CONTRACTS

Creating and enforcing contracts is a lengthy and costly process, even in areas where formal agreements are highly significant, often requiring days or weeks to refine the language with a colleague while paying an hourly wage, to a lawyer. Even worse, if the counterpart later violates the contract, the only way to enforce the terms (with the exception of the litigation) is to spend much more hours and thousands of dollars in the legal system. The art world is even more complicated, as the reluctance of industry to contract leads to a possible agreement falling apart if one party even proposes the adoption of a formal agreement. Smart contracts are somewhat abstract, so an analogy is useful. Towards the end of Stanley Kubrick’s dark comedy about the Cold War. Strangelove, the varied team of the US War Room. He learns that the Soviet Union has invoked a nuclear deterrent called Doomsday Machine. If an attacker tried to strike the USSR with a preventive nuclear attack, the Machine of the Day of Remembrance would be released, even though the entire human military apparatus had already evaporated. Strangelove explains that the device “is designed to be activated automatically … in a set of specific and well-defined circumstances … programmed in a huge computer complex.” A few decades before the advent of the blockchain, Doomsday Machine basically had a smart contract: a digital agreement between the parties, in which the conditions are: what to do, when to do it, and how to, all coded in advance. After reading and executing the agreement, individuals can not interrupt them. Nor does it require an intermediary (legal and judicial system) to monitor compliance, making the smart contract safer, more efficient and much cheaper than the traditional contract.

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stockhom

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