Cybercourts for Smart Contracts?

Posted By Cliff Tuttle | June 14, 2018

No. 1,504

According to Wikipedia:

“A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.^[1] Smart contracts were first proposed by Nick Szabo, who coined the term, in 1994.^[2]

Proponents of smart contracts claim that many kinds of contractual clauses may be made partially or fully self-executing, self-enforcing, or both. The aim of smart contracts is to provide security that is superior to traditional contract law and to reduce other transaction costs associated with contracting. Various cryptocurrencies have implemented types of smart contracts.”

Economist Alex Taberrok wrote today in his blog, Marginal Revolution about the idea that a computer could become the mediator of disputes involving smart contracts.  Presumably, instead of consulting case law, the cyber court would apply appropriate algorithms to the facts of a dispute. Its not too far in the future, actually. The disputed subject matter would involve a limited number of variables.  The algorithms would be generated from the rules of the smart contract together with other agreed answers.  You would put it together like the Uniform Commercial Code. And, of course, if there is a consensus that a verdict is wrong, you can reprogram it for the next time.

CLT

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CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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