No, smart contracts will not rid the world of lawyers, despite the greatest efforts of blockchain innovators. At least, that's according to Nick Szabo, the man widely credited with inventing the smart contract concept itself.
During the keynote address at the Smart Contracts Symposium at Microsoft's New York headquarters this week, Szabo gave an update on the industry he helped create – a talk that was followed by a string of commenters from smart contract professionals.
Addressing a group of about 250 people (comprised largely of members of the blockchain trade association, the Chamber of Digital Commerce), Szabo broke down the potential benefits and what he sees as the current limits of self-executing code run on a cryptographic, shared ledger.
Crucial differences between traditional contracts and smart contracts are that the logic in traditional law is based on the "subjective" interpretation of analogy, according to Szabo. On the other hand, blockchain smart contracts are based on Boolean "bits and logic" that underpin bitcoin.
There are also differences on the global scale, he went on.
While traditional law falls into "jurisdictional silos" defined by state borders and other lines of demarcation, blockchain-powered contract law has the potential to exist across borders.
The result is that while traditional law is relatively flexible, involving interpretation and judgment (and can therefore be corrupted), a software version is "rigid and predictable".
"Traditional law is manual, local and often uncertain," said Szabo, who is also the co-founder of cryptographic assets firm, Global Financial Access. "Public blockchains are automated, global and predicable in their operations."
While the jobs of lawyers may be safe for now, other professions might not be so lucky.
In fact, smart contract law is so different from traditional law that, instead of lawyers' jobs being at risk, it's those in other industries with repeatable tasks with the most to lose.
Speaking on a panel covering smart contract platforms and applications, Marley Gray, Microsoft principle architect in charge of blockchain engineering, said that smart contracts elevate the "distributed resolution of the truth" first enabled by the bitcoin blockchain.
For contract designers dealing in this new distributed way of reconciling such complex processes, the hard part will be to not get trapped into thinking in terms of encoding existing processes into a blockchain, Gray said.
"People have a hard time unlearning what they’ve been brought up to do," he explained. "Sometimes the best thing to do is completely destroy a business process."
Bloq CEO Jeff Garzik echoed the notion that business workflows need to be entirely reinvented from the ground up.
But he took the idea further, arguing that the reimagined workflow won't just impact how businesses function internally, but how they do business with each other.
"Blockchain is adjudication as a service," said Garzik, a former BitPay employee. "It validates rules that are common to the entire playing field. It's very much a hyper-real-time version of the court system."
IBM fellow and vice president of blockchain technologies Jerry Cuomo summarized the push to reimagine business workflows far beyond law:
While smart contracts are in their earliest phases of development, large-scale failures have helped to define issues that should be avoided.
In addition to Szabo's review of the state of smart contracts, he discussed the forward to a white paper published that day and distributed to event attendees, titled "Smart Contracts: 12 Use Cases for Business & Beyond".
Prepared by the Smart Contracts Alliance, an initiative of the Chamber in collaboration with Deloitte, the paper describes smart contract implementations ranging from the automatic compliance of the destruction of records to instantaneous processing of auto insurance.
The paper positions smart contracts on a spectrum ranging from contracts "entirely” written in code to "natural language" contracts with encoded payment mechanisms.
To Szabo, the safest way to execute such contracts would be the bitcoin blockchain, which he called the "most reliable financial system that’s ever been deployed".
In spite of the current limitations of the bitcoin network for supporting smart contracts, in Szabo's forward to the white paper he described his ideal smart contract deployment as rather complimentary to its current abilities:
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