Smart contracts, a blockchain ++
Smart contracts are one of the most interesting aspects of BlockChain technology. However, not all public blockchains support them (for private BCs each case is a story in itself).
For example, Ethereum is the one with the most extensive ecosystem, while it is not implemented on the Bitcoin BC.
Smart contracts are conditional transactions, activated automatically and, not least inexorably (i.e. it is a serious problem to block them once uploaded to the BC), upon the occurrence of specific events (e.g. rent payment on the last day of the month).
However, the spread of smart contracts faces two formidable challenges.
The first of a technological nature, linked to the characteristic of immutability inherent in blockchain technology, with all the complexities linked to the management of events not foreseen by the contract, as well as simple second thoughts or coding errors that do not correctly express the will of the parties but which are encoded in an unchangeable way.
The second, however closely linked to the technological one, is on the legal aspects of smart contracts. The topic is complex and varied and includes, among others:
- compatibility with the European GDPR,
- the formal validity of the contractual formulation: is the code of a smart contract in the Solidity and Rust programming languages worth a contractual text in prose?,
- the formation of consensus between the parties: at what point can it be assumed that it is formed?
- regulatory harmonization at least at EU level and the definition and management of cross border contracts.
In short, a decidedly innovative and constantly evolving subject.
Under the aegis of the European Commission, the document “Smart Contracts and the Digital Single Market Through the Lens of a ‘Law + Technology’ Approach by Thibault Schrepel” was produced in 2021 which deals with the topic in an organic way, also proposing 20 hypotheses of intervention
An interesting summary comment, in Italian, by the legal journalist Claudia Morelli, is available on the Altex website.
This week’s question at Generative AI, on the home page, is about the legal validity of smart contracts: is a smart contract a valid and enforceable legal contract?
The answer is from ChatGpt, which, compared to Bard, better articulates and highlights the relationship with Oracles for recalling data external to the blockchain.