A smart contract is an agreement between people or organizations, which is in a form of a program code that runs automatically and receives all the necessary data through so-called “oracles” – programs that provide communication between the real and the digital world.
Rather, smart contracts should be referred to as a blockchain because today, such contracts are implemented through blockchain, and if you go into detail, perhaps 99% of smart contracts should be called ethereum contracts, since they are created on the air (ether- cryptocurrency). Continue reading Smart contracts as an innovative legal tool
In the age of high technology, the trend of smart is very
relevant. Smart contracts are a very contested topic.
A smart contract has huge advantages over the usual one.
First of all, it’s his defense. The system is structured in such a way that the
parties to the treaty and their resources are controlled and protected.
Participants in this process may not be concerned about the correctness of the
obligations, as if the conditions are not met, the contract will be cancelled.
In addition, the use of smart contracts can eliminate the need for
intermediaries, significantly reducing operating costs. This is a huge advantage
of this type of contract. A smart contract can be defined as a tool that
formalizes and protects computer networks by combining protocols with the user
Judith Rirearson is not sure that such contracts will
someday replace the usual ones, but everything is interchangeable, especially
it can help optimize the state system. The information is more secure and more
accurate, thanks to automatic input. In addition, smart contracts allow you to
execute transactions without additional persons, i.e. intermediaries. All
documents are encrypted and stored in the registry, which excludes forgery or
loss of these documents.
Issues of regulation and taxation of transactions with smart contracts have not been actively discussed by the international community for the first year. After all, it is the legal uncertainty in the sphere of crypto and blockchain that is a serious threat to world financial stability. Undoubtedly, the world situation on the blockchain field is extremely interesting to study, but I would be interested to share with your ideas precisely about the possibility of introducing smart contracts into the Ukrainian legal system.
This year I was lucky to get acquainted with Natalia Drick, head of the Blockchain Association of Ukraine and to attend her lecture on the prospect of developing smart contracts, crypto in Ukraine and the legal brain of their use. Thanks to that meeting, I was interested in the topic and now I can share my own thoughts on it.
So. What actions does Ukraine need to take to predeterminate the legal scope of smart contracts?
In modern days, a great number of lawyers dispute about Self-Executing Contracts implementation. Despite of unlimited potential, which will serve as an optimization of government management and economical and judicial branches, many lawyers push back against this idea. To begin with, we will find out what is the smart contract. Smart Contract is self-executing contract between the buyer and seller, which is written into lines of code. The code and the agreements exist in blockchain network. The code oversees all transactions execution. Applied in accounting, fiscal policy, electoral system, judicial system, notary and all registration processes.
Citing a number of legal and technical issues, a Legalweek panel pushed back the idea that contracts written entirely in code will ever be able to fully replace traditional, natural languages ones.
One of the most talked about benefits of smart contracts, which automatically execute the terms of an agreement, such as a transfer of funds, on the blockchain, is that they do away with the need of intermediaries. But lawyers at the “Getting Into the BlockTech Game” session at Legalweek 2020 in New York, pushed back against that idea, arguing that such a level of independence is not happening today, and likely won’t happen in the future.