Smart Contracts: Will Bitcoin’s Blockchain Technology Fundamentally Change Contract Law?

Bitcoin

The cryptocurrency Bitcoin gets a lot of media attention for its goals of decentralizing currency, funding drug dealers, and being more volatile than the Russian Ruble.

Less discussed by the mainstream press (mostly because these are topics that are super hard for an average person to understand) is the role that Bitcoin’s underlying Blockchain technology could have in non-currency solutions for verifying contracts, property transfers, or trust-related activities in an objective, decentralized way.

A variety of entrepreneurs and researchers are actively testing alternative uses of the blockchain to create a new category of “smart contracts” that allow for contract performance to be verified without requiring a judicial system or other centralized third party. While implementation of these new solutions are still fairly theoretical, a number of companies are actively building software solutions for smart contracts.

If these solutions are successful, they could reduce or eliminate the need for lawyers or courts for the creation or management of many different kinds of contracts.

For instance, a professional Rugby player in Australia is currently building a blockchain smart contract tool to manage third-party endorsement contracts for athletes, where the technology would use distributed software and the bitcoin blockchain to verify an athlete’s endorsement performance and immediately issue payments upon performance, eliminating the role of centralized authority or court in resolving contract performance disputes.

As the Rugby-player-turned-entrepreneur notes, “There would be no embarrassing scandals played out in public and media view, and neither the player nor sponsor would have the ability to dispute the outcome.”

While these are still early times in the development of these technologies, the rate at which they are being pursued indicates the technology solutions will almost certainly outpace the legal community’s ability to understand, evaluate, and plan for them.

(Photo: https://www.flickr.com/photos/btckeychain/10680258673/)

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