📌 Discreet Log Contracts Summary
Discreet Log Contracts, or DLCs, are a way to create smart contracts on Bitcoin and similar blockchains. They allow two or more parties to make a financial contract that is settled according to an agreed outcome, such as the price of an asset on a certain date, without revealing the contract details on the blockchain. DLCs use cryptography so that only the outcome and settlement are visible, keeping the terms and conditions private.
🙋🏻♂️ Explain Discreet Log Contracts Simply
Imagine you and a friend bet on a football match, and only the referee knows who won. The referee gives a secret code to the winner, and only that person can claim the prize. No one else knows the details of your bet or who was involved, just the final result. Discreet Log Contracts work like this, hiding the contract information and only showing the outcome.
📅 How Can it be used?
A sports betting app could use Discreet Log Contracts to allow users to bet on matches privately and securely using Bitcoin.
🗺️ Real World Examples
A cryptocurrency derivatives platform uses DLCs so that users can bet on the future price of Bitcoin. When the contract ends, an external source, like a price feed, confirms the result, and the payout is made automatically without revealing the bet’s details to the public blockchain.
Two companies use a DLC to hedge against currency fluctuations. They agree on contract terms privately, and at settlement, only the final payment appears on the blockchain, keeping their business arrangements confidential.
✅ FAQ
What are Discreet Log Contracts and how do they work on Bitcoin?
Discreet Log Contracts are a way for people to make agreements using Bitcoin that are settled based on real-world outcomes, like the price of an asset at a certain time. The clever part is that the actual contract details stay private, with only the final result and payment showing up on the blockchain. This keeps personal and financial information hidden while still using the security of Bitcoin.
Why would someone want to use a Discreet Log Contract instead of a regular smart contract?
People might choose Discreet Log Contracts because they add an extra layer of privacy. With traditional smart contracts, all the rules and terms are public for anyone to see. DLCs keep these details off the blockchain, so only those involved know what was agreed. This is especially useful for sensitive financial agreements.
Can Discreet Log Contracts be used for things other than betting on prices?
Yes, Discreet Log Contracts can be used for many types of agreements where the outcome can be verified by a trusted source, not just for price bets. For example, they could be used for insurance payouts, event tickets, or any situation where two people want to make a deal that depends on something happening in the real world.
📚 Categories
🔗 External Reference Links
👏 Was This Helpful?
If this page helped you, please consider giving us a linkback or share on social media!
📎 https://www.efficiencyai.co.uk/knowledge_card/discreet-log-contracts
Ready to Transform, and Optimise?
At EfficiencyAI, we don’t just understand technology — we understand how it impacts real business operations. Our consultants have delivered global transformation programmes, run strategic workshops, and helped organisations improve processes, automate workflows, and drive measurable results.
Whether you're exploring AI, automation, or data strategy, we bring the experience to guide you from challenge to solution.
Let’s talk about what’s next for your organisation.
💡Other Useful Knowledge Cards
Lean Six Sigma in IT
Lean Six Sigma in IT is a method that combines two popular approaches, Lean and Six Sigma, to improve how IT services and processes work. Lean focuses on removing steps that waste time or resources, while Six Sigma aims to reduce mistakes and make processes more predictable. When used together in IT, these methods help teams deliver better software, faster support, and more reliable systems by continually finding and fixing problems.
Referral Marketing
Referral marketing is a strategy where businesses encourage existing customers to recommend their products or services to others, often by offering rewards or incentives. This approach relies on word-of-mouth and personal recommendations, which are generally trusted more than traditional advertising. Companies use referral marketing to reach new customers through the networks of their current users.
Quantum Feature Analysis
Quantum feature analysis is a process that uses quantum computing techniques to examine and interpret the important characteristics, or features, in data. It aims to identify which parts of the data are most useful for making predictions or decisions. This method takes advantage of quantum systems to analyse information in ways that can be faster or more efficient than traditional computers.
Load Tracking
Load tracking is the process of monitoring and recording the progress and location of goods or shipments as they move from one place to another. It helps companies and customers know where their delivery is at any given time and estimate when it will arrive. This information is often updated in real-time using GPS or other tracking technologies.
Knowledge Base Software
Knowledge base software is a tool that helps organisations store, organise and share information in a central location. It allows users to create articles, FAQs, guides and other resources that can be easily searched and accessed by staff or customers. This software is used to improve communication, solve problems faster and reduce the need for repetitive explanations.