Today, the generally accepted international legal framework for the operation of smart contracts has not yet been regulated. This aspect, in turn, leads to different approaches to defining this term. Thus, in scientific articles from Harvard University, it is noted that a smart contract (hereinafter SC) is a computer code that automatically executes part or all agreements. It is presented on a platform made using Blockchain technology.
However, taking into account the nature of Blockchain – confirmation of any actions (transactions, fixing property rights, etc.), their placement in a distributed registry, openness of smart contract terms, we understand that El Salvador Phone Number List without the participation of a blockchain lawyer it is impossible to prescribe the terms for the needs of a specific project. This is especially important for legaltech and fintech startups.
Definition of a smart contract
From the point of view of the legislation of most countries, the Smart Contract is not a contract, but it is a matter of time. In fact, it has all the attributes that allow it to replace conventional contracts. A smart contract is a program code, or rather its special description, which determines the procedure for processing information and transactions in Blockchain technology. A way to exchange values without involving a third party. At the same time, it is better to involve lawyers who understand Blockchain to prepare the conditions for the Smart Contract.
A legal smart contract is a smart contract that has legal force. In essence, this SC has the same legal force as a license agreement that you sign when installing any software product. Or any contract concluded between the parties in accordance with the laws of a certain state and certified by a notary.
Legal terms of a smart contract and its creation
When drafting and signing a smart contract, the parties specify the terms of the transaction in it, taking into account the tasks of the online platform. For example:
- Obligations of the parties;
- Securing copyright on NFT;
- Payment of royalties;
- Penalties for non-compliance;
- Deadlines, other issues.
If necessary, you can put electronic signatures. A smart agreement can automatically detect to what extent the specified conditions are met and decide whether to terminate the transaction, impose sanctions or close access.
Since a smart contract is a computer algorithm, the conditions buy telemarketing data marketing for it are written by knowledgeable lawyers, and programmers program it. Lawyers themselves cannot translate complex legal formulations into the form of a smart contract. To create an IC, close collaboration of both categories of specialists will be needed. Before preparing the agreement, the parties will need to develop a legal strategy for automating the legal process, and determine what exactly the IC will regulate.
Why do we need Blockchain in smart contracts?
Blockchain is a transaction database that includes a sequentially created chain of digital blocks. Each of them stores data about the previous and next blocks. The main advantage of Blockchain is that it is completely transparent. Anyone can get acquainted with the internal data, but nothing can be changed or deleted.
The technology is used in various fields, including smart contracts. Thanks to the SK, Blockchain is able to track the entire list of supplies and check, for example, the authenticity of tea leaves: where they were grown and by whom, when they were brought to the store. This makes it possible to completely exclude counterfeit tea, find out its freshness and even check whether the production complies with the moral and ethical values of the end consumer.
Why do you need a smart contract in NFT?
NFT – non-fungible token – is a digital intellectual property. It is used for:
- real estate;
- collectibles;
- arts and music;
- transport and so on.
Tokens are created using a smart contract located on the Blockchain in Ethereum. NFT has a unique code and metadata that distinguishes one token from another. This is the difference between its operation and cryptocurrency. The NFT smart contract is a part of the program code that allows the network to store data transparently and without changes. Ultimately, this code specifically controls the digital asset, in this case the NFT. Allows you to own, sell, buy, exchange the digital NFT asset on online platforms where this is provided.
What is Ethereum and smart contracts in it?
Ethereum is a blockchain platform, one of the first to implement Turing-complete smart contracts. Turing completeness in smart contracts makes it possible to perform mathematical functions. Ethereum has gained wide popularity among users because it can issue tokens and create decentralized applications.
The possibilities for creating smart contracts are flexible, and their scope of use is very wide. The platform provides not only the functions that the developer put into it, but also those that were needed later. Various logically presented ideas are implemented with the help of this network. Ethereum is one of the most frequently used cryptocurrencies among developers today and the most famous in terms of the number of decentralized applications. Etherеum is a platform developed on the basis of Blockchain. Here, the parties, using cryptocurrency, can enter into programmed relationships.
As a rule, smart contracts are formed on the Ethereum base, since it is one of the most reliable crypto platforms today. The specificity of the local smart agreement is that there are already ready-made samples. There is no need to fully write the program code. You only need to enter the transaction data in the designated fields and confirm the execution.
Examples of using a smart contract based on Ethereum are as follows:
- NFT release;
- Insurance (optimization of the process of its consideration);
- Voting (SC ensures automation and transparency);
- Deliveries (here the advantage of the insurance company, such as speed, is of primary importance);
- Record storage (secure encryption and archiving);
Smart Contracts for Cryptocurrency
Smart agreements are also used for transactions related to the purchase and sale of cryptocurrency. In these cases, the parties to the smart contract have accounts on the Blockchain platform or on one exchange. The Blockchain concept, which is used in cryptocurrency, implies saving in each transaction a chain of data on all previously conducted operations.
Such a register is not located on the main server, but on each network participant, called a “node”. Smart contract in cryptocurrency – security, safety and speed of the transaction. Using a smart contract, you can buy almost anything: from cars to furniture sets and from food delivery to rare antiques.
What is GitHub and what is it used for?
GitHub is a project and code management system. It is also a bj lists social networking platform made for developers. An online code storage and synchronization service for programmers. The main goal of GitHub is to support collaborative project development and version control.
Considering that any smart contract is considered a joint project of two or more participants, the SC can be placed on such platforms originally intended for coworking as GitHub. Having recorded the fact of the first publication of your creation. Our first legal contracts for NFT can be viewed here .
Development of smart contract terms for the customer’s goals
Currently, several important features and conditions that are characteristic of smart contracts are being defined. Thus, we are talking about the presence of a decentralized system. The conditions in it, initially laid down, are executed automatically, without human intervention. In such a situation, any condition of such an agreement must be real for execution within the boundaries of the system without the risk of someone else preventing the execution of the specified conditions.
As already mentioned, today smart contracts are used in different segments. Programs fulfill the terms of contracts by writing off or freezing funds in accounts. In addition, they decide whether to grant a loan or not, confirm the occurrence of a certain situation.
As a rule, smart agreements are developed entirely in code. Contracts are placed in a system where neither party controls the fulfillment of the terms independently. Both parties (or all, if there are more) are only participants. They can rely on Blockchain and a computer algorithm. When preparing such agreements, the standards of the current legislation of the state whose laws the parties concluding this contract want to be guided by are taken into account. By the way, it is possible to back up a smart agreement with a paper analogue, but in the future, most likely, there will be no need for this.
