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Published by Enhelion, 2021-11-09 01:54:35

Module 4

Module 4

MODULE 4

SMART CONTRACTS, SMART SECURITIES AND DERIVATIVES

4.1. INTRODUCTION

In a customary centralized model of commercial relationships, there is always
a third party who is an outsider that stands between the two parties as they
make a contract through certifying terms and conditions of a contract. This
third party may be a banking institution, a law enforcement company, a
government institution, or some other intermediary. When building
connections within a centralized model, these businesses are dependent on
middle men, who puts clients at risk. Also, central systems cannot guarantee
payments and execution of contracts. The growth of blockchain technology,
which enables businesses to construct decentralized models, opens new
skylines for organization to make transactions and agreements. And one of
the technological advancements which suggests an alternative to the
traditional model is the smart contract.

Various international companies have already hopped onto the blockchain
bandwagon and are working on their own projects to stay ahead of the
competition. Main technology providers like IBM, Microsoft, TCS,
Accenture are rendering blockchain solutions to their clients. Many tech start-

ups too are belligerently capitalizing on the affluent by building new products
and services that depend on the technology. For other class of business, the
big question before the is that how blockchain implementation can benefit
them. There is no doubt that contemporary business environments require
companies to make their technology and innovation as fundamental to their
strategy.

4.2. WHAT IS SMART CONTRACT?

The term “smart contracts” was originally coined by cryptographer Nick
Szabo in the early 1990s. Szabo saw a contract as a set of promises agreed to
by a meeting of the minds. He aptly noted that computers make it possible to
run algorithms. First, the contract terms are translated into code—a series of
if-then functions. Once a condition is met, the smart contract will take the
next step necessary to execute the contract. Thus, the term “smart contracts”
refers to computer transaction protocols that execute the terms of a contract
automatically based on a set of conditions.1

A smart contract is cryptograph or a code generated by the computer
consecutively on top of a blockchain encompassing a set of rules under which
the parties to the smart contract decide to interact with each other. When the
pre-defined rules are met the agreement between the parties are automatically
executed. The smart contract code enables, authenticates, and implements the

1 Ng, T. (2018). Blockchain and Beyond: Smart Contracts. [online] Americanbar.org. Available at:
https://www.americanbar.org/groups/business_law/publications/blt/2017/09/09_ng/ [Accessed 2 Dec. 2018].

negotiation or performance of an agreement. It is the simplest form of
decentralized computerization.

It is an instrument involving digital properties and two or more parties, where
some or all of the party’s credit assets into the smart contract and the assets
mechanically get redistributed among those parties according to a formula
based on certain data, which are not known at the time of commencement of
contract.

The term smart contract is usually mistaken since a smart contract is neither
smart nor do they have to be confused with a legal contract.

§ A smart contract can only be as smart as the people’s code taking into
account all available information at the time of coding.

§ While smart contracts have the potential to become legal contracts if
certain pre-conditions are met, they should not be confused with legal
contracts accepted by courts and or law enforcement. However, we will
probably see a fusion of legal contracts and smart contracts emerge
over the next few years as the technology becomes more mature and
widespread and legal standards are adopted.

Smart contracts radically reduce transaction costs. Auto enforceable code –
whether on the protocol level or on the application level – standardizes
transaction rules, thus reducing the transaction costs of:

§ reaching an agreement,

§ formalization, and

§ enforcement.2

A smart contract can validate the relationships between people, organizations
and the assets they own. The agreement of the smart contract defines the
conditions, rights and obligations – to which the parties of smart contract
have to give their consent. It is often predefined, and agreement is reached by
simple opt-in actions. This transaction rule is set in digital form, in machine-
readable form. These rights, duties and obligation recognized in the smart
contract can now be automatically implemented by a computer or a network
of computers as soon as the parties have come to an agreement and met the
conditions of the agreement.

The notion of a smart contract is not new. However, Blockchain seems to be
the catalyst for smart contract implementation. The most original form of a
smart contract is a vending machine. The rules of a transaction are
programmed into a machine. You select a product by pressing a number
related to that product, insert the coins, the machine acts as a smart contract
checking whether you inserted enough money, if yes, the machine is
programmed to eject the product, and if you inserted too much money, it will
also eject the change. If you didn’t insert enough money, or if the machine

2 KUMAR, A. (2018). Smart Contracts On The Blockchain: A deep dive in to Smart Contracts. [online] Medium.
Available at: https://medium.com/@abhibvp003/smart-contracts-on-the-blockchain-a-deep-dive-in-to-smart-
contracts-9616ad26428c [Accessed 2 Dec. 2018].

ran out of the money, you will get your change back. Automatic vending
machines not only slashed transaction costs by making human vendors
obsolete, but they also expanded service, offering 24/7 availability instead of
limited opening hours of a kiosk.

It is a mechanism involving digital assets and two or more parties, where
some or all of the party’s deposit assets into the smart contract and the assets
automatically get redistributed among those parties according to a formula
based on certain data, which is not known at the time of contract initiation.3

When all parties to the smart contract fulfill the pre-defined rules, the smart
contract will auto execute the transaction. The objective of smart contracts is
to provide transaction security more than the traditional contract law and
reduce transaction costs of management and implementation.

Smart contracts have the capacity to become legal contracts if certain
conditions are met, they should not be confused with legal contracts accepted
by law court and or law implementation. However, we will probably see a
fusion of legal contracts and smart contracts develop over the next few years
as the technology becomes more matured, widespread and legal values are
accepted.

Several people are critical of the term “smart contract”. One reason being that
a smart contract is not essentially smart. It is just a set of orders and

3 Ibid.

instructions that anyone can write, and people are very capable of creating
some smart contracts on their own.

The term smart contract is misleading because it is not really a contract, not
in the sense that it is anything that needs to be complied. A normal contract
has legal penalties in the ‘real world’. If a party to the contract does not
uphold their part of the agreement, the legal system can be used to hold them
liable. On the contrary, a smart contract does not have to be supported by
anyone, it is a set of instructions that self-executes. A smart contact does not
have much preference in the ‘real world’. It is only able to send transactions
to other accounts on the blockchain, any other priority must be acquired by
creating a legal wrapping around the blockchain agreement.

4.2.1. What's the difference to other automated transactions?4

Established forms of automated contract execution of an underlying
agreement (such as automated banking payments, standing orders, buying
music online and downloading it after payment has been confirmed) differ in
the following ways from smart contracts:

• There are third parties involved that retain control over the respective
transaction. A bank could interfere in the process and subtract or add
money to any account at any time. Instead, smart contracts are not
administered and controlled by such third party.

4 https://www.freshfields.com/en-gb/our-thinking/campaigns/digital/fintech/whats-in/whats-in-a-smart-contract/

• The computer program is usually run on such third party's computer
(server), ensuring, for example, the bank's internal control instead of
seeking external validation, which can be done via the use of
blockchain technology without the need of an intermediary.

• Traditional forms of automated transactions lack technical flexibility:
one can only use the conditions and attributes provided for by the
developer of the respective automation application. For example,
traditional automated transactions can hardly be triggered upon events,
such as specific weather conditions, unless the developer implemented
such an option. In contrast, a smart contract permits for such a trigger
even if the developer did not explicitly provide for this condition when
creating the code.

• With traditional automated contract executions, the code is exclusively
in the hands of the third party responsible for it. When it comes to
smart contracts, the use of blockchain technology entails that all
participants are running the same code, and this code is stored with all
participants (or even publicly available). So, smart contracts create trust
by using the decentralised, open and cryptographic nature of
blockchain technology that allows people to trust each other and
transact peer-to-peer, making the need for intermediaries and third
parties obsolete.

4.3. SMART CONTRACT CODE IS A LAW

A smart contract essentially consists of two elements which you need to
understand/trust:

§ The code and how this are interpreted

§ The immutability of the blockchain

Just like with normal contracts, it´s important to understand the actual content
of a smart contract when interacting with it. But unlike a normal contract,
which is written in legalese and interpreted by the legal system, the content of
the smart contract is written in computer code and interpreted by computers.
So, what does smart contract code actually look like.

The smart contract code is the terms and conditions that you are signing up
for when interacting with a smart contract. As long as you trust the
blockchain that the smart contract resides on, you know that the code will
execute exactly as programmed — so no breach of agreement can exist. It is
important to note however, that working as programmed does not mean that it
will work as intended if there are errors in the code.5

Smart contracts can be used for simple financial transactions like transferring
money from A to B. They can also be used for recording any kind of
proprietorship and property rights like land registries and intellectual

5 Rubygarage.org. (2018). A Guide to Smart Contracts and Their Implementation. [online] Available at:
https://rubygarage.org/blog/guide-to-smart-contracts [Accessed 2 Dec. 2018].

property, or managing smart access control for the distribution of economy,
just to name a few. Also, smart contracts can be used for more multifaceted
transactions like governing a group of people who share the same interests
and goals. Decentralized Autonomous Organizations (DAOs) are such an
example for more complex smart contracts.

4.4. HOW TO CREATE A SMART CONTRACT?

To create a smart contract, you need:

§ Subject of the contract: The program must have access to goods or
services under contract to lock and unlock them automatically.

§ Digital signatures: All the participants initiate an agreement by signing
the contract with their private keys.

§ Contract terms: Terms of a smart contract take the form of an exact
sequence of operations. All participants must sign these terms.

§ Decentralized platform: The smart contract is deployed to the
Blockchain of this platform and distributed among the nodes of the
platform.6

6 KUMAR, A. (2018). Smart Contracts On The Blockchain: A deep dive in to Smart Contracts. [online] Medium.
Available at: https://medium.com/@abhibvp003/smart-contracts-on-the-blockchain-a-deep-dive-in-to-smart-
contracts-9616ad26428c [Accessed 2 Dec. 2018].

4.5. BENEFITS OF A SMART CONTRACT

Smart contracts use all the benefits of Blockchain technology & provide:

§ Security: The smart contract is encrypted and distributed among nodes.
This guarantees that it will not be lost or changed without your
permission.

§ Standardization: There is a wide range of different types of smart
contracts nowadays. You can choose one and change it according to
your needs.

§ Trustworthy: Bypass the traditional principal-agent dilemmas of
organizations, thus providing an operating system for what some refer
to as “trustless trust”.

§ Direct dealings with customers: Smart contracts remove the need for
intermediaries and allow for transparent, direct relationships with
customers.

§ Resistance to failure: Since businesses aren’t dependent on a third
party, no single person or entity is in control of data or money.
Decentralization means that even if any individual leaves the
blockchain network, the network will continue to function with no loss
of data or integrity.

§ Fraud reduction: Since smart contracts are stored in a distributed
blockchain network, their outcome is validated by everyone in that
network. Therefore, no one can force control to release other people’s
funds or data, as all other blockchain participants would spot this and
mark such an attempt as invalid.

§ Cost efficiency: Eliminating intermediaries removes additional fees,
allowing businesses and their customers not only to interact and
transact directly but also to do so with low to no fees for transactions.

§ Record keeping: All contract transactions are stored in chronological
order in the blockchain and can be accessed along with the complete
audit trail.7

This implies that you do not have to trust people and organizations, you trust
a code, which is foundation and provides transparent procedures. With
blockchains and smart contracts we can now visualize a world in which
agreements are implanted in digital code and stored in transparent and shared
databases, which are protected from erasure, tampering, and modification.

In this world every contract, every procedure, job and payment would have a
digital record and signature that could be recognized, legalized, stored, and
common Intermediaries like lawyers, agents, and bankers, and public
managers might no longer be necessary. Individuals, establishments,

7 KUMAR, A. (2018). Smart Contracts On The Blockchain: A deep dive in to Smart Contracts. [online] Medium.
Available at: https://medium.com/@abhibvp003/smart-contracts-on-the-blockchain-a-deep-dive-in-to-smart-
contracts-9616ad26428c [Accessed 2 Dec. 2018].

machineries, and processes would freely transact and cooperate with one
another with little friction and a fraction of present transaction charges.

A smart contract can formalize the relations between people, organizations
and the assets they own. The agreement of the smart contract defines the
conditions — rights, duties and obligations to which the parties of smart
contract shall give their consent.

4.6. EXAMPLE OF A SMART CONTRACT

If X and Y don’t know and don’t trust each other, they usually need a trusted
third party to serve as an intermediary to verify transactions and enforce
them. With smart contracts & blockchains, you don’t need those trusted
intermediaries anymore for clearing or settlement of your transactions. Take
the example of buying and selling a car:

On the Blockchain, once all involved authorities and companies are on a
blockchain, a smart contract could be used to define all the rules of a valid
care sale. If Alice wanted to buy the car from Bob using a smart contract on
the blockchain, the transaction would be verified by each node in the
Blockchain Network to see if Bob is the owner of the car and if Alice has
enough money to pay Bob. If the network agrees that both conditions are
true, Alice automatically gets the access code to the smart lock for the garage.
The blockchain registers Alice as the new owner of the car. Bob has € 20,000
more on his account, and Alice € 20,000 less. No middlemen required. On the
Blockchain, who owns what is transparent and at the same time anonymous

or pseudonymous. This means that every computer running the blockchain
protocol could check whether a certain person is the rightful owner of the car
or not. Stealing cars won’t be as easy as today, especially once we have smart
keys granting access control verified on the blockchain, to unlock our future
vehicles. As the owner of the car, you could authorize other people to drive it
(stating the public key of the respective individual). In such cases opening the
car would only be possible with a smart key on the Blockchain.8

4.7. BLOCKCHAIN NETWORKS USING SMART CONTRACTS

While we have discussed the working of the smart contracts in context with
blockchain technology there are plenty of examples of smart contracts which
are executed within various blockchain systems and ventures, the few notable
examples are Bitcoin and Ethereum.

4.7.1. Bitcoin

Though Bitcoin is frequently recognized for transactions of the Bitcoin
cryptocurrency, its procedure can also be used to generate smart contracts.
Bitcoin offers a programming language that permits for customizing smart
contracts like payment channels, multi signature accounts, time locks and
escrows. In particular, there is a distinct smart contract platform called Root
Stock built on Bitcoin’s blockchain.

8 Ibid.

4.7.2. Ethereum

Ethereum is the utmost protuberant smart contract framework, formed and
designed especially to support smart contracts. This agenda, planned in the
Solidity language, is a devolved platform that runs smart contracts without
any possibility of stoppage, censorship, scam, or third-party intrusion. The
Ethereum blockchain database stores transactions between people,
transactions involving smart contracts, and their source code.

4.8. SMART SECURITIES

Smart contracts are critical in supervising the evolution from Blockchain 1.0
to Blockchain 2.0. The term “smart contract” is a vague concept. Attorney
and computer programmer Nick Szabo first defined the term in 1994. Much
of the haziness surrounding smart contracts stems from the interaction
between the traditional legal understanding of contracts and the “smart”
feature of the code. Several online activities are administered by code and are
legally related but they lack the legal elements of contract formation. Smart
contracts rely on the knowledge that the code can enforce and implement the
terms of the agreement. A smart contract is “self-enforcing” if the software
implements the terms without any supplementary input from the parties. This
permits an agreement to occur even in the absence of trust. For example,

Szabo considered a simple smart contract governing a car loan. The loan’s
terms are expressed in code and programmed into the car.9

The contract no longer hinges on the debtor’s willingness to abide by its
terms; if the debtor has the means to do so, the software ensures that he or she
makes the payments. If the debtor cannot make the payments, the smart
contract invokes a lien by revoking the debtor’s permission to start the
ignition. This hypothetical loan also highlights the smart contract’s cost
saving benefits. The bank does not need to devote manpower to constantly
monitor the status of each loan and handle the paperwork required to invoke a
traditional lien. It does not need to hire a debt collector, nor does it need to
contend with the possibility that an unscrupulous repo man may expose it to
additional liability. Szabo’s ideas were ahead of their time in the mid-1990s
(though perhaps somewhat prophetic of today’s era of driverless cars). Most
smart contracts, to this point, have not demonstrated quite the same ability to
process inputs as Szabo envisioned. Their most common use has been in
multimedia digital rights management (“DRM”). Purchasing or renting
content on iTunes or a comparable service amounts to acquiring a limited use
license. For example, users can view rental content only over a limited
period, they can access music only on a certain number of compliant devices,
and they can burn audio playlists to CDs only a few times.10

9 Surujnath, R. (2018). OFF THE CHAIN! A GUIDE TO BLOCKCHAIN DERIVATIVES MARKETS AND THE
IMPLICATIONS ON SYSTEMIC RISK. [online] News.law.fordham.edu. Available at:
https://news.law.fordham.edu/jcfl/wp-content/uploads/sites/5/2017/06/Surujnath-Note_pdf_publishing.pdf
[Accessed 3 Dec. 2018].
10 Ibid.

DRM activities achieve results without presumptuous monitoring and
implementation costs by making it impossible for users to violate and intrude
the smart contract. Each song comprises software that assists as the
agreement’s monitoring device. A movie rental, for example, is the time
printed when the user begins watching it. Twenty-four hours later, the
software retracts the user’s ability to access the video. Yet DRM smart
contracts are restricted in their abilities. Unlike Szabo’s utopian contracts,
DRM does not process inputs and cannot apply the contract’s terms. It thus
has restricted functionality. Unlike simplistic DRM, smart contracts which is
advancing can use the blockchain’s computational authority and allocate the
fundamental assets once the agreement’s conditions are fulfilled. Smart
contracts uploaded to blockchains that are automated in code that embodies
the “terms” of the agreement.

In a way, the coded language of a smart contract is less obtuse than that of its
written counterpart. To laypersons, traditional contracts evoke images of
dense text walls, impenetrable legalese, and linguistic butchery designed to
mitigate liability. But smart contracts reduce each term to its basic
component in the form of “if/then” statements. For all their programming
complexity, it may be best to think of smart contracts as conditional
payments. The process by which a smart contract is uploaded to the
blockchain varies across the different types of blockchains. Because smart
contracts are customizable and can be used for a variety of purposes, it is
advantageous to use a blockchain that supports a wide range of programming
languages. Bitcoin’s chief competitor, Ethereum, was specifically designed

for smart contracts, and thus permits users more freedom in drafting their
programs. The process of uploading a smart contract to the Ethereum
blockchain is not dissimilar from the Bitcoin transacting process discussed
earlier. The user does so through a transaction containing the smart contract’s
code. This special transaction does not go to the counterparty’s address, as
with a normal Bitcoin transaction. Instead, nodes on the network recognize
the smart contract and create a special address for it. The parties can later
trigger the contract by sending a transaction request to the smart contract’s
address that fulfills the conditions necessary for the contract’s execution.11

Triggering a smart contract can result in a chain reaction: it can automatically
lead to another transaction request, which may trigger another smart contract,
and the process can theoretically repeat itself an infinite number of times.
This means that satisfying a single condition can trigger a series of smart
contracts that are contingent on that obligation. There must then be a way for
the blockchain to monitor these triggering conditions. The blockchain,
however, cannot keep track of every parameter that can influence the
activation of a contract. Multi signatures and oracles resolve this problem by
keeping track of information off the blockchain and providing a trusted
signature once a condition to the contract is satisfied. As the name suggests,
multi-signature (or multi-sig) allows for more than two parties to enter into
an agreement. With a “2-of-3” contract, there are three parties to the
agreement and the contract requires two parties to sign with their private

11 Surujnath, R. (2018). OFF THE CHAIN! A GUIDE TO BLOCKCHAIN DERIVATIVES MARKETS AND THE
IMPLICATIONS ON SYSTEMIC RISK. [online] News.law.fordham.edu. Available at:
https://news.law.fordham.edu/jcfl/wp-content/uploads/sites/5/2017/06/Surujnath-Note_pdf_publishing.pdf
[Accessed 3 Dec. 2018].

keys. This can create escrows by allowing buyers to commit money to sellers
and to third parties. If the parties consummate the transaction without issue,
the buyer and seller sign the agreement, and the payment goes through. In the
event of a dispute, the third party can arbitrate the dispute and release the
funds. Oracles use multi-sig to incorporate outside information into the
blockchain. An oracle serves as an additional signatory that attests to
information that is not tracked by the blockchain. It can reference an agreed
upon data source and serve as an additional signature to a transaction that is
contingent on a real-world event. Once the required condition is met, the
oracle signs the transaction with its private key to effectuate the transaction.
In a trading system that relies on numerous ledgers to keep track of different
assets, the oracle can facilitate a payment that is contingent on a factor
tracked by another blockchain. Smart contract technology is still very much
in its early stages of development, so some of the advantages and
disadvantages may not be clear yet. But even as of now, the technology is
compelling enough to attract significant investment. 12

4.9. DERIVATIVES

Derivative contracts are financial instruments deriving from certain
underlying assets, such as stocks, bonds, goods or even interest rates.
Derivative contracts are becoming increasingly important to manage financial
risk effectively and to create synthetic exposures to asset classes.
Wall Street and Main Street traders contend that the progress in platform

12 Ibid.

technology will profoundly change the frequently used securities known as
derivative contracts. The distributed books, unimaginable just a few years
ago, are on the edge of a cliff of a new era of innovative financial engineering
and risk management accuracy.

Blockchain technology critics see the improvement in the settlement of funds
and the risk assessment of counterparties as a shortening of the liquidity cycle
for different derivative positions, making it much quicker for financial
institutions to inject liquidity into the system for other transactions. "In order
to maintain liquidity levels firms, have to overcompensate where the money
has to be tied up for some time before the next transaction," said Derick
Smith, Cofounder and CEO of Chain reactor. "Transaction time will improve
and risk assessment will improve. Most other players will get to see who they
are providing liquidity for."

Industry leaders expect distributed large- scale infrastructure to inspire new
approaches to financial engineering to customize derivatives consisting of
individual cash flows to meet precise timing and credit risk criteria. Industry
leaders can also save costs by eliminating redundant IT systems and overhead
trading and risk management. The financial industry currently spends
approximately $ 150 billion per year on IT and operational expenditure, plus
$ 100 billion on post-trade and security service charges. It has been reported
that many Wall Street companies have doubled their capital budgets for
technological development in blockchain.

Despite all the vigor around blockchain and intelligent contract technology,
there are still many challenges which exist. In a decade, some experts
estimate that new systems will be fully implemented. The well- documented
connectivity challenge continues to impede progress.

The derivatives industry is highly intermediated and blockchain computing
offers a chance to reduce costs and increase efficiency. The basic
characteristic of derivatives is long - term risk. Regulators often say that they
want to curtail risky practices, but this is a vague proposal when dealing with
parties that trade in risk in a very literal way. Therefore, a well- functioning
derivatives market is concerned with minimizing unwanted risks.
Counterparty risk, i.e. the risk that a counterparty cannot fulfill its contractual
end, is the main source of concern for market participants. It measures the
degree of exposure a company has to the potential default of its counterparty
as a form of credit risk. As counterparty risk is an inevitable part of every
derivative transaction, it is more difficult to depreciate. Market participants
fear a domino effect i.e. default of one counterparty results in the default of
the other counterparty. Because companies always assume a certain degree of
counterparty risk in each trade, they tend to avert the risk by canceling
transactions. An unexpected default by a counterparty to which a company is
exposed can re-expose itself to previously neutralized risks. In other words,
the failure of one counterparty can disrupt the balanced position of the
company, resulting in a scenario in which the affected positions need to be
hedged again. If the entire market suffers from extreme conditions, hedging
may not be possible or at least more expensive.

The derivative value chain can be divided into three general levels: pre-
trading, trading and clearing and delivery. Orders are sent to and channeled to
markets in pre- trading. During trading, buyers and sellers are bridged.
Compatible counterparties may then enter into trading by entering into a
derivative contract.138 At that time, the contracts are " open"; Open contracts
may be managed and traded again during the term of the clearing process
throughout their maturity. Finally, the contract is " closed" either by cash
payment (which occurs in most cases) or by physical delivery of the
underlying asset when the agreement reaches maturity.

Blockchain is still in its formation and global regulators are still trying to
keep pace with private sector Fintech research. The role of regulators in the
new, decentralized future is still far from clear, so many foreign jurisdictions
have taken a " wait and see " approach to the regulation of blockchains.

Blockchains could radically revise the market structure for derivatives trades,
depending on the development of the technology. Existing regulations may
not be enough to address the risks of a market for blockchain derivatives. At
this stage of the development of the blockchain, it is difficult and possibly
counterproductive to propose concrete proposals for new rules. Instead, it is
said that the systemic risk is the primary concern for regulating current
derivatives and that a new regulatory scheme must take into account the
unique risks of blockchain. This part argues that while CCPs are generally
regarded as an effective way of reducing systemic risk, they partially create
risk by creating large central entities subject to failure. While blockchains can

reduce the risk of over- centralization, the blockchain technology can create
different systemic risks. Regulators should consider these risks in
determining how blockchain markets should be governed.

4.10. CONCLUSION

Unlike the customary unified business model, smart contracts foster a new
kind of business association built on trust.

By inheriting blockchain assets, smart contracts propose immutability and
distributed storage, which is what differentiates them most from traditional
agreements and contracts. Immutability and distributed storage allow smart
contracts to become a reliable means for making business contracts and
executing transactions.

Blockchain technology are already impacting businesses. Indeed, it is hard –
or even impossible – to transform the way businesses operate with the snap of
a finger. Important changes take time. Nevertheless, positive and promising
use cases for the blockchain and smart contract technologies in particular are
resting the foundation for the future of business.


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