Smart contracts critical to blockchain success

Smart contracts used in conjunction with blockchain technology could be the key to making major efficiency savings, a panel has told the FinTech Week conference in London today.

Sean Murphy, partner at Norton Rose Fulbright LLP, claimed that long-term contracts are typically inefficient. “Its, impossible to anticipate what will happen with contracts in the long term. You have to deal with circumstances and legal ramifications. Contracts are often amended”

Murphy mentioned how smart contracts can be handled easily and improve efficiency.

Preston Byrne, COO at start up Eris Industries, said the code used in blockchain and smart contracts is ideal because of its resistance to malice. “ This code will resist manipulation and assist the industry immensely. Banks are already violating every tenant of KYC”

The panel also discussed on how such contracts could become legally enforceable.

Ajit Tripathi, director of fintech and digital at PWC, remarked on how enforceability is not intrinsic to the code. “It comes from the institutions around the ecosystem of the code. Blockchain improves the cost of forming contracts, that’s a fact”

Murphy, the only lawyer of the group, said: “You need to look at the range of possibilities. Contracts don’t need to be in writing to be enforceable, for example moral contracts. What matters is certainty of terms.”

The panelists concluded by estimating the timeline for full integration of the blockchain into the finance industry.

Dr. Lee Braine of Barlcays IB CTO office, gave fast predictions. “In terms of online legal documentation, it has been going on for years. In regards to simplifying workflow in the conglomerate, we can see a 1-2 year wait.”

In the closing words, Tripathi commented on the relationship between blockchain and smart contracts. Tripathi said:” Without blockchain, smart contracts are just an application and code. It is extremely difficult to do smart contracts without blockchain because of viability.”