Legitimacy of Smart Contracts Written in Encrypted Code on Blockchain Technology Under Current Contract Law: A Comparative Study

Abstract

Abstract: Using smart contracts as a new technology for online contracting has become the best option today when working in non-trustworthy environments to execute automated irreversible agreements. However, such contracts have issues relating to the language used for expressing the obligations of the involved parties. Additionally, smart contracts have no legal recognition of blockchain as a means of record-keeping for smart contract transactions. Parties engaged in smart contracts face difficulties in terms of incompatibilities with current legal frameworks. The objective of this article is to evaluate the legality of smart contract language and the validity of blockchain as an electronic medium from the perspectives of current laws. This article adopts a qualitative doctrinal legal research approach. The findings indicate that there is a need to enact laws that recognise the language used for smart contracts and the transactions recorded on the blockchain.