Technological transformation brings changes of all kinds. And it is that even the way in which the contracts work and are drawn up has evolved. Therefore, in this article, we take a look at what smart contracts are and why you need to know their particularities if you want to practice law in this new digital era.
Smart Contracts or smart contracts can be executed and applied by themselves autonomously and automatically, without intermediaries or mediators. They avoid cumbersome interpretations because they are “scripts” (computer codes) written with programming languages. The terms of the contract being pure sentences and commands in the code that forms it.
A Smart Contract can be created by natural and/or legal persons, but also by machines or other programs that operate independently.
Blockchain And Smart Contracts
Also, these types of contracts do not depend on the authorities to be valid. By their nature, they constitute a code that is visible to all and cannot be modified because it is based on Blockchain technology. Which gives it that decentralized, immutable, and transparent character.
In other words, it could be said that the Blockchain acts as a digital notary, and the network allows the contract to be executed autonomously and automatically.
Thanks to the integration of these technologies, Smart Contracts are freely accessible and consulted, and the network gives proof of their existence. Their content, and their execution on a specific date and time. Likewise, the Blockchain allows that once the Smart Contract is signed. It is impossible to modify or alter it, which is fully protected and. In addition, is self-executing to faithfully comply with its content.
Bitcoin And Smart Contracts
Blockchain is not the only technology that has been integrated into this new type of contract; Bitcoin has also been part of this Bitcoin evolution.
Bitcoin has integrated Smart Contracts to carry out certain transactions, and it runs by default and is transparent to the user. This cryptocurrency created what some call programmable money. Through which a transaction with instructions can be carried out in a distributed and immutable way. Providing total security and eliminating misinterpretations.
Smart contracts work by following simple when … then statements that are written in code on a blockchain. A computer network performs actions when predetermined conditions are met and verified. These actions may include disbursing funds to the appropriate parties, registering of vehicle, sending notifications, or issuing the ticket. The Blockchain then updated when the transaction is complete. This means that the transaction cannot be changed, and only authorized parties can see the results.
In a smart contract, there may be as many stipulations as necessary to satisfy the participants that the task will be performed satisfactorily. To set conditions, participants must determine how transactions and their data are represented on the Blockchain, agree on the “if / when … then …” rules governing these transactions, explore all possible exceptions, and define a framework for resolving disputes.
Smart Contracts Defined
Smart contracts are simply programs stored on a blockchain that is executed when predetermined conditions are met. They are generally used to automate the execution of an agreement so that all participants can be immediately sure of the result without involving an intermediary or wasting time. They can also automate a workflow, triggering the next action when conditions are met.
The smart contract can then be programmed by a developer. Although more and more organizations using Blockchain for enterprises are providing templates. Web interfaces, and other online tools to simplify the structuring of smart contracts.