What are Ricardian Contracts? | CryptoNewsHerald


Ricardian Contracts are a type of smart contract that enables the transfer of digital assets in a secure and legally binding manner. The concept of Ricardian Contracts was developed by Ian Grigg, a financial cryptographer, and is based on the idea of representing a contract as a digitally signed document. This type of contract is said to be a hybrid of legal and technical documents, combining the legalese and formal structure of a traditional contract with the cryptographic security of a digital document. By using Ricardian Contracts, parties can create, store, and execute digital assets and agreements in a secure and legally binding way.

What are the features of Ricardian contracts?

Separation of the subject of the contract and the execution of transactions

Through the hash function, the Ricardian contract forms the link between the legal language and the digital dimension. All terms of the agreement are integrated into the contract, while the subject of transactions and their execution are strictly separated, which enhances protection. The contract establishes the agreement of the parties in such a way that programs controlled by the parties can execute the agreement.

Link to hash

The proposal to conclude a transaction (offer) is signed with a conventional digital signature. A contract is accepted when a transaction is agreed to that refers to the hash of the contract. In the case of a payment system, the guaranteed payment refers to the hash of the contract, as well as to the payer and payee. Payment can be made through a mutual transaction, as well as through a smart contract. In the case of a smart contract, a transaction is accepted based on the smart contract code.

hidden signature

The parties to the agreement sign the Ricardian contract using private keys. The signature of the contract provider is added to the document, which creates a legally binding and legibly written sentence in relation to the information (such as ownership) in the document.

If the parties to the agreement subsequently participate in the contract (for example, they want to make a payment), then the cryptographic hash identification method is rewritten from the original signed document. The use of the hash of the agreement ensures that a hidden signature is attached to the contract.

Bow Tie Diagram

The Ricardian contract separates the agreement of the parties in terms of time and scope and uses the so-called bowtie chart: a diagram of a legally binding contract showing all of its purposes.


Ricardian Contracts are a revolutionary way of using technology to create and enforce contracts. They provide a more secure and efficient way of transferring assets and allows for contracts to be written in a human-readable format. With their advantages of reducing transaction costs, Ricardian Contracts are becoming increasingly popular in the blockchain world, helping to create a more secure and efficient system of doing business.


What are Ricardian Contracts?

Ricardian Contracts are documents that accurately describe the terms of an agreement using a combination of natural language and computer-readable code. These agreements are designed to be easily understood by both humans and computers, providing a level of clarity and precision not seen in traditional legal documents.

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