When to Use Smart Contracts Instead of Traditional Contracts—A Conceptual Analysis

Anna Hupe ()
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Anna Hupe: University of Kassel

A chapter in Digital Innovation and Organizational Transformation, 2026, pp 361-375 from Springer

Abstract: Abstract Smart contracts are code-based representations of business logic that encapsulate predefined rules that they verify and execute autonomously. As self-executing agreements, these contracts running on a blockchain facilitate interactions be-tween untrusted parties, eliminating the need for intermediaries. They speed pro-cesses, increase transparency, and facilitate data exchange across national and or-ganizational boundaries, providing a competitive advantage. However, there are significant costs associated with implementing smart contracts. In our study, we conduct a comparative analysis of these costs and compared them to traditional contracts. Using a combination of literature review and expert interviews, we dis-sect the cost structures of both approaches at an abstract level. We then construct a matrix to systematically compare traditional contracts with smart contracts. This framework allows us to model the conditions that favor the use of smart contracts over traditional ones, and to identify instances where each approach has a distinct advantage.

Keywords: Smart contract; Transaction costs; Conceptualization (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnichp:978-3-032-08483-5_23

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DOI: 10.1007/978-3-032-08483-5_23

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