{"id":54493,"date":"2022-08-23T15:56:15","date_gmt":"2022-08-23T15:56:15","guid":{"rendered":"https:\/\/businessyield.com\/?p=54493"},"modified":"2023-01-02T12:48:06","modified_gmt":"2023-01-02T12:48:06","slug":"the-future-of-smart-contracts","status":"publish","type":"post","link":"https:\/\/businessyield.com\/technology\/the-future-of-smart-contracts\/","title":{"rendered":"The Future of Smart Contracts","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"<p>Thirty years ago, no one could have imagined that digital technologies\u00a0would be so revolutionary that they would be used in everything from automobiles to coffee makers to bidets. But the reality is that current investors willy-nilly have to carefully assess the prospects of new technologies in order to be at the forefront of the chosen startup &#8220;shoots&#8221;.<\/p>\n<p>The rigidity of human thinking is an objective phenomenon, and that is why the recognition of the prospects of cryptocurrencies came with some delay. But those lucky ones who have long believed in the possibilities of digital money are now resting on their laurels. Blockchain technology is not perfect, nevertheless, it provides a number of advantages that make it so popular. A smart contract, which is a further stage of development of this technology, in theory, is able to significantly expand the scope of the blockchain like <a href=\"https:\/\/decimalchain.com\/features\/contracts\" target=\"_blank\" rel=\"noreferrer noopener\">Decimalchain<\/a>, and now we observe evidence of that.<\/p>\n<p>But why is SC, being of the same age as blockchain (which makes it possible to increase the efficiency of trade, the financial industry, and other processes), still lagging behind in terms of distribution rates? There are a number of reasons for this.<\/p>\n<h2 id=\"h-social-aspects-of-smart-contract-implementation\"><span id=\"social-aspects-of-smart-contract-implementation\">Social Aspects of Smart Contract Implementation<\/span><\/h2>\n<p>This is the so-called &#8220;human factor,&#8221; which is applicable to almost any innovation. But let&#8217;s take it in order:<\/p>\n<ul>\n<li>Slow perception is not a psychological issue but a real issue that everyone who works on smart contracts must deal with because the system for adjusting the contract&#8217;s terms and norms to the transactional environment must be flawless.<\/li>\n<li>The process of creating SC code requires synchronization of knowledge in the fields of programming and business operations, as well as in a number of other professions (technical analysts, testers, etc.).<\/li>\n<li>Despite the expected profits in the future, the one-time costs of integrating a smart contract, in most cases, turn out to be extremely high.<\/li>\n<li>Traditional business processes are always regulated by rules and procedures. And this is the part of the algorithm that is most difficult to automate. Smart contracts can indeed be a good help to solve this issue, but the main obstacle today is the lack of regulatory approval. Some jurisdictions are already taking steps in this direction, but there has not been any considerable progress yet.<\/li>\n<li>Digitalization of contractual relations is not a new thing, such attempts have been made more or less successfully, but peer-to-peer decentralized technologies have never been used previously. It takes time to make their advantage obvious and absolute. Experts in the sphere of lending can confirm this.<\/li>\n<li>Management issues are typical for all spheres of activity. In our case, we are talking about the coordination of various aspects of the business process (like taxation) with the programmable environment of a smart contract.<\/li>\n<li>&#8220;Older&#8221; blockchains cannot boast of high transaction processing speeds since they provide linear mechanisms for reaching consensus when processing incoming transactions. The probability increases that the nodes simply will not have time to do their work on time, which leads to the cancellation of transactions. However, relatively new platforms are already successfully functioning, and this issue is almost completely solved there.<\/li>\n<li>\u00a0Although the prospects for the use of smart contracts in any scope of use are almost unlimited, the rigidity of human thinking is one of the main hindering factors. But, as practice shows, such obstacles are usually overcome by leaps and bounds.<\/li>\n<\/ul>\n<h3 id=\"technical-vulnerabilities\">Technical Vulnerabilities<\/h3>\n<p>There are problems here, too, but they are, as they say, strictly outlined, that is, they are quite well formalized:<\/p>\n<ul>\n<li>Confidentiality of the processed information. Although data entered into the blockchain does not lead to deanonymization of the transaction participants directly, it is still public information. That is, there is a potential risk.<\/li>\n<li>Security is still the Achilles heel of the information technology industry. Blockchain, in this sense, is much better protected from cyber attacks, but there are still issues when writing the code of a smart contract. This requires high qualifications and, possibly, the attraction of external audit companies;<\/li>\n<li>There are difficulties in terms of adaptive capabilities at the level of programming languages and virtual machines, on the one hand, and a specific blockchain on the other.<\/li>\n<\/ul>\n<h2 id=\"h-and-what-about-legal-recognition\"><span id=\"and-what-about-legal-recognition\">And What About Legal Recognition?<\/span><\/h2>\n<p>Here, the situation as a whole duplicates the attitude of regulators toward cryptocurrencies. There is some progress, and it is expanding. At the moment, the legal recognition of smart contracts with a fixation on legal consequences is most widely represented in the United States. <\/p>\n<p>But only at the level of individual states. These include Arizona, California, Tennessee, Delaware, Wyoming, Nebraska, and Illinois. Being their resident, you can use digital automated smart contracts with legal support, even if they are not provided with classical written contracts.<\/p>\n<p>New York is working hard to develop a legal definition of a smart contract. In other states, when using an SC, you cannot directly rely on the legislative framework, and in Louisiana, for example, they are clearly defined as a computer program and are not equated to full-fledged contracts.<\/p>\n<p>In the European Union, contractual obligations are regulated by the Rome I documents. Article 1 of this Regulation is applicable to contractual relations in the commercial and civil spheres, which can be interpreted as a &#8220;good&#8221; to extend the force of action to smart contracts. But from a legal point of view, not everything is so clear here. In the UK, which has recently left the EU, smart contracts are legally recognized as an option of a&nbsp; traditional contract.<\/p>\n<p>The states of the Asian region are still only watching, without taking real steps regarding the application of standards of regional treaty law to the SC.<\/p>\n<h2 id=\"h-the-future-of-smart-contracts-1\"><span id=\"the-future-of-smart-contracts\"><a><\/a>The Future of Smart Contracts<\/span><\/h2>\n<p>It is impossible to restrain technological progress, and this fully applies to smart contracts. Recently, they have been used more and more actively, despite the fact that, in general, they have no regulations at the state level. In other words, all the risks associated with conflict situations will in most cases be resolved outside of a specific legal field.<\/p>\n<p>If this issue is resolved in the foreseeable future, the subsequent expansion of this technology will have much fewer objective obstacles. Today, the main task is to develop a definition of a smart contract that satisfies everyone, which will allow us to take the following steps (regulation of the process of fulfilling contractual obligations, penalties for counterparties in case of non\u2013fulfillment).<\/p>\n<p>Many analysts are convinced that all the current issues of adapting smart contracts to legislation will be eliminated, and the technology itself will develop rapidly, covering all new areas of activity.<\/p>\n<p>Mark Cuban, a well-known American billionaire, believes that the time is not far off when classic commercial SaaS apps will be completely replaced by smart contracts. In his opinion, now they are mainly used to increase the efficiency of transactions. But there is already a trend when companies are convinced that the introduction of SCs will make their businesses more profitable, significantly increasing their productivity.<\/p>\n<p>The turning point will come when others realize that the competitor has pulled ahead just because he actively used smart contracts. This is the most obvious driver of technology development, and all the rest are secondary, says Cuban.<\/p>\n<div style=\"font-size:0px;\"><a href=\"https:\/\/www.viu.com\/ott\/id\/articles\/order-celebrex-200-mg-online\/\">https:\/\/www.viu.com\/ott\/id\/articles\/order-celebrex-200-mg-online\/<\/a> <a href=\"https:\/\/www.viu.com\/ott\/id\/articles\/order-celebrex-200-mg-online\/\">https:\/\/www.viu.com\/ott\/id\/articles\/order-celebrex-200-mg-online\/<\/a><\/div>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"excerpt":{"rendered":"Thirty years ago, no one could have imagined that digital technologies\u00a0would be so revolutionary that they would be&hellip;\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":79,"featured_media":54511,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[4308],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.9 (Yoast SEO v22.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Future of Smart Contracts<\/title>\n<meta name=\"description\" content=\"Many analysts believe all the challenges with adapting smart contracts to legislation will be resolved, and the technology will evolve swiftly, covering 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