The post Using smart contracts to manage real-world contracts appeared on BitcoinEthereumNews.com.

This post originally appeared on ZeMing M. Gao’s website, and we republished with permission from the author. Read the full piece here. Using smart contracts on a blockchain to manage certain aspects of regular contracts such as status (validity, termination, etc.) monitoring, renewing, or rolling has broad business applications. Note that it is not to use a smart contract to replace a regular contract. Doing such would be impractical in many cases. By “regular contract,” I mean real business contracts in a legal sense. These can be vastly more complex than the so-called smart contracts. Not only that, many terms and contingencies of the real business contract require human supervision and intervention and cannot, and should not, be replaced by completely automated “smart contracts” (which really is a misnomer because they are dumb, not smart). But smart contracts on blockchain can be used to manage these off-chain real contracts far more efficiently and effectively than the current method. And this is the future. For example, the current contract management regime involves much costly uncertainty and human involvement just to maintain a clear and mutually accepted (non-disputed) status of a contract. Simple tokenization on blockchain may partially solve this problem but is too rigid because it does not allow the off-chain real contract to be renewed, rolled on, or modified without losing continuity. “Losing continuity” means every change would result in a new smart contract, creating complexity and obstacles in management. An nChain invention uses an on-chain UTXO to represent the state of an off-chain contract, and subkeys to manage the renewing or rolling of the contract within the same thread that can be automatically managed without losing control or privacy. The significance of this is easily overlooked. It allows businesses to form and execute contracts the way they would like to and not be forced to change their business practice, but…

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Filed under: News - @ December 26, 2023 6:24 am