The days of ambiguous contracts might be behind us. Smart contracts bring in a future where contracts would be governed by objective logic, as opposed to subjective legalese.
What is Blockchain?
Blockchain is a distributed network. It is an open platform where participants can exchange money (think bitcoin), goods, and services. With a blockchain legal services and contracts can be openly negotiated on a distributed ledger. This will make going to court or a lawyer’s office unnecessary. Contracts would be agreed upon, written up, and interpreted virtually on the blockchain.
The World We Live in Today
Right now, we have contracts that are written by people and guaranteed by courts and the legal system. In the United States, even though contracts are written in English, they are often hard to understand if you are not a practicing lawyer. Many of these documents are larded with legalese that can be interpreted differently depending on which lawyer or judge reads the document.
How Smart Contracts Work
Smart contracts are an alternative to the contracts we use today. Smart contracts are hosted on the blockchain and are between two parties. Since the contract is on the blockchain, the transaction is open and transparent to all of the people on the block chain.
Another key feature of block chains, is that they would be dependent on code as opposed to legalese. This is the same code that powers computers and web applications. For the example, if someone has a student loan, and loses their job, their payments would automatically be lowered based on the code that powers the contract. If a company violates a labor law, the company would automatically be fined- there will be less time arguing over the meaning of words, because the contract is based on pure logic.
The Future Now
Smart contracts are a relatively new concept that is just now being explored. There are companies like Hedgy which create blockchain contracts for companies. If you know how to code, you can use platforms like Etherum to create your own smart contract.