Blockchain Smart Contracts: Current Challenges and Future Prospects
Rapidly developing Blockchain technology is immensely influencing the financial world and now we can already witness the rise of a new economy — the crypto-economy. However, Blockchain advancements are not limited only to finance. Blockchain developers have recently come up with a new Blockchain technology that is actively conquering the market and has already become highly popular among many businesses — Smart Contracts.
Smart Contracts are a disrupting technology for legal institutions. It allows businesses to exclude third parties from the creation of agreements and improve their inner paper flows. In this article, we’ll look into what Smart Contracts are, their benefits, and how companies are already applying this technology for their successful development.
Smart Contracts Challenges
The Externado University Civil Law Department organized a talk to answer questions on smart contracts and the Blockchain.
Until now, contracts have been verbal or written documents subject to review by notaries, making them more expensive, just by the fact of having to go to a Notary Office and paying the corresponding document fee.
This type of contract is not accessible to all and can be subject to interpretation. In search of a solution to the problems posed by this model, smart contracts were created.
Intelligent or electronic contracts are those exclusively accomplished through any digital medium when it has or can have, a real and direct impact on a specific agreement between two or more parties.
The above definition was offered by Dr. Wilson Furtado, an expert in Information Society Law, guest speaker at the talk organized by the Externado de Colombia University Civil Law Department.
Smart contracts were proposed over two decades ago by American cryptographer Nick Szabo. Today, with the blockchain development company of Blockchain technology, the concept is resurfacing and becoming a reality.
According to Furtado, the key to these contracts is they can be self-executing and self-enforcing; that is, not requiring an external mechanism, as required on verbal and written contracts. “Smart contracts are “scripts” (computer codes) written in programming languages, where the terms of the contract are simply statements and commands written in code,” stated the speaker.
Another new feature of smart contracts is they can be created by people, but also by machines or other programs tailored for this purpose. In fact, since their inception, smart contracts are legally valid and do not depend on authorities as they are visible to the parties and because they cannot be altered, thanks to the Blockchain development company.
To understand smart contracts, says Wilson Furtado, it is necessary to also keep in mind the Blockchain and bitcoins technology.
The blockchain is the system whereby smart contracts can be executed. This technology emerged in conjunction with “cryptocurrency,” better known today as Bitcoin, as a form of validation of transactions performed. ”Blockchain operations are made through nodes. These exist in digital programming, and they verify the data encrypted in smart contracts,” says Furtado.
During his presentation, the expert addressed the controversies still surrounding smart contracts, such as the possibility of falsifying parties’ identities, the risk of changing the clauses of the contract, and the lack of physical signatures.
Notwithstanding the preceding, Furtado stated these contracts are already being used by most large companies and business, and that it is vital to understand the concept for the future of the digital economy and Contract Law.