Smart Contracts: Terminology and Legal Nature
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Smart Contracts:
Terminology and Legal Nature
Larisa-Antonia Capisizu
Assistant professor at Titu Maiorescu University in Bucharest (ROMANIA)
E-mail: larisa.capisizuggmail.com
Abstract
Blockchain technology and smart contracts are regarded by some authors as the
greatest innovations since the advent of the Internet, while other authors are skeptical
about them, arguing that they can only be considered a technological bubble that will
burst in a short period of time. Despite the opposite views on these innovations, the legal
literature has given them considerable attention. Due to the early stage of development
and the lack of widespread adoption, there are numerous questions regarding this new
way of contracting. This article aims to answer some of these questions such as what are
smart contracts and what is their connection with the blockchain technology.
Keywords: blockchain technology, smart contract
1 Definition of smart contract
The concept of smart contracts is not new, but the interest for the use cases of smart
contracts has grown exponentially with the advent of blockchain technology. The idea of
a smart contract is attributed to Nick Szabo (scientist, lawyer and cryptographer).
According to one of his early writings, a smart contract can be described as a set of
promises, specified in digital form, including protocols within which the parties perform
on these promises [1]. In a later publication, Szabo proposed another definition that
smart contracts are digital, computerized contracts, in which the execution and perfor-
mance take place automatically, without the need for human intervention. [2]
Szabo compared the concept of smart contracts with a soft drink vending machine:
When money is paid, an irrevocable action is put in motion. Money is retained and a
drink is vended. The transaction cannot be stopped in the middle ofthe process. The terms
are, in a sense, embedded in the hardware and software that runs the machine. [2] At its
core, vending machine is the primitive ancestor of smart contracts according to Szabo. [3]
Except Szabo's publications [4], the concept of smart contracts has not been of
interest after its launch in the early 90s, mainly due to lack of technology to support their
use. However, with the advent of blockchain technology, the focus on smart contracts has
increased. Explaining how blockchain technology works goes beyond the scope of this](ViewImageLocal?handle=hein.journals/cidstue2019&div=73&collection=&method=preview&ext=.png&size=3)
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Smart Contracts: Terminology and Legal Nature
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