Blockchain and Smart Contracts

What is blockchain and its benefits?

When people talk about blockchain, generally they are talking about “blockchain”, properly so-called and smart contracts. 

Blockchain itself, is simply a way of holding information without needing an intermediary. The way that blockchain works means that it is more secure, and more accessible than other means of holding information 

What are smart contracts?

Smart contracts are not smart and not contracts. What they are is simply a form of automation, which work on the general principal of “if” and “then”. 

There are limitations when using smart contracts. Firstly, as they are not smart they cannot make value decisions, and there is no element of common sense in the way they work. 

Secondly, whilst a smart contract can discharge a legal contract, it is not in itself a contract in the legal sense, for example because there is no bilateral agreement, no meeting of the minds required to make a contract. The key point is that whether a contract exists in the legal sense is determined by whether the requirements for a valid contract have been met under the law of that contract; you do not have a legal contract simply because you call the AI a “smart contract”. 

How do you overcome the limitations of smart contracts?

The best way to overcome these limitations is to put in place an underlying legal contract. If we have a set of rules embedded into a legal contract regarding – and provisions in the legal contract not need to include these in a smart contract.