Smart Contracts Are Not Legal Contracts

Smart contracts are not recognized as legal contracts and don’t offer the same protections. They are more like stored procedures in that they are scripts that execute on a blockchain.

Vitalek Buterin, founder of Ethereum regrets naming them smart contracts.

See also:

  • Continuous Organizations Don’t Make Sense for High Growth Startups

    Continous organizations are touted as a way to run a company in a radically transparent way on a blockchain. It aims to balance the incentives of the company owners, investors, and employees. However, this is probably impossible to do for a high growth startup.

  • Smart Contracts Are a Computing Model That Requires Maintenance Forever

    Smart contracts that run on a distributed ledger effectively need to work forever to be useful. Working forever requires maintenance and security—the longer a computer program runs, the more exposure it has to change and the opportunity to be exploited.

  • Nfts Are a Subset of Ownership

    NFTs lack the legal and regulatory protection of other forms of property. In the event of a dispute, there is no oversight. This fundamental principle of crypto projects (decentralization, no middle man, zero trust) limits what can be represented as a non-fungible token.

  • Distributed Autonomous Organizations Are More Like an LLC

    Distributed autonomous organzations (DAOs) have more in common with limited liability corporations (LLCs) than C Corporations. There is near infinite variability possible in an LLC’s operating agreement similar to how DAOs can be grant DAOs, investment DAOs, protocol DAOs, and many more. C Corps on the other hand have converged on, more or less, a standard—Delaware C Corp and a well-known governance structure based on ownership of stock.