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Why smart contracts can’t be fully automated

Blockchain technology has been generating excitement in the public and private sectors for the past several years for many reasons — a prominent one being support for self-executing contracts commonly referred to as smart contracts. But while smart contracts have the potential to streamline many business processes, full automation isn’t likely anytime in the foreseeable future.

“Smart contracts are a combination of some certain binary actions that can be translated into code and some reference to plain language like we have today that is open to litigation if you mess up,” says Antonis Papatsaras, CTO of enterprise content management company SpringCM, which specializes in contract workflow automation. “I think it’s going to take forever.”

The history of smart contracts started with vending machines

Computer scientist Nick Szabo proposed the phrase “smart contracts” in 1994, describing it as a “computerized transaction protocol that executes the terms of a contract.” He further elucidated the idea in his 1997 paper, Formalizing and Securing Relationships on Public Networks: “The basic idea behind smart contracts is that many kinds of contractual clauses (such as collateral, bonding, delineation of property rights, etc.) can be embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive (if desired, sometimes prohibitively so) for the breacher.”
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David Eidelwein

Rédacteur en chef Blockchain at Talan
David follows the content related to Blockchain technology for Talan Innovation. Skilled as business analyst and project manager in banking sector, he is particularly interested in the impact of blockchain technology on organizations and its use case. David contributes to Talan Innovation content since December 2016

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