# What does the future hold for smart contracts? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2018-12-18 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: The Future of Smart Contracts: Challenges and Opportunities Meta Description: Discover the potential and limitations of smart contracts in legal technology. Find out how to adapt skills to unlock business value in the evolving landscape. URL: https://financedigest.com/future-hold-smart-contractshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/akber-1736840171630-compressed.jpg) _Like with any new technology, when it comes to smart contracts, a pragmatic approach must be adopted and current limitations must be taken into account. Any organisation looking to adopt smart contracts needs to understand the true applications and where there is the possibility to deliver the most value to clients. To do this, the skills mix needs to be rapidly adapted – from recruiting computer and data scientists with legal understanding to upskilling lawyers with foundational technology and data skills, ensuring they are equipped with the knowledge and confidence to help clients unlock business value through legal change and more specifically, smart contracts._ _**Akber Datoo,** Managing Partner, D2 Legal Technology, outlines what the [future holds](https://www.financedigest.com/what-does-the-future-hold-for-corporate-payments.html "What Does the Future Hold for Corporate Payments?") for smart contracts._ **More than a buzzword** ![Akber Datoo,](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/akber-450x300-1736840171639-compressed.jpg) Akber Datoo, As we head into 2019, the hype is still far ahead of the practical adoption of smart contracts. To start with, there is still no agreed definition of the term – with academics and experts still lacking consensus. Of course, the technology to [enable smart](https://www.financedigest.com/top-fintech-trends-for-2021-enabling-smart-and-secure-finance.html "Top Fintech Trends for 2021 Enabling Smart and Secure Finance") contracts has evolved significantly over the past two decades, with the arrival of Distributed Ledger Technologies (DLT) such as Blockchain making the smart contract concept more commercially feasible. Nonetheless, it is this combination of [automated process](https://www.financedigest.com/the-implantable-biomaterials-market-to-move-ahead-on-rpa-robotic-process-automation.html "The Implantable Biomaterials Market to move ahead on RPA (Robotic Process Automation)") and human input that underpins the ongoing challenges regarding the adoption and enforcement of smart contracts. The answer will in part depend on whether there will be this development of lawyers with the confidence in the technology and the ability to undertake, or at least be involved in the review of the code, possibly in some more amenable form, representing the smart contract. Additionally, they would need to be able to understand where to optimally blend code with the natural language required for non-operational contracts. Furthermore, there are concerns regarding DLT; from the inherent reliance upon cryptocurrencies, with their dark web connotations and global concerns regarding their [future stability](https://www.financedigest.com/stability-test-chamber-market-2019-scope-of-current-and-future-industry-2027.html "Stability Test Chamber Market 2019 | Scope of Current and Future Industry 2027"), to the open and public nature of DLT networks. The [financial market is looking to address this with the creation of closed](https://www.financedigest.com/fast-track-financial-close.html "FAST-TRACK FINANCIAL CLOSE"), market-specific DLTs – and it is possible the legal profession will follow suit. Yet, the processes, skills and [business practices relating to the wholesale adoption of smart contracts are still very much under development](https://www.financedigest.com/impact-com-appoints-a-raft-of-new-business-development-representatives-as-the-technology-companys-client-roster-grows-by-more-than-50.html "impact.com appoints a raft of new Business Development Representatives as the technology company’s client roster grows by more than 50%"). **Plug and play** Smart contract applications are definitely still a work in progress. Developments are exciting, as smart contract companies such as Clause.io are looking to feed real-time Internet of Things (IoT) data into a smart contract and use real-time data – such as from a delivery van to support [supply chain](https://www.financedigest.com/eliminating-payment-barriers-the-future-of-supply-chain-payments-is-digitization.html "Eliminating Payment Barriers: The Future of Supply Chain Payments is Digitization") processes, to the creation of standardised pieces of code to provide further automation – and minimise lawyers’ coding requirements. However, before any such innovation can be embraced, the fundamentals must be in place: lawyers will still require a basic understanding of systems, [data and IT development before being let loose in the use of any standardised code if they are to avoid](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") unintentionally including bugs or errors within the contract. The concept of plug and play smart [contracts is currently](https://www.financedigest.com/pharmaceutical-contract-packaging-market-current-impact-to-make-big-changes-2020.html "Pharmaceutical Contract Packaging Market Current Impact to Make Big Changes 2020") unrealistic. **A look to the future** Smart contracts clearly have the potential to be a key [technology for the future](https://www.financedigest.com/technology-skills-and-servitization-a-brighter-future-for-manufacturing.html "TECHNOLOGY, SKILLS AND SERVITIZATION: A BRIGHTER FUTURE FOR MANUFACTURING?") once it has matured and legal considerations are resolved. Until then, the legal profession must take practical [next steps](https://www.financedigest.com/open-finance-the-next-step-for-global-digital-transformation.html "Open finance – the next step for global digital transformation") to fully unlock the business value of smart contracts. As well as addressing the educational and skillset gap, there needs to be a greater appreciation of [business processes](https://www.financedigest.com/automating-business-processes-is-essential-to-digital-transformation.html "Automating business processes is essential to digital transformation") related to legal agreement data and basic data governance principles put in place and implemented in relation to them. It is [essential to step back and understand the true implications of this technology](https://www.financedigest.com/why-anti-spoofing-fingerprint-technology-is-essential-for-the-continued-growth-of-digital-payments.html "Why anti-spoofing fingerprint technology is essential for the continued growth of digital payments"). It is tantalising and logically compelling and without a doubt will have a significant role to play in the [years ahead](https://www.financedigest.com/global-stocks-to-grind-higher-lacklustre-year-ahead-reuters-poll.html "Global stocks to grind higher, lacklustre year ahead: Reuters poll"). But there is a long way to go before [businesses can confidently and wholeheartedly embrace smart contracts](https://www.financedigest.com/euro-zone-business-activity-contracted-again-in-august-pmi.html "Euro zone business activity contracted again in August -PMI") for anything other than the simplest of agreements. To [gain real traction](https://www.financedigest.com/carmine-color-market-will-gain-traction-at-7-9-amid-growing-preference-for-natural-food-ingredients-fmi.html "Carmine Color Market Will Gain Traction at 7.9% amid Growing Preference for Natural Food Ingredients: FMI"), DLTs need to mature, smart contracts need to be legally tested, and they need to be enforceable. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---