name

suggests, are distributed record systems. That is, the

information is not all in one place, but distributed by

all system participants as shown in Figure 1.

Unlike traditional databases, distributed ledgers

have no central data storage or administration

functionality. In a DLT, each node processes and

verifies each item, thus generating a record of each

item and creating a consensus on the veracity of each

item.

This architecture represents a significant

revolution in record keeping, changing how

information is collected and communicated.

Figure 1: Centralized Ledger vs Distributed Ledger

(Tradeix.com, 2019).

2.2 Blockchain

The blockchain is one of many existing DLTs and it’s

the most recognized of these technologies being the

core of bitcoin. Blockchain works on a Peer-to-Peer

network, which is a network with an architecture in

which tasks are distributed among peers, in contrast

to the centralized architecture where information is

stored in one place. Blockchain emerged in 2008

when Satoshi Nakamoto published his article

"Bitcoin: A Peer-to-Peer Electronic Cash System"

(Nakamoto, 2008). As the name implies, it consists of

a chain of blocks. It is in these blocks that the

information is stored. Figure 2 shows a generic

representation of a block.

Figure 2: Blockchain’s blocks structure (Zheng, 2018).

The main feature of Blockchain is immutability,

which means that when a block is validated in the

network, it is no longer possible to change it. The act

of validating blocks is called mining and consists of

finding a value for the nonce parameter, which

satisfies the conditions of validation. These

conditions go on to generate a valid HashCode.

Hashcode is a numeric value generated by algorithms

based on the data in the block, which means that if

some data changes, the Hashcode changes. The

mining consists of obtaining the nonce that causes the

Hashcode to fulfill certain validation rules such as

starting with 10 zeros. These rules change depending

on the platform.

Those responsible for the mining process are

called miners. A miner is any participant in the

network that aims to validate a block of transactions,

using the mining process.

The mining process is based on a model called

proof-of-work. That is, the confidence of the

validation is correct is obtained through the

computational effort used to make the mining. As an

incentive to make people want to mine, the act of

mining is usually rewarded. Currently, there is an

attempt to move from proof-of-work to proof-of-

stake. This new method has the same goal of proof-

of-work but varies the way consensus is achieved.

Unlike the proof-of-work, in which the miners have

to solve a mathematical problem and spend

computational resources to validate and create a

block, in this method the creator of each block is

determined based on its possessions and there are no

block rewards. This method causes energy

consumption to decrease because the miners do not

compete with each other for the rewards, which leads

to an increase in the difficulty of a 51% attack. A 51%

attack, as the name implies, is an attack on

Blockchain networks that consists of obtaining 51%

of the network participants in order to obtain

consensus and consequently the validation of the

blocks.

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2.3 Smart Contracts

Smart Contracts are digital protocols that define a

contract and use the Blockchain network for its

immutability and audibility. Smart Contracts are

programmable so that, in addition to validating

contract conditions, they impose restrictions and

penalties (Salah, 2019; Bocek, 2017). The first

appearance of the term was in 1997 by Nick Szabo

(Szabo, 1997).

Smart Contracts can be used for financial services

or for general services, The first one means simple

financial transactions, the later means that the data

being changed by the Smart Contracts does not

necessarily need to be of financial nature, this opens

the path to what is now called DApps, Decentralized

Applications. Decentralized applications are

applications that run on the Blockchain network and

do not need any regulatory authority. An example of

a decentralized application is Bitcoin, as well as any

other virtual currency platform. However, the major

difference from a decentralized application with

Smart Contracts is that virtual currency platforms

work only with transactions, whereas a decentralized

application using Smart Contracts can include much

more information in its blocks than a simple

transaction and other information and interactions can

be programmed (Wu, 2019).

The company responsible for the great Smart

Contracts revolution is Ethereum, a decentralized

platform capable of executing smart contracts and

decentralized applications using Blockchain

technology. This platform allows users to develop

and deploy Smart Contracts to the network by paying

a fee of their current cryptocurrency, Ether.

3 ENVIRONMENT SETUP

In this section we describe the environment

preparation process using the Windows 10 Operating

System and the Google Chrome browser, listing in

order the necessary software, followed by

programming languages.

This preparation process consists of installing and

configuring the necessary programs for the

development of Smart Contracts, as well as providing

an explanation for the need for these programs. The

environment described will be an initial environment

for testing and the first contact with the Smart

Contracts and Ethereum networks. Table 1 shows a

summary of all the steps to be performed, the reason

and the way they are installed. Table 2 lists the

programming languages involved in the development

of Smart Contracts and lists their functions in this

environment.

Table 1: Necessary steps and motives.

Steps Motives Installation

A. Nodejs e

Npm

It allows you to run

JavaScript

applications and

makes several open-

source applications

available as modules.

Download the

installer from the

official website and

run it.

B. Testrpc

It simulates the

ethereum blockchain

network.

npm install -g testrpc

C.Web3.js

API provided by

Ethereum that

provides interaction

with the Ethereum

network.

npm install

web3@0.19

Metamask

It allows for access

and interaction with

the Ethereum

network in a simpler

way.

Extension of Google

Chrome

E. Remix

Developed and made

available by

Ethereum for the

development of

Smart Contracts.

Not necessary

because there is a

browser version.

npm install -g remix-

ide

3.1 Nodejs and Npm (Node Packet

Manager)

You need to download and install node.js, which is a

tool that allows you to run applications in JavaScript

and supports several open source modules. That is, it

works as a server for various JavaScript applications.

The current nodejs installer of the official site also

includes npm. This tool is used to manage the existing

modules in nodejs and allows the user to obtain these

modules through the Windows command line with

the command "npm install <module name @

version> "(It is not mandatory to specify the version,

in which case it will be obtained the latest version).

3.2 Testrpc

Testrpc, now called ganache-cli, is a tool that is

provided as a nodejs module and serves to simulate

the Ethereum network in a fast and flexible way.

It can be installed through npm with the command

"npm install -g testrpc" and the "testrpc" command to

execute it. In addition to providing the simulated

network, this tool provides some default test accounts

to use.

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3.3 Web3.js

Web3.js is an API (Application Programming

Interface) created and provided by Ethereum, which

consists of a collection of already defined modules

and functions that allow interaction with the

Ethereum network both locally and remotely.

It is necessary to include this API in the desired

project by opening the Windows command line in the

project folder and executing the "npm init" command,

which will create a JavaScript Object Notation

(JSON) file with information about the project

dependencies. Then you need to run the command

"npm install web3@0.19". This command will

download and install version 0.19 of web3.

Optionally this API can be downloaded with the latest

version with the command "npm install web3".

However, the latest version is in the Beta phase, so

unexpected problems can be encountered. As a result,

version 0.19 is advisable.

3.4 Metamask and Lite-server

The next step is to install MetaMask, a Chrome

extension that allows you to access and interact with

the Ethereum network without running all Nodes, and

lite-server, a fast and light web server. To install

MetaMask, simply go to the extensions section of

Google Chrome and look for MetaMask. After adding

this, follow the installation steps. After installing

MetaMask you will need to install the lite-server in

the project, which will allow MetaMask to inject an

instance of the web3 API. To install the lite-server in

the project, it is necessary to open the command line

in the project folder and execute the "npm install lite-

server" command.

3.5 Remix IDE

The final step is to use the IDE offered by Ethereum

for programming Smart Contracts in Solidity. This

IDE is used through a browser. Simply enter the link

"https://remix.ethereum.org". This IDE allows you to

schedule the contracts and to launch these contracts

in the Ethereum network. For this, it is necessary to

access the "run" window and select the "Injected

Web3" environment. The account will be

automatically synchronized with the account created

in MetaMask.

Table 2: Used Programming languages.

Programming

Language

Purpose

Solidity

Ethereum’s Smart Contracts programming

language.

JavaScript

A programming language that links the

web page to Smart Contracts.

Html/Css

Language that allows you to build and

customize web pages.

3.6 Solidity

Solidity is the programming language for Smart

Contracts, created by Ethereum. It is a high-level

object-oriented language with Python, C ++ and

JavaScript influences. In this language it is possible

to define a Smart Contract and its properties, as well

as its behavior. Figure 3 shows an example of creating

a Smart Contract using the Solidity language, for this

guide we will use the version 0.5.5.

Figure 3: Example of a Smart Contract in Solidity.

In this example, a “version” name contract is

created in which you can define the version, a

description, and several authors that are saved in a

vector. We can check some language properties such

as variable types, String, bytes32 array and uint

(unsigned int), as well as the definition of a

constructor, some functions such as adding and

removing an author, and events. Of these properties

of Solidity referred to, the events stand out. These

Learning Smart Contracts for Business Environment

191

events offer the possibility to mark an action, called

through the keyword “emit” and defined through the

keyword “event”. Events allow you to schedule so

that when a certain event occurs, certain methods

within the code are executed, these events can then be

received in a standby function in the JavaScript code.

3.7 JavaScript

JavaScript is a programming language used for web

development and it will allow us to program the

interaction of the user with the Smart Contract

interface.

Through JavaScript, it is possible to obtain and

use the Web3.js API, which allows access to the

Ethereum network. Figure 4 shows an example of

JavaScript code on how to obtain an API instance.

Figure 4: JavaScript code example to obtain web3 API

instance.

In this example, it is shown how to obtain an

instance of the web3 API, first we check if it is

already defined, if it is then we just create the instance

with the current Provider, this happens because we

will use MetaMask which will inject a web3 API

instance, if it isn’t defined then we create a new

instance passing as parameters the new provider.

3.8 HTML/CSS

HTML (HyperText Markup Language) allows you to

easily create a web page and customize it with the

help of CSS (Cascading Style Sheets). This language

is necessary because it will be essential to provide an

interface so that Smart Contracts can be tested.

In general, following all these steps will be

possible to get an environment to start developing

Smart Contracts for Ethereum networks.

Using Remix, the contracts created in Solidity can

be deployed with MetaMask. When deploying a

contract, a window with information of the

transaction will be visualized (or shown), and using

HTML and CSS a simple Web page can be created to

test the Smart Contract. For the Web to correctly use

the created Smart Contract, it will be needed to copy

the Smart Contract Application Binary Interface

(ABI), as well as the contract HashCode given in the

remix IDE to the JavaScript code.

4 RELATED WORK

Currently, Blockchain technology has been exploited

for implementation in many areas, mainly due to the

great revolution caused by Smart Contracts and its

ability to allow the creation of decentralized

applications. Although the term Smart Contracts is

not new (Szabo, 1997), its application in Blockchain

opens the door to many possibilities that are already

under study. Data is the most valuable asset in any

organization (Santos, 2011), therefore any

Blockchain implementation can be a huge

improvement in some scenarios. For Smart Contracts,

there is already a free online introduction course

(Coursetro.com, 2019), which addresses the

preparation of the environment and the introduction

to the creation of Smart Contracts. In this course a

video tutorial is provided, as well as a written tutorial

on how to start programming the Smart Contracts,

preparing the environment and then introducing the

Solidity language. Despite the quality of the course,

there are some missing pieces because it is outdated

and also because it is meant to be just and introduction

to the theme. Besides this Smart Contracts

introduction course, also related to the work done in

this paper, but with more focus on business fields

there is also a framework that provides an easier

access to smart contracts for companies by allowing

the development of smart contracts logic in a

controlled English, business-level rules language

(Astigarraga T, 2018). This is a good solution to

easily implement blockchain and Smart Contract

technologies in companies however it doesn’t provide

the necessary knowledge and background to

understand blockchain only provides an ease of use

for companies who aim to work on top of this

technologies. Accordingly, the work presented in

sections II and III was intended to: 1) offer an

improved and updated step-by-step guide on how to

prepare the environment, 2) provide the first part of

introducing concepts and 3) introduce the application

strand in the business environment.

5 ADDIE MODEL

For the application of this guide in a business

environment, it is necessary to make it a well-

structured learning model. In this context, the ADDIE

model emerges, a model that allows transforming the

simple guide for creating the development

environment into a learning model that is

apprehended by a focal point responsible for the

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subsequent application to the human resources of the

company.

The ADDIE model, shown in Figure 5, is an

Instructional Design Model (IDM). It is a model that

proposes certain rules for organizing pedagogical

scenarios in order to define correct learning

objectives.

As an IDM, the ADDIE model serves as a

framework for the creation of training programs, and

for this reason this work follows this model’s guides.

The following are the essential phases of the

ADDIE (Analyze, Design, Develop, Implement and

Evaluate) model, as well as a brief explanation and

objectives for each phase.

• Analyze: In this phase, the goals and

objectives of the program are defined, and it

is evaluated the current knowledge of the

target audience in order to assess what the

program will need to do.

• Design: At this stage, the whole program is

planned in detail, from the content to the

approach and tools to be used.

• Development: The development phase is

where the developers create and assemble

the content assets that were created in the

design phase. It is also possible to review

the project at this stage.

• Implementation: This phase reflects the

constant modification of the program in

order to achieve maximum effectiveness. It

is at this stage that the program is adjusted

as required.

• Evaluation: It is the final phase and consists

of a final and meticulous test of the whole

program, which is divided into two parts:

formative and summative.

The formative assessment is done at all stages and

is done during implementation with both trainers and

students. The summative assessment is done after the

implementation phase ends and serves to improve the

program based on the results.

Figure 5: ADDIE model diagram (Educationaltechnology.

net, 2017).

6 LTEM BASED MODEL

In the previous section, the application of a learning

model, the ADDIE model, was mentioned for the

transformation of this guide into a well-structured

learning model. In this section, the evaluation of the

learning of this model is presented. Learning models

do not always work as expected, and from this

perspective, there is no guarantee that the created

model will play its role in perfection. To solve this,

we will resort to an evaluation model, the LTEM

(Learning-Transfer Evaluation Model), shown in

Figure 6.

The LTEM model (Worklearning.com, 2019) is

an evaluation model designed especially for

organizations with the ability to obtain feedback, to

improve learning processes and to validate their

results. This model is divided into 8 levels, where the

first step reflects an inadequate level and the last one

represents the ultimate learning objective. Benefits of

the latter can be applied in various learning scenarios

from a classroom to e-Learning. The following is a

brief explanation of each of these echelons.

6.1 Attendance

It corresponds to an evaluation method in which only

confirmation of presence in a certain class or training

is necessary. This method is inadequate because proof

of presence does not imply proof of learning.

6.2 Activity

It is a method that consists of evaluating learning

through the activity of the learner. This activity can

be measured in 3 ways:

• Attention

• Interest

• Participation

This method is also unacceptable for evaluation

because these 3 aspects do not reveal learning results.

Attention, interest, and participation are not

synonyms of learning and students who demonstrate

these 3 aspects may well not have learned. Examples

of this method are some online courses that require

you to periodically push a button to move forward. In

these methods, the demonstration of learning

outcomes is lacking, because, despite the 3 aspects,

students may not only have not learned, but they may

have learned the wrong thing or may have focused on

the wrong point.

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6.3 Learner Perceptions

In this method of evaluation, students’ feedback is

used to evaluate learning, and this is done through

student surveys. Usually in these types of inquiries

questions such as the competence of the instructors,

expectations of the course, among others, are asked.

This is another ineffective method because the

students’ expectations do not match the learning

outcomes.

6.4 Knowledge

Testing knowledge is another way of assessing

learning and can be done right after learning or can

occur after some time has passed; both forms test

knowledge regarding facts and terminology.

In the first one, knowledge is tested while the

information is still accessible and there is no time for

the information to be forgotten. For this reason, there

is no guarantee that this information is always

available in the future. On the other hand, knowledge

alone does not generate decision-making capacity.

For these reasons, this first way to assess learning by

testing knowledge quickly after being acquired is not

adequate.

In the second, knowledge is tested a few days

after its acquisition, which also implies the recall of

knowledge and therefore is a better option in relation

to the first form. However, it remains an inadequate

evaluation method for the same reasons.

6.5 Decision-making Competence

More important than just knowledge, learning

outcomes should reflect an understanding of

knowledge, as well as the ability to make decisions

and perform realistic tasks. This method consists of

evaluating through the ability to make decisions.

Given the importance of short and long-term

memory, we can divide this assessment also in these

two strands. The assessment of the ability to make

short-term decisions is made on the day of learning

and so it is still insufficient to be considered adequate

because there is no guarantee that this capacity will

be maintained over time. Long-term assessment, on

the other hand, is already considered an adequate

assessment for learning, offering realistic scenarios or

simulations in which the student will have to make

decisions.

6.6 Task Competence

At this level, both the ability to make decisions and

the actions taken are evaluated. In this evaluation, the

practice in a realistic environment is promoted. This

is done through the SEDA (Situation, Evaluation,

Decision, Action) model, which is a model that

represents in a simple way what happens in the real

world. Just as the decision-making ability of this

evaluation can occur in the short and long term, and

in the short term there is the same problem as in the

previous one, there is no guarantee that this

competence will be maintained in the long term. On

the long term this means that a student on this level is

capable of the next level, transfer of knowledge.

6.7 Transfer

At this level it is expected that there is a transfer of

learning to be applied in the real world, and this can

happen in two ways: Half transfer or Full Transfer. In

Half Transfer, this change is assisted. That is, there is

help for this transfer initiative. On the other hand, in

Full Transfer this transfer occurs without significant

help.

6.8 Effects of Transfer

The learning transfer result always generates impact,

and it is also up to this model to assess this impact and

generate a list of those affected, from team members

to the organization itself or family and friends.

Furthermore, it is necessary to assess whether this

impact is positive or negative.

Figure 6: LTEM Model diagram (Worklearning.com,

2019).

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We intend to improve this guide so that it can

include more than creating and preparing the

development environment, but also enabling the

launch of Smart Contracts in a simulated Blockchain

network. We also want to include the creation of a

simulated Blockchain network, where it’s expected

the possibility to create and develop a complete

decentralized application. More than creating these

learning models, it will be essential to also apply the

LTEM model to evaluate this learning offered in a

business environment.

7 CONCLUSIONS AND FUTURE

WORK

The gap in knowledge and skills in the business world

in Blockchain and especially in the growing Smart

Contracts, at a time when these concepts are

increasingly important, led to an attempt to create

something with the aim of filling that gap.

This article has offered in the first part, an

introduction to the Blockchain and Smart Contracts

domain, giving some background into its key

concepts and has described a step-by-step tutorial on

how to prepare the Smart Contracts development

environment.

In this work, a training model was proposed with

application in business environments following the

norms of the ADDIE model and already considering

the LTEM model for evaluation.

As future work, we intend to improve and apply

this first learning model by going further and deeper

within the field of Smart Contracts aiming at the

creation of decentralized applications using the

LTEM model for evaluation.

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