[:en]Today, Smart Contract is at the center of the debate regarding the digital transition, and represents a valid alternative to the traditional contract. The first Smart Contract prototypes date back to the ’70s, but the resonance obtained in recent times is mainly due to the great diffusion of the tecnologia blockchain.
The main feature of this innovative type of contract lies in the automatic execution of the clauses, which ensure that each operation and each development automatically binds all parties involved through effects predefined by the algorithms.
The advantages of Smart Contract
The main advantages of Smart Contract are:
– independence from intermediaries
– immutability of the code
– economic saving
– simplification of operations
– great precision and reduction of the margin of error.
How Smart Contract works
The practical operation of the Smart Contract consists in the translation of a traditional contract into a code capable of systematically verifying the existence of certain conditions preparatory to the implementation of other consequent conditions. In other words, only when condition A is met then it is possible to proceed towards the implementation and development of condition B. Smart Contracts, therefore, aim to check and subsequently transcribe, according to the “if/then” logic, the conditions agreed by the contractors and defined by the articles of the contract.
The first phase of drafting is the only one that requires monitoring and IT support. In fact, the translation of the contract into code requires the assistance of an expert who has the necessary technological and legal background. The individual clauses of the contract are signed at the stipulation stage. The self-executing process, at this point, guarantees immutability and thus makes it impossible to revoke the transaction as well as unforeseen, arbitrary changes and modifications after the fact.
The blockchain, in a perspective of synergy between the two technologies, is the ideal technical support for Smart Contracts, as it facilitates the creation of consensus between the parties. Not only that. In the stipulation of traditional contracts, the intervention of an intermediary is always necessary to guarantee and protect the contracting parties. In the case, instead, of smart contracts, the blockchain can be automatically resoloutory, being essential characteristics of its functioning the immutability and the control by all the components of the network, of the data that are inserted each time.
Evaluation and validation: the PoW mechanism
The evaluation and therefore validation of the contract will be the work of the platform users through the PoW (Proof of Work) mechanism. Within the contract the specifics and details can be as many as necessary to meet the needs of all parties. At the basis of the contract there are rules determined by both parties, which govern all exchanges, protecting transactions against any possibility of modification or intervention by external agents. The resolution of any disputes must always be foreseen and predefined at the time of the stipulation, regulating also the procedure for the eventual dissolution of the contract.
The marriage between Smart Contract and blockchain, therefore, can facilitate the initial phase of the negotiation: the protection of the parties is extremely simplified and guaranteed, allowing to consult an intermediary figure only in the phase of translation of the agreement into a string of code. Subsequently, it will be an app that will oversee the proper conduct of the operations required by the code. The app notifies the parties in a timely manner that one or more crucial clauses are fulfilled. The two parties then give their consent to proceed with the next steps.
All the operations take place in an automated way; for this reason they do not require the control of a correct execution by an external super partes controller.
The presence of an IT and legal expert
The critical issues that can be encountered in this contractual methodology lie in the need to use an IT expert. This specialist must be able to correctly transform the agreement into a cryptographic code (the code string), in the initial phase of negotiations.
The appropriate legal preparation of this professional figure is aimed at ensuring that possible divergent interpretations of the articles are avoided in subsequent litigation. For the proper conduct of the various stages of the agreement, any possible hindrance or misunderstanding must be avoided.