By Joe Liebkind October 12, 2017
Every day presents a fresh opportunity to uncover a new application for blockchain technology. After successfully forming the backbone for a revolutionary cryptocurrency, the blockchain is bringing forth strategic evolutions across industries including logistics, web security, and even trade finance. However, nowhere is this advance more evident than its growing function as an innovative payment solution. One of the key pillars driving this rapid adoption is the embrace of smart contracts.
Simply stated, smart contracts are a form of automated contracts that use pre-defined rules to facilitate the exchange of nearly any good or service. The overarching principle is to increase the transparency of the transaction while reducing fees and allaying the potential for conflict over nonperformance. However, unlike traditional contracts, these contracts have no room for interpretation because all terms are predetermined and automatically enforced by the contract itself. (See also: Understanding Smart Contracts.)
A simple analogy for understanding the purpose would be pizza delivery. In this example, a pizzeria promises 30-minute delivery for a pie or money back guaranteed. The pizzeria would then create a smart contract with a customer ordering a pie. The customer could put the funds in escrow, and if the pizza is delivered within 30 minutes, the funds are released from escrow to the pizzeria. If the pizzeria fails to deliver on time, the money held in escrow is returned to the customer. While overgeneralized, this example readily illustrates how smart contracts can be applied across nearly any activity that requires some sort of contract to establish trust and security between parties.
More at: Are Smart Contracts the Best of Blockchain? – Investopedia
One of distributed ledger technology’s most promising attributes, the power to enable smart contracts, has applications that reach far and wide. As blockchain technology becomes more widely adopted, many of these applications are coming to fruition.
A 2016 Forbes story titled ” Smart Contracts May Create Significant Innovative Disruption ” noted that smart contracts could soon extend far beyond the movement of digital cash and be used “to effectuate business activities involving purchases and exchanges of virtually any tangible or intangible goods, services and rights (e.g., sales of securities, commodities, personal property, real estate, digital rights, etc.).”
There is, however, one important roadblock to the widespread adoption of smart contracts for tangible goods, as well as non-blockchain-based intangible goods: smart contracts are confined within their native blockchain network, and unable to operate in the rest of the world.
“Smart contracts are simply software and as such they can ‘enforce’ or, better, administer the state of the data to which they have access on the blockchain,” noted a 2015 BBVA research report . “Yet, beyond that, they have little reach. For the foreseeable future, they will not be enforceable in any court and few parties will be able to rely on smart contracts alone to structure all of the terms of a commercial transaction.”
More at: Smart Contracts and the Future of Banking – Nasdaq
What happens when someone breaches a contract?
If you’ve gone through all the rigmarole of developing a paper contract, the legal ramifications are clear. But paper contracts are not only inefficient but also prone to fraud, which is why a group of startups and developers are pushing digital “smart contract” systems tied to immutable blockchains.
But what if someone breaches their smart contract? The answer, in most places throughout the world, is less clear. That is, unless you’re in Arizona.
Since passing a law in March that enshrined the validity and enforceability of digital signatures recorded on a blockchain, the Grand Canyon State has quietly emerged as a choice location for blockchain companies that develop applications based on the self-executing pieces of code.
For Sweetbridge, a Phoenix-based outfit building a blockchain supply chain finance platform, the law has afforded the company sufficient legal clarity and confidence to begin rolling out operations more aggressively.
Caroline Lynch, Sweetbridge’s public policy and legislative advisor, explained that the state’s decision to elevate smart contracts to the same legal grounding as traditional contracts has been imperative to the company’s growth.
Lynch told CoinDesk:
“It takes away that one potential area for dispute, if for no other reason than a party to a contract cannot argue that because it was executed through a digital ledger it lacks validity.”
More at: Only in Arizona: How Smart Contract Clarity Is Winning Over Startups – CoinDesk
Qtum has announced the launch of its mainnet, Ignition, a groundbreaking blockchain platform which provides the first decentralized governance protocol and proof-of-stake consensus mechanism for smart contracts.
Blockchain industry leaders are increasingly looking to Qtum to solve complex issues of scalability and deliverability for their projects, and Qtum delivers a smart contract platform running on a proof-of-stake consensus for the first time. This allows individuals and businesses to use smart contracts on mobile devices while staking their Qtum holdings to secure the network. The Qtum Mainnet goes live September 13, 2017.
“Many projects have gone silent after their token sales, but Qtum has diligently built an industry-changing platform that tackles the challenges faced by developers,” said Qtum Co-Founder Patrick Dai, who was recently named on Forbes China’s Top 30 Under 30 list for his contributions to consumer technology. “Beyond fixing issues of scalability, developers building their projects on Qtum gain access to China’s extensive market.”
More at: Qtum Ignition Tackles Scalability with First Decentralized Governance Protocol – Blockchain News
The standard that governs how new cryptographic tokens can be launched on top of the ethereum blockchain has been been finalized.
Revealed today by the open-source project’s developer team, the ERC-20 standard establishes a common set of rules for tokens issued via ethereum smart contracts, and currently serves as the basis for the many tokens that have been released through initial coin offerings (ICOs).
The standard has now been formalized on the ethereum GitHub page, meaning that going forward, all tokens built on ethereum should conform to the standard.
ERC-20 was previously unenforced, but it had been readily adopted by token developers since its introduction in late 2015. The standard ensures that ethereum-based tokens perform in a predictable way throughout the ecosystem, such that decentralized applications and smart contracts are interoperable across the platform, and that all tokens follow a fixed standard of security.
Source: Ethereum’s ERC-20 Token Standard Has Been Formalized – CoinDesk
Much has been written on blockchain recently, even in legal. We continue our series with Mark Oblad, VP, Legal and Finance at JW Player, who has coded a number of tools for automating transactions. Last time we talked about open source and industry source of information for contracts here. This time, we look first at smart contracts. The concept of the “smart contract” has taken hold and is becoming increasingly the focus of legal technology groups, such as the Computable Contracts Initiative at Stanford Law School’s CodeX, Cardozo Law School’s Tech Startup Clinic, New York Law School’s Center for Business and Financial Law, law.MIT.edu, and Computational Legal Studies.
More at: Legal Technology and Smart Contracts: Blockchain & Smart Contracts (Part IV) – Forbes Entrepreneurs #NewTech
SmartContract.com, the secure blockchain middleware provider enabling smart contracts to securely connect with external data sources and off-chain payment methods, has revealed its plans for the release of the ChainLink Network.
One of the inherent limitation of smart contracts is that they are unable to access any off-chain resources like data feeds, APIs and/or bank payments. This is caused by the method in which consensus is reached around a blockchain’s transaction data. ChainLink Network seeks to solve this problem by allowing smart contracts to securely access the many off-chain resources they need to become truly useful for the majority of financial agreements.
The LINK token will give developers the ability to easily pay each ChainLink Node Operator for the unique data, API, and/or off-chain payment capabilities they provide access to. The ChainLink Network provides a way to securely, quickly, and verifiably connect to external data sources, APIs, internal systems, and existing banking infrastructure. ChainLink V1.0 was launched on June 27th.
“The ChainLink Network is proud to offer a solution to the pressing connectivity problem between smart contracts and external data by creating a fully decentralized blockchain middleware that serves as a conduit between smart contracts, data feeds, APIs, bank payments and back office systems, while making it accessible to smart contracts that need these resources via our LINK token,” SmartContract.com Founder and CEO Sergey Nazarov said.
Source: SmartContract.com launches ChainLink, adds blockchain experts as advisors – EconoTimes