The Next Big Revolution: Smart Contract and Artificial Intelligence

History has always seen several revolutions in the challenge to  reduce the costs of global business. At first the transport, then the production, and recently also the communications industry has seen a sharp drop in its costs. However there are still great obstacles in the international business due probably to jurisdiction’s issues, such as security and trust’s matters or also development’s costs and relationships.

Despite the changes introduced by technological development, there is still a big problem to solve: most institutions still continue to take for granted the fact that we live in a world of paper. Relations are generally dominated by  written contracts and written laws. Let’s think about the laws relating to intellectual property and privacy : it’s an ecosystem which takes as a model a paper world. Security measures have included seals and written signatures. The value is transferred through bills, checks, bearer bonds and so on.

Now it’s growing a need for change. We should become conscious of the necessity to leave the paper world and enter a new age: that one of digital innovation, or better, the physics of cyberspace. The latter , designed by computer scientists, is radically different from the features of paper. AI and  digital media allow  a dynamic combination , allowing not only to transmit information but also to make decisions. Ai  tools are able to operate and reasoning like a man and perhaps even more uprightly.

The transition from a static to a dynamic one world allows  to create a fourth revolution of the costs of the business , trust and security’s matters. An impact that will be visible in the fields of law, accounting, auditing, billing, privacy and so on. The whole nature of our business relationship should be changed radically. And today it seems that the so expected change could come from Blockchain 2.0.

What’s about?

When you hear about Blockchain 2.0 , you should know that it means to exploit blockchain technology’s potential and pour into services and activities different from those ones of the financial world. I’m thinking about the contract’s world. Let’s try to imagine how contracts could change through the blockchain technology.

Basically the contract is an exchange of promises accepted by two or more parties, a "meeting of minds".

Usually we associate the idea of contract to the typical written one, a series of terms and conditions in black and white on a paper. But actually we should think about all those contracts that are agreement of facts without the necessity of a written form. We can buy a newspaper or take a ride on a  public transport without writing an agreement.  Anyway, the contract is the basic element of economics. But the digital revolution is challenging us to develop new institutions in a short amount of time. Extracting from our laws, the procedures and theories that remain suitable for the cyberspace, you can keep much of the tradition and reduce the time required to develop institutions digital helpful.

The computers make possible the execution of algorithms allowing the transmission of messages ever more complex and more sophisticated. In addition, computer scientists and cryptographers have recently discovered many new algorithms. Combining these messages with the algorithms, it makes possible a wide variety of new protocols. These protocols, running on public networks such as the Internet, are both a challenge and a tool that will allow us to formalize and establish new types of relationships in a new environment. There would be the possibility for a global revolution in the contracts law, business forms, and audits.

In the field of  e-commerce, design criteria to automate the execution of the contract come from different areas such as economics and encryption, but still with a lack of awareness of the technology, on the one hand, and  on the other hand with a lack of awareness of the practical impact of technology in  the world of business. Smart contracts reduce transaction costs, also eliminating the need for a third party to serve as an intermediary. The contractual phases of research, negotiation, commitment, performance  are the reign of smart contracts.

But what about the practical consequences of this new revolution?

Steve Omohundro at the Bitcoin and the blockchain Radar Summit talked about the connection between AI and blockchain . “ I think we’re in a period of exploration and excitement in that field, and it’s going to merge with the AI systems because programs running on the blockchain have to connect to the real world. You need to have sensors and actuators that are intelligent, have knowledge about the world, in order to integrate them with the smart contracts on the blockchain. I see a synthesis of AI and cryptocurrencies and crypto-technologies and smart contracts. I see them all coming together in the next couple of years.”

According to Steve Omohundro, cryptocurrency could transform every aspect of life, providing enormous benefits, but probably even some harm. For this reason it’s necessary to increase the knowledge in this field and regulate these system to ensure they are safe.

Meanwhile, different platforms, devoted to the creation of smart contracts are in course of development and probably in a couple of years AI and Blockchain technology will be the new protagonists of the society.

Are we ready?

Antonio Simeone @simeoneantonio1

Chiara Mancini