As time passes and technology evolves, blockchain is not only used for monetary purposes, as is the case of digital currencies such as Bitcoin or Ether, but it is the basis of different types of operations and transactions. The one of intelligent contracts is one of them. Perhaps, "the most futuristic", says Franco Amati, co-founder of Signatura and the NGO Bitcoin Argentina.
A traditional contract is simply a notarial paper that details actions that have to be carried out under certain conditions, but this role does not control the compliance of the actions, but ensures them. In case something of the contract is not fulfilled, it could be entrusted to the action of justice, who should solve the inconveniences.
Smart contracts (or smartcontracts) are computer programs that execute agreements established between two or more parties, generating certain actions that occur as a result of compliance with a series of specific conditions. That is, they are executed and enforced themselves automatically and autonomously, when the conditions previously programmed in the code are given, in an impartial manner and without the need for a third party to act, such as a notary public or a lawyer.
For Amati, "in a normal contract, if one does not comply, the other party would have to go to court, the smart one avoids that." If the contract is not respected, there is an automated arbitration based on what the code says. This is revolutionary, because it avoids a lot of risks that traditional contracts have. "
For his part, Juan José Mendez, Chief Brand Officer of Ripio, explains that "intelligent contracts digitize the characteristics of traditional contracts and convert them into software, since they are based on Blockchain technology, their conditions and functions acquire behavior through algorithms and they become more transparent, safe and efficient, avoiding the intervention of intermediary certifying agents such as scribes, accountants or guarantors ".
To that, Leo Elduayen, co-founder and COO of Koibanx, blockchain solutions company, sum: "its use adds particular value when in a process we have several parties involved that need to be certain that certain events have happened in an integral way to execute a exchange of value"
For Sebastian Wain, co-founder of CoinFabrik, which also develops blockchain solutions for different companies, "the difference with a normal contract is that all parties can verify that the program is executed as agreed and who triggered the transactions". Anyone can become a validator and verify the authenticity of the correct execution of the intelligent contract and the state of the database, "without the need of a third party," Wain says.
Another relevant aspect, according to all the consulted experts, is that neither of the parties could manipulate to their benefit the computer where the contract was written or even the code of their software.
In this regard, the executive of Ripio, remarks that: "one of the advantages of the contracts developed with blockchain technology is that they are created on public and decentralized databases, that is to say that any programmer could audit the code with which the programs are programmed. contracts. "
For its part, the CoinFabrik spokesperson complements: "If the blockchain is tolerant of what are called Byzantine faults it can withstand that up to a third of the nodes fail or are malicious." The contract is copied between all participating nodes and does not reside However, it is important to highlight a confusion that often happens: however well implemented the contracts are, if a blockchain depends on systems external to it and those systems fail or are attacked, the contract goes to fail".
Use cases
According to Leo Elduayen, the development of contracts worldwide is quite developed, there are several companies that are already applying them to improve their processes.
Particularly, says the executive, "RSK was created from Latin America, one of the protocols that allow the creation of intelligent contracts." On RSK, intelligent contracts can be programmed secured by the Bitcoin network (the safest on the planet), which makes it attractive and innovative for the main companies that develop solutions applying this technology, such as Koibanx, Bitex and Signatura, among others ".
For Sebastián Wain, the main case in use is to notarize documents in order to prove that an instrument existed around a particular date and time. "The concept is called proof of existence and can be applied in many areas, for example, in the registration and verification of patents, so under certain security premises, there is no way to register a patent as if it had a previous date ", exemplifies.
According to the Ripio executive, in Argentina there are some companies that are developing smart credit contracts. RCN is a loan network that uses smart contracts to expand access to credit services on a global scale.
Today it operates through the Ripio digital wallet, allowing Argentine users of the application to apply for loans easily to people around the world. RSK, meanwhile, is developing a platform based on intelligent contracts that will allow exporting the features of Ethereum technology to Bitcoin.
Globally, with the help of IBM, supermarket chain Walmart is using smart contracts to optimize its distribution chains in the United States. In addition, adds Juan José Mendez, companies such as Civic use smart contracts to provide greater transparency to the systems of verification of identity of applications and financial entities, while startups such as Nebula are exploring the use of smart contracts to guarantee privacy in records of Health.
"Since Koibanx we have worked on its implementation for payment wallets as, for example, with Banco Davivienda, one of the most important in Colombia, also for loyalty and incentive programs, we have integrated it for Tarjeta Naranja and for exchange of financial instruments , we are exploring it with a local fiduciary, "Elduayen explained.
Another example is the Center for Social and Technological Studies (CESYT), an institute of higher education that in 2015 became the first official entity in the world to register its diplomas in the Bitcoin network.
Thanks to this technology, explained Rodolfo Andragnes, Executive Director of the CESYT Institute, in a recent interview with CriptoNoticias, the authenticity of the document can be verified anywhere in the world without the need to consult an intermediary body.
MATTER OF MATURITY
If the interviewees agree on something, it is that while technology has great potential, there is still a long way to go as there are certain limitations that prevent its evolution. "It's basically a matter of maturity," exclaims NGO founder Bitcoin Argentina. "I think it's going to move forward, but I'm a bit pessimistic about the times, it's a matter of maturity of technology, but also of people."
As he explains, smart contracts work on digital currencies like Bitcoin or Ether while traditional contracts do so in pesos or dollars. Then, the contract would not do much, because if the price of bitcoin changes, what the contract says would be changing.
"Anyway, this is being solved with a new technology that is criptodollars, a kind of digital dollar that allows everything to be done with bitcoin, but with a currency that is always worth a dollar. own digital currency so that smart contracts can be used by the common user and not only in niche sectors, "he adds.
Another problem is that not everything is systematizable, there are things that are subjective and can not be put into code, not everything is mathematical in life and in contracts. María Elena Murano, Blockchain Leader at IBM Argentina, explains: "There are philosophical issues at stake, there is a lot of concern about whether or not the code could contemplate all the conditions that can be met."
The spokeswoman also points out that smart contracts are not legal today, "technology is still far from being so formal and comprehensive". On the one hand, there must be some kind of declaration from the courts as has happened in some US states, such as Delaware, where it has been said that everything that is registered in a blockchain is a proof document. Today there has to be an agreement between the parties so that the law approves something and, even so, it may be considered invalid if there is a law that determines it.
"Until there is jurisprudence we can not be sure of how the evolution of this will be," exclaims Murano.
Uber justice
In an ideal context, once the limitations are overcome, this could be a benefit for end users and also for banks or companies that can resort to this type of services to register transactions, agreements or contracts. Not so for scribes and lawyers, who could see their roles threatened.
The co-founder of Signatura and the NGO Bitcoin Argentina is forceful. "The smart contract eliminates the judicial system as an intermediary because it would be replacing what happens if the contract is not fulfilled, this type of contract is inviolable, what it says has to be fulfilled, yes or no. necessary, "shoots Amati.
Think, for example, in the countries where the DNI has a chip, these documents could be connected to a computer and sign an online contract in blockchain in such a way that nobody could say that it was not signed and would remain in an indelible place, with another person who does the same on your computer.
"In cases like this, it is not necessary that there is a notary public to validate those signatures," says the expert.
"As for lawyers, in a world of smart contracts, they would have fewer roles too, one might be needed if there is something that comes from that, Another issue is that there are no jurisdictions in this because everything is in the cloud. the code is executed by nodes that are in any part of the world In the litigation issue, many roles disappear, maybe not the one who writes the contract, but the one of the scribes should tend to disappear ", completes Amati.
While the spokesman of Koibanx considers that the intelligent contracts are already transcending. "In different parts of the world, many financial institutions and governments are already investigating how to apply them, and investment funds are becoming interested and investing in companies that work with this issue, and in the commercial area there are already several players who use it every day. "
"Internet took 20 years to be fully adopted, Blockchain has nine and smart contracts four, we are living its adoption, which is even faster than with its predecessor technologies," says Elduayen.
"I think we are facing a technological revolution of the magnitude of what was the Internet or even the industrial revolution, and changes like this force the professionals - lawyers and notaries - to continue to be trained and kept up-to-date. replacing the professionals, will force us to specialize, reinvent ourselves and intervene in where we really add value to the production process ", emphasizes the expert.
For its part, the head of CoinFabrik is a little more cautious. In a private blockchain there will always be the judicial instance to decide if an intelligent contract respects the spirit of a legal contract. "There are human aspects of laws that can not be reflected in a program," he says.
An analysis by BBVA Research indicates that smartcontracts will not replace lawyers, but will be an evolution of the legal system and that the role of lawyers could change, from awarding or litigating individual contracts, to producing templates for these contracts.
Linked with this, Maria Elena Murano, from IBM, believes that lawyers and scribes will evolve in the role they can achieve and discover new edges.
"A notary, for example, is the one who studied and knows all the conditions for a power, a document, to be valid, technology forces professions to change and adapt," he stresses.
As stated by Franco Amati, there is still a long way to go in terms of intelligent contracts, but it is a fact that scribes and litigation lawyers have blockchain technology in front of them.
As has happened with words such as "cloud", "artificial intelligence", "bitcoin" or "blockchain", and despite its limitations, "intelligent contract" is a concept that is becoming increasingly relevant. After all, all industries get their Uber.
