Understanding Smart Contracts: Hype or Hope?

TL;DR

This paper critically examines the hype surrounding smart contracts, contrasting their promising potential with current practical limitations and highlighting future development opportunities.

Contribution

It provides an interdisciplinary analysis of smart contracts, combining data, legal, and technological perspectives to assess their realistic capabilities and challenges.

Findings

Fundamental flaws in current smart contract implementations

Application difficulties hinder widespread adoption

Potential for future innovations to overcome current limitations

Abstract

Smart Contracts are commonly considered to be an important component or even a key to many business solutions in an immense variety of sectors and promises to securely increase their individual efficiency in an ever more digitized environment. Introduced in the early 1990s, the technology has gained a lot of attention with its application to blockchain technology to an extent, that can be considered a veritable hype. Reflecting the growing institutional interest, this intertwined exploratory study between statistics, information technology, and law contrasts these idealistic stories with the data reality and provides a mandatory step of understanding the matter, before any further relevant applications are discussed as being "factually" able to replace traditional constructions. Besides fundamental flaws and applica-tion difficulties of currently employed Smart Contracts, the technological drive and enthusiasm backing it may however serve as a jump-off board for future developments thrusting well in the presently unshakeable traditional structures.