Blockchain and smart contracts: will it be the end of traditional contracts?

Technological advancements, far from slowing down, are accelerating. One of these, which is quietly beginning to change the way business is done, agreements are made, and contractual relationships are understood, is blockchain technology and smart contracts.

But what does all of this really mean? Are we facing the end of traditional paper contracts, notaries, and physical signatures?

Let’s break it down step by step.

What is a blockchain smart contract?

Although it may sound like science fiction, a smart contract is essentially a computer program that executes automatically when certain pre-set conditions are met. There’s no room for “I misunderstood something” or last-minute forgetfulness: the contract is written in code and is as literal as it is mathematical.

These contracts operate within a blockchain network, a type of distributed, decentralized, and secure digital ledger, where everything that happens is recorded and cannot be altered. This system ensures that contracts are executed without the need for intermediaries, such as lawyers or notaries.

In other words, when we talk about blockchain and smart contracts, we refer to technology that can automate legal and financial processes in a secure, transparent, and frictionless way.

How does a smart contract work?

A simple example

Imagine you’re renting a vacation home through a smart contract. The agreement stipulates that if you make the payment before the 1st of the month, the digital keys will automatically be sent to your email. If you don’t pay, no keys will be sent. Simple as that.

The contract doesn’t need a person to verify the payment or send the email: everything is automated. This reduces errors, administrative costs, and eliminates unnecessary disputes.

Advantages of smart contracts over traditional contracts

Automation and efficiency

One of the main advantages of blockchain and smart contracts is their ability to automatically execute tasks. This accelerates processes that, in the traditional system, could take days or weeks.

Security and transparency

Every contract stored on blockchain is immutable. That means that once recorded, it cannot be altered or tampered with without network consensus. Furthermore, anyone with access can verify it, which increases trust between parties.

Cost savings

By eliminating the need for intermediaries to validate or execute the contract, costs are significantly reduced. This can be a great advantage for small and medium businesses looking to optimize their resources.

Reduction of human errors

Traditional contracts can contain ambiguities or interpretation errors. In smart contracts, conditions are defined with mathematical precision, removing those frequent gray areas.

And what about traditional contracts?

Will they disappear?

Not so fast. While blockchain and smart contracts are gaining traction, there’s still a long way to go. Traditional contracts are still necessary in complex situations or when subjective elements, such as clauses open to interpretation, come into play.

Additionally, current legislation doesn’t always accommodate this new type of digital agreement. In many countries, they don’t yet hold the same legal validity as traditional contracts signed in front of a notary. This is gradually changing, but full integration will still take time.

Real-world applications of blockchain and smart contracts: much more than cryptocurrencies

Although they became popular with the rise of Bitcoin and other cryptocurrencies, smart contracts have applications far beyond the financial sector.

In real estate

They enable property purchases without the need for intermediaries, with automatic property transfers once payment is made.

In logistics

They can be used to verify the arrival of goods and release payments automatically when the product is delivered.

In intellectual property

Creators can use smart contracts to receive royalties automatically each time their work is used or reproduced.

In the financial world

This is where the union between blockchain, smart contracts, and artificial intelligence can be truly transformative.

For example, with algorithms that analyze risks in real time, combined with smart contracts that execute payments or block transactions automatically, efficiency in asset and loan management is multiplied.

And what role does artificial intelligence play in all this?

At Founderz, we’ve been analyzing how artificial intelligence is driving new uses of blockchain in finance and business. In fact, this is one of the key areas of our Certificate Program in Artificial Intelligence and Innovation, where we explore how these technologies converge to transform the industry.

For example, with the use of AI, we can create more dynamic smart contracts that can adapt to changing conditions or anticipate breaches by analyzing data in real time.

This opens the door to automated agreements that evolve alongside market reality or user behavior.

Is it time to embrace blockchain and smart contracts?

It depends. Like any innovation, adopting blockchain and smart contracts requires training, adaptation, and strategy.

Not all businesses or users are ready to make the leap. But it’s the perfect time to start exploring its possibilities, understanding its benefits, and preparing for what’s to come.

Are you ready for the change?

If you want to learn more about how to integrate this technology into your business or career, at Founderz, we support you every step of the way. Explore our training programs and start building the future of your professional decisions today.

Start today and discover the potential of blockchain and smart contracts in the real world!

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