The world is abuzz with news about blockchain development and technology lawyers need to understand the implications. The rise of smart contracts, or automated implementation of portions of real-life contracts by transferring assets between parties, is one of those interesting implications. A smart contract is neither smart, nor a contract, but can be regarded by lawyers as a technological solution that automates some transfer between parties to a contract, such as payment or release of information, upon the occurrence of a triggering event. At its most basic, a smart contract consists of fixed program code, a storage file and an account.
Recent news about a startup company making headway with smart contract technology development is worth noting. Adjoint, Inc., based in Boston, is trying to market a solution where financial transactions are automated through smart contracts and work with many proprietary interfaces. The solution provides a consensus protocol (a protocol used in blockchain to get all the processes to agree on a specific value for verification) that allows companies to deploy and analyze a network of smart contracts on top of a mathematically verified distributed and encrypted ledgers.
The future of this technology is promising enough that Adjoint was voted this year’s Ernst & Young Startup Challenge winner of the title of “Most Investable Startup.” The recent EY Startup Challenge required six teams to build and showcase blockchain solutions and prototypes. For the six-week competition in London, Adjoint focused on a distributed ledger solution for energy trading clearing and settlement. At the competition’s concluding showcase, Adjoint provided a live demonstration of its smart contract solution for Over-the-Counter bilateral trades, setting up an OTC swing swap contract between two parties on a private blockchain.