The roots of blockchain technology go back to the 1990s, but it was the Bitcoin blockchain, its first widely used example, that made blockchains popular in 2009. In short, blockchains are decentralised digital ledgers made up of "blocks" of information linked to one another through cryptographic hashing, and they are extremely hard to tamper with. Each "block" contains its own hash value as well as the hash value of the preceding "block". Since even the smallest change to a block alters the entire hash of that block and therefore of the following blocks, miners can easily spot an anomaly in the blockchain and discard false information or transactions.
Crypto assets are the best-known use of blockchain technology because of the expectation of quick profits. Blockchain technology, however, offers other uses in everyday life and in legal processes as well.
Above all, smart contracts, which are computer programs stored on the blockchain, have become part of many people's lives thanks to the Ethereum blockchain. A vending machine is the classic example of a simplified smart contract. Vending machines operate very simply. When a person wishes to buy a snack and inserts enough money, the machine immediately releases the chosen snack. Smart contracts generally follow the same logic. Computer code made up of "if, then, else" statements executes the "contract" automatically once the conditions set out in the smart contract are satisfied. The examples below are all existing uses of blockchain technology through smart contracts.
One groundbreaking use is the blockchain as a registry. Although it is not yet widespread, the prototype use of blockchain technology and smart contracts in a real estate sale has shown the world how much convenience they can bring. An experimental real estate sale in the UK significantly shortened the process and removed the need for traditional intermediaries. This is a good indication of how much time and cost can be saved when real property is sold by tokenizing it and transferring it on the blockchain. This use is not restricted to the sale of real estate and can serve as proof of ownership for any other asset.
A second use of blockchain technology through smart contracts is as a voting system. Whether in general elections or on other occasions such as mass voting, results stored on a blockchain will be immutable and become final almost immediately because of the secure nature of the blockchain.
Smart contracts can also act as an escrow agent and again save time and cost in the process. The conventional escrow mechanism depends on safekeeping by a third party, and that escrow agent may not be objectively trustworthy. In addition, escrow agents are usually paid generously, though reluctantly, by both parties to the transaction. Using a smart contract as a monetary escrow agent solves both of these problems of traditional escrow at once, but it may also create a new risk of leaking confidential business information, since transactions on public blockchains are transparent.
Smart contracts can be used in countless types of transactions, some of which are mentioned in this article, but users must also bear their drawbacks in mind. The main drawback of smart contracts is that they cannot be altered. Because smart contracts follow the "code is law" approach, changes in the intentions of their users are not taken into account and the contract is executed once its conditions are met, whatever the circumstances. There is also a risk that contracts may be hacked or written with faulty code, which can cause panic among users dealing with large amounts of crypto assets. These drawbacks can, however, be avoided to some extent through careful use and a concrete legislative framework.
All in all, we believe that blockchains and smart contracts have great potential to make legal and everyday matters easier, but they should be used with great care, as this field still awaits much-needed regulation.