SMART CONTRACTS AND BLOCKCHAINS: STEROID FOR COLLUSION?
By Ai Deng1
I. WHAT IS A SMART CONTRACT?
It is late afternoon. Our stomachs are calling. We walk up to a vending machine. We stare at the selection for a minute, swipe a card or insert some cash, and make our choice. The machine (usually) gets us the snack we want and also figures out how much change to give back. It is such a routine part of life that most of us probably don’t realize that we and the vendor just engaged in a transaction that is based essentially on a smart contract. Smart contracts are those that self-execute as soon as certain contractual terms are met.
The idea is not new. Every time we set up an automatic recurring bank transfer or payment, we effectively create a smart contract with the financial institution. Of course, a smart contract can do a lot more. For example, given the inevitability of smart vehicles in the not-so-distant future, it is easy to imagine a smart insurance contract where sensors on the vehicle detect who is at fault in an accident, insurance rates are adjusted accordingly, and an insurance payment is made automaticallyâall with minimal human involvement.2