Smart contracts is a term coined by Nick Szabo in the 90’s, which seeks to define contracts that do not require the intervention of the State, paper, or justice operators to be enforced because they have the capacity to be executed automatically and consist of sentences programmed in machine language whose precision does not give rise to interpretations.
Trust as the basis of commercial relations.
Among the elements that make up the mercantile relations, one of the most important is trust, technically known as credit, given that nowadays the Internet has been erasing the borders to do business, reliable third parties began to emerge to guarantee the fulfillment of obligations, typical in the well-known web 2.0, for a complete transition to web 3.0 it is necessary to eliminate the reliable third parties and consolidate p2p business.
On the other hand, many merchants use other people’s money to grow their business and here lies the fundamental point of credit, although financial institutions make exhaustive risk analysis, it is necessary for them to guarantee the payment of the obligation and this is where the loan with collateral, pledge or mortgage takes position, which are materialized through a written contract, especially when the contracting parties are in different latitudes of the world, a situation in which it is unlikely to make a personal face-to-face interview. In such a situation, the intervention of some entity is necessary to help formalize the obligation with its respective collaterals.
It is therefore trust that drives the business world and to achieve it it is necessary that certain conditions are given that give peace of mind to both parties, that is the function of the contract. This idea taken to the growing digital world would lead us to a possible answer and it is the smart contract, a tool that helps us to eliminate third parties and therefore to economize contractual relationships on the Internet, wherever the parties are.
User-centric identity systems.
A disadvantage of these contracts is the possibility of knowing that the person signing on the other side is who he says he is or has the capacity to contract according to the rules of Civil Law, because they use the user-centered identity system that contributes to privacy through the issuance of an address that identifies each of the parties, however, does not guarantee that the person who is contracting on the other side is capable of acquiring obligations, which leaves two options, rethink the identity system in which there is a balance between privacy and security or leave the burden of proof to the interested party who wants to annul that contract, i.e., must prove that the business was executed by that incapable person and not another.
Foreign causes not attributable to the debtor.
There are possibilities that imply the involuntary default of the debtor specifically manifested in the causes of force majeure and fortuitous event, which are unforeseeable events that still affect the contractual relationship, the problem of this lies when that strange cause not attributable to the debtor occurs outside the blockchain. Natively the blockchain has no way to obtain data of what happens outside it, it is necessary to use appropriate oracles according to the contractual relationship in question, so that the contract is not automatically executed to the detriment of the affected party.
An oracle is a database that collects information about what happens outside the blockchain and incorporates it in order to execute the programmed commands. Understanding that smart contracts are going to deploy consequences based on the information collected by the oracles, certain precautions must be taken, since if it is compromised, it can issue corrupt information that will affect legitimate interests that will give rise to disputes.
Conclusions.
So far, in order to ensure legal certainty, both the digital and traditional orders must coexist, in which arbitration platforms will be better specialized. Trust in the new systems will come gradually and must be so, since an abrupt adoption brings disasters such as those that have already occurred with scams through ICOs and other types of existing scams.
The more people join, the more effort should be put into education; it is the instruction of users that can guarantee security, beyond any regulation.
