Blockchain technology and corporate governance : the issue of smart contracts — current perspectives and evolving concerns

Abstract

Traditional contracts are being replaced in an increasing number of instances by smart contracts that is, “decentralized agreements built in computer code and stored on a blockchain”, which are able to automatically execute the terms within the contract and control the relations between parties so that no further “explicit but redundant” negotiations are needed. This paper assesses current and evolving concerns regarding the adoption of blockchain technology in the areas of financial services, and corporate and public governance. The author evaluates the risks and benefits of the utilization of smart contracts and assesses their suitability (in terms of transparency, accountability, responsibility and fairness) for use in the public services’ “space”. It concludes that while the benefits outweigh the disadvantages, great care should be exercised in terms of design and use because this is still a developing area in terms of both the technology itself and the regulatory environment.