The smart contracts or smart contracts, a set of programmed rules that are defined as digital documents, face a series of challenges in the legal and social fields, according to Víctor Rodríguez, manager of the educational programme at Ironhack Madrid, a training school for digital talent, and he explains what they are.
According to reports, the world of smart contracts poses new challenges, especially in the legal field. "One of the main problems is that different legal realities coexist in society, depending on each country, so both international and sectoral legislation should be taken into account," he explains.
In addition, he points out that this is compounded by "the lack of a mediator between the parties, the adaptation of legal language to computer language and the pending progress to ensure legal validity".
This technology expert points out that currently, Smart Contracts do not have a specific legal regulation in the Spanish legal system because it is something relatively new.
"For the time being, it must meet the requirements of the Article 1261 of the Civil Code but it will soon be necessary to give them a regulation of their own, as smart contracts will become more reputable and notorious for their ability to perfect commercial ecosystems," says Víctor Rodríguez.
As for the social challenge, he states that the adoption of these contracts on a massive scale in consumer society is still a long way off, beyond the legal impediments, due to society's own rejection of them.
"There is still a lot of ignorance about the technologies on which they are based, the Blockchain and cryptocurrencies, and that is the first stumbling block they face. The second is, once the technology is understood, the social acceptance of it, something that can take years, since today there are still people who are reluctant to carry a credit card on their mobile or who are wary of online shopping," he argues.
Asked about the main advantages of this type of contract, he pointed to its adaptability and flexibility as its greatest assets.
The global smart contracts market is expected to exceed EUR 265 million by the end of 2023.
The beginning of transactions was based on barter and contracts were word of mouth, in the 7th century BC the first currency was born, in 1958 American Express launched its first credit card, which meant a certain intangibility of money, and the development and growth of digital technology has allowed us to go a step further until we reach cryptocurrencies.
Digital currencies are based on technology blockchainsame technology used
in smart contracts: a distributed digital registry that stores data of any kind and is distributed among thousands of devices that store the information in the form of blocks in an orderly manner forming a chain.
Each time new information is added, this string is updated on each and every device that has it stored.
The blockchain ecosystem is evolving rapidly and Ironhack has conducted an analysis of the process that enables these digital transactions, the findings of which it presented today.
The most notorious application of this technology is the bitcoinbut Ironhack stresses that the technology blockchain has proven to be useful beyond cryptocurrencies due to its efficiency in numerous applications, such as data processing or the transparency it offers in legal and financial aspects for the validation of transactions".
As the modes of exchange change, so do the ways in which deals are struck, and this is where the smart contractswhich contains the same conditions as a traditional contract, but, according to Ironhack, "avoids the difficulties of interpretation, is error-free and is based on 'scripts' (a small piece of computer code), allowing deals to be concluded more securely, quickly, cheaply and efficiently without the need for an intermediary".
This new settlement model is one of the main business applications for DLT technologies - distributed log technologies, Distributed Ledger Technology 265 million by the end of 2023 with a 32% CAGR (compound annual growth rate) over the forecast period from 2017 to 2023, according to Data Library Reserch".
This type of contract is executed on a decentralised platform, such as Ethereum, which, Ironhack notes, "in the last 12 months, reached over 10 million smart contracts deployed".
"The figures are very high, although this value does not reflect the actual number of 'Smart Contracts' that have been implemented in that period, as there are numerous blockchainssome even operating on a private basis," he explains.