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April 8, 2021

Blockchain Contract Agreements

Here is the code of a basic intelligent contract written on the Ethereum blockchain. Contracts can be coded on any blockchain, but Ethereum is usually used because it offers unlimited processing capacity. Intelligent contracts represent an additional risk that does not exist in most text-based contractual relationships – the possibility that the contract will be hacked or that the code or protocol simply involves an unintentional programming error. Given the relative safety of blockchains, these concepts are closely coordinated; most of the “hacks” associated with blockchain technology are actually exploiting an involuntary coding error. As with many errors in computer code, these errors are not egregious, but only become obvious when they have been exploited. For example, in 2017, an attacker was able to empty several wallets with several signatures offered by Parity for $31 million in ether. [17] Multi-signature portfolios add a level of security because they require more than one private key to access the portfolio. However, in the parity attack, the attacker was able to take advantage of an error in the parity code by re-opening the Smart contract and making himself the sole owner of the wallets with multiple signatures. Parties to an intelligent contract must examine the distribution of risk and liability for involuntary coding errors and the resulting uses between parties and possibly with third parties, developers or insurers of the smart contract. Supply chain management An area in which smart contracts could be used is supply chain management. Transparency in supply chains through smart contracts helps to flatten the flow of goods and restore confidence in trade.

Smart contracts can cover property rights when items are moved into the supply chain and confirm who is responsible for the product at any given time. The finished product can be checked at any stage of the delivery process until it reaches the customer. Parties may also wish for written statements from the programmer to ensure that the code is executed as intended. As a result, in the case of bespoke agreements that are not based on an existing model, the parties may be required to enter into a written agreement with the Smart Contract programmer, contrary to the contract that the parties can enter into today with an Electronic Data Interchange (EDI) service provider. Creating logical parameters the parties should also ask themselves a number of questions. What data source will companies use for their contracts? And what are the tolerances? What kind of rounding will the Smart Contract also produce? These types of issues need to be discussed before translation for intelligent codification of the treaty. Smart insurance policies could also be used in the insurance industry. This sector now lacks automated administration. It can take months for an insurance fee to be processed and paid. Smart contracts can simplify and streamline the process by automatically triggering a claim when certain events occur.

Specific details could be recorded on the blockchain to determine the exact amount of compensation. Mortgages on smart contracts could also simplify the mortgage process. The terms of a mortgage agreement are based on an assessment of the income, expenses, credit rating and other circumstances of the mortgage. The need to carry out these checks, often by third parties, can complicate the process for both the lender and the mortgage. By cutting out the means, the parties could behave directly among themselves. There are now a number of smart contract platforms. They could be subdivided according to technology, end-users (banks, government, supply chain, real estate, insurance, etc.) and the region (Europe, North America, Asia or the rest of the world).