Last edited 16 Nov 2020

Smart contracts


[edit] Introduction

Smart contracts are negotiated, verified and automated by a computerised protocol. Digital Built Britain recommended smart contracts for construction procurement in level 3 BIM (building information modelling) as a replacement for paper-based contracts.

Smart contracts can provide better protection through digital archiving, have the flexibility to be changed during the project, and are easier to administer, resulting in lower transaction costs and faster transactions.

The term was originally coined in 1994 by the computer scientist Nick Szabo. He referred to smart contracts being used to bring the practice of contract law to the design of e-commerce protocols between strangers on the Internet.

However, the term can be misused to describe contracts which are produced electronically, reducing the need for paper. While this process can help simplify contracts, it does not provide innovation in terms of how they are planned or used.

Truly smart contracts automatically validate conditions to determine the action that the contract requires. In this sense it has been compared to a vending machine, whereby a simple transaction results in a contract without the need for the ‘middle man’ of the lawyer to produce documentation.

[edit] Types of blockchain

Some of the smart contract systems, sometimes referred to as ‘blockchains’, that are currently available include:

[edit] Intelligent contracts

Intelligent contracts differ from smart contracts in that they ask questions of the contract users. From the answers received, they use logic to plan, create and negotiate bespoke contracts, adopting only the clauses relevant to the particular project and users.

The hope of those developing intelligent contracts is that the standard forms of contract could be entirely replaced by one single access questionnaire portal. Intelligent contract systems could also be developed to import smart elements into longer digital contracts, such as:

[edit] Advantages of smart contracts

Smart contracts have been criticised for their flaws. For instance, vulnerability to viruses, taxation of transactions, liability for errors and so on. However, the advantages of smart contracts might include:

[edit] Related articles on Designing Buildings Wiki

[edit] External resources

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