Smart Contracts and Legal Challenges
Blockchain is almost everywhere these days. There is an undeniable hype around it and only the time will show us in which fields this technology will manage to survive. One of the most cited applications of the Blockchain technology is smart contracts, introduced with the Ethereum blockchain, then copied and used in different blockchain-based platforms.
A smart contract is, in fact, a piece of code running on a Blockchain, which is an (1) append-only (2) digital ledger under which the data is stored (3) not by central actors but by different participants (4) in blocks that are connected with cryptographic algorithms. For a detailed analysis on how the Blockchain technology works, you can check here.
Smart contracts are not ‘contracts’ that are ‘smart’
Why are they called ‘contracts’? What makes them different from other codes? First of all, it must be emphasised that this is a misnomer. Smart contracts are neither smart nor contracts, at least not necessarily. The underlying idea why these are called ‘contracts’ is possibly that they are used to transact by people whereas the reason they are claimed to be ‘smart’ is probably the fact that they are automatically executed when pre-determined conditions are satisfied.
