Blockchain is a distributed, transparent ledger that keeps records of transactions without the involvement of a central intermediary. Each new transaction is tied together with other new transactions into a “block”, which is added as the latest link on a long “chain” of historic transactions. This chain forms the blockchain ledger that is held and verified by the network participants. This verification is done reliably and automatically on behalf of each user, creating a secure and tamper-proof ledger system. Originally, the blockchain technology was developed as part of the digital currency Bitcoin. But its potential goes far beyond cryptocurrencies. A report of the European Parliamentary Research Service (EPRS) from February 2017 explores how blockchain technology is developing and could influence areas of business and life in general. One of the key points in the report relates to the use of blockchain technology for smart contracts. At their simplest, smart contracts are defined as agreements between two or more parties, the terms of which are programmed into computer code. When certain conditions that are described in the code are met, specific actions, which are also defined in the code, are automatically triggered. Automation ensures performance by excluding human discretion from contract execution. Unlike simpler blockchains that record transactions, those that include executable code feature an extra dimension of complexity and agency. Blockchain’s potential is real, but the technology is still in its early stages. Before it can be widely adopted, it will have to overcome several hurdles. The law is expected to face challenging question and criteria are clearly needed to ensure the legal validity and enforceability of smart contracts under the law. While most discussions of smart contracts recognize that they will provide efficiency gains in several areas, they are not expected to replace either traditional contract law or traditional contract lawyers. 16 October 2017 Daniela Kishkova.
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