Smart Contracts and Automation of Private Relationships

18 Pages Posted: 30 Jul 2020

See all articles by Pietro Sirena

Pietro Sirena

Bocconi University - Bocconi Law Department

Francesco Paolo Patti

Bocconi University - Department of Law; Bocconi University - Bocconi Law Department

Date Written: July 28, 2020

Abstract

The aim of the present essay is to investigate whether and how blockchain technology platforms and smart contracts could be considered a modern form of private authority, which at least partially escapes the application of mandatory rules and traditional enforcement mechanisms. Blockchain technology presents itself as democratic in nature, as it is based on an idea of radical decentralization. This is in stark contrast to giant Big Tech corporations working over the internet in the fields of social networking, online search, online shopping, etc., with blockchain, technology users put their trust in a network of peers. Nevertheless, as happened with the internet, market powers could create monopolies or highly imbalanced legal relationships. In this sense, contractual automation seems to play a key role in understanding the potentialities and the risks involved in the technology. In general terms, one of the main characteristics of a smart contract is its self-executing character, which should eliminate the possibility of a breach of contract. But smart contracts may also provide for effective self-help against breaches of traditional contracts. Finally, when implemented on blockchain platforms, smart contract relationships may also benefit from the application of innovative dispute resolution systems, which present themselves as entirely independent from state authorities.

Keywords: Smart Contracts, Blockchain, Self-execution, Self-enforcement

JEL Classification: K10, K12, K20, K41, K42

Suggested Citation

Sirena, Pietro and Patti, Francesco Paolo, Smart Contracts and Automation of Private Relationships (July 28, 2020). Bocconi Legal Studies Research Paper No. 3662402, July 2020, Available at SSRN: https://ssrn.com/abstract=3662402 or http://dx.doi.org/10.2139/ssrn.3662402

Pietro Sirena

Bocconi University - Bocconi Law Department ( email )

Italy

Francesco Paolo Patti (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

Bocconi University - Bocconi Law Department ( email )

Italy

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