A type of Bitcoin transaction which is conducted using an oracle in order to execute a smart contract. The discreet log contract (discreet is a misspelling for discrete, which became common) enables parties to place bets and conditional payments via the Bitcoin blockchain and compatible networks, in a discreet manner where no third party (through the public ledger) can have access to its details, and even its very existence.
For that purpose, the two transacting parties lock funds in a multisig address, that will exchange hands only when the oracle releases the specified information at a predefined time (an oracle for a discreet log contract (DLC) can take the form of a data feed such an exchange’s publication of an security price, an announcement of a sports match on a website, etc.)
The contracts constitutes a monetary agreement to redistribute funds from a party to another, based on a set of predefined conditions, while keeping the details of such conditions confidential (unknown to the blockchain itself).
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