An Introduction to Smart Contracts and Their Potential and Inherent Limitations

Harvard Law School Forum on Corporate Governance and Financial Regulation

Stuart D. Levi

“Smart contracts” — computer code that automatically executes all or parts of an agreement and is stored on a blockchain-based platform — are an example of “Amara’s Law,” which states that we tend to overestimate new technology in the short run and underestimate it in the long run. Although smart contracts will need to evolve before they are widely adopted for use in complex commercial relationships, they have the capacity to revolutionize how parties contract in the future.