The Limits of Smart Contracts

Jens Frankenreiter

Journal of Institutional and Theoretical Economics (JITE), 2019, vol. 175, issue 1, 149-162

Abstract: This essay investigates the potential of smart contracts to replace the legal system as an infrastructure for transactions. It argues that (contract) law remains relevant for most transactions even if they are entirely structured by way of smart contract. The reason for this is that the power of smart contracts to create and enforce obligations against attempts by the legal system to thwart their executionis limited. These limitations are most relevant for obligations to perform certain actions outside the blockchain, but also apply to other obligations contingent on facts outside the records stored on the blockchain.

Keywords: blockchain; cryptocurrency; tokens; smart contracts; distributed ledgers; Bitcoin; Ethereum; open source; contract law; regulability (search for similar items in EconPapers)
JEL-codes: K12 K24 K42 L14 O33 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1628/jite-2019-0021

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