How to use humans to make “smart contracts” truly smart

• Author: Roslyn Hinchliffe,Scott Farrell,Johanan Ottensooser,Claire Warren
• Published date: 07 July 2016
• Citation: jd0271
• Date: 07 July 2016
• Subject Matter: Economic Law

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By Scott Farrell, Claire Warren, Roslyn Hinchliffe and Johanan Ottensooser.

“Smart contract” is a buzzword phrase which could mean anything and be used to

justify everything, from the realisation of the value of blockchain (another buzzword)

to the end of lawyers (that can’t be right). To many, the recent “attack” on the most

visible large smart contract in the world (the ominously named Decentralised

Autonomous Organisation or DAO) has been a reality check for the dreams of

replacing laws with computer code. Was this the warning of the “Skynet” moment for

this nascent technology, a prescient alert to the dangers in delegating too much to

the machines? Well, yes and no: but there is a way of combining the best of both

human judgment and computer efficiency in the world of financial market contracts.

In this alert, we strip away the hype and decode the buzzwords. We tell you what

these “smart contracts” really are and why people care. Also, we explain (in non-

tech speak) what the “DAO attack” was and the fears it created for smart contracts.

We then propose a solution, a new “DnA” (Digital and Analogue) architecture for

smart contracts, a blend of human and machine. We provide a link to our work on

this for you to review, test and improve. All open-source.

Are smart contracts actually … well, not that smart?

A smart contract is simply any agreement which can execute part of its functions

itself. An example is a contract which automatically calculates the amount of the

payments which have to be paid and then arranges for them to be made. The self-

executing part is achieved through a software program that gives effect to what the

parties have agreed and the agreement is recorded on a system which allows that

software to take effect. That’s all it is. Other than this, nothing else is needed for it to

be a “smart contract”. So it doesn’t really have to be that smart. There are a whole

range of possibilities and a smart contract could automate its entire life-cycle or just

07 July 2016

How to use humans to

make “smart contracts”

truly smart