Are blockchain-based smart contracts stupid?

Blockchain-based smart contracts were supposed to revolutionise transactions, however, use cases are hard to come by and they appear unable to meet the needs of businesses

Smart contracts are only a good as the quality of the data they receive; the well-known garbage in, garbage out conundrum.

Blockchain-based smart contracts are getting more than their fair share of attention in the media these days. There’s no shortage of ‘influencers’ in the blockchain community leaping to the technology’s praise. Smart contracts, they say, make business deals more efficient and cut out the need for the middleman.

But what exactly is a smart contract and are they all that smart?

The concept of smart contracts was first conceived by Nick Szabo, a legal scholar and cryptographer known for laying the groundwork for digital currency. Back in 1994, he had the idea that decentralised ledgers could be used as self-executable contracts.

Essentially, smart contracts are software codes that contain a set of rules which executes automatically, without a third party, if the rules of the contract are met.

Advocates of smart contracts say they enable transactions and agreements to be carried out without intermediaries such as banks and lawyers. They also make transactions traceable, transparent, and irreversible, thus reducing conflicts and increasing oversight. Furthermore, they offer the opportunity to automate transactions.

But despite all the excitement, the commercial use of blockchain-based smart contracts remains nascent with many initiatives stuck in a sort of proof-of-concept limbo.

Are smart contracts ‘stupid’?

Perhaps this is because smart contracts aren’t smart enough yet. There’s a huge amount of nuanced legal and practical expertise that goes into drafting contracts in the real world that you’re never going to get from smart contracts in their current iteration. Contracts are subject to…

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