Blockchain network with glowing smart contracts balanced on legal scales.

Smart Contracts: Are Standardized Regulations the Key to Unlocking Their Full Potential?

Beau Callahan in Law & Justice August 2025 • 4 min read.

"Delphi and SWARA analysis offer insights into navigating the complex landscape of blockchain smart contracts and the need for legal frameworks."

The rise of digital currency and blockchain technology has spurred the development of smart contracts, self-executing agreements written into code. These contracts promise to revolutionize industries by automating processes, increasing transparency, and reducing the need for intermediaries. However, their novelty also presents unique challenges, particularly in the legal realm. How can these contracts be considered valid and enforceable, and what regulations should govern them?

Smart contracts offer numerous benefits, including automated execution, public visibility of contract terms, and prevention of financial crimes. Yet, disputes arising from smart contracts often require human intervention, raising complex issues related to evidence, enforceability, and jurisdiction. The absence of standardized regulations creates uncertainty and hinders the widespread adoption of this transformative technology.

To address these challenges, researchers are exploring critical success factors for implementing blockchain transactions as smart contracts. By identifying key elements and proposing methodologies for assessing their influence, this research aims to contribute to the development of a legal framework that fosters innovation while mitigating risks. The ultimate goal is to unlock the full potential of smart contracts in various industries, including manufacturing.

What are Smart Contracts and Why Do They Matter?

Blockchain network with glowing smart contracts balanced on legal scales.

Smart contracts are essentially computer programs containing pre-written instructions that execute automatically when specific conditions are met. Think of them as digital vending machines: once you insert the correct payment (meet the conditions), the machine dispenses the product (executes the contract). This eliminates the need for human intervention, making transactions faster, more efficient, and less prone to manipulation.

The underlying technology that enables smart contracts is blockchain, a distributed and immutable ledger that records all transactions in a transparent and secure manner. Each transaction is verified by a network of computers, making it extremely difficult to alter or tamper with the data. This combination of smart contracts and blockchain creates a powerful tool for automating agreements and building trust between parties.

Smart contracts have the potential to transform various industries, including:

Finance: Automating payments, loans, and insurance claims.
Supply Chain Management: Tracking goods and verifying authenticity.
Real Estate: Streamlining property transactions and managing rental agreements.
Healthcare: Securely sharing medical records and automating insurance processes.
Manufacturing: Managing complex supply chains and ensuring quality control.

However, the lack of standardized regulations poses a significant barrier to the widespread adoption of smart contracts. Businesses and individuals are hesitant to rely on these contracts without clear legal guidelines, leading to uncertainty and potential disputes. This is where the need for a comprehensive legal framework becomes crucial.

The Path Forward: Standardized Regulations for a Secure and Innovative Future

The journey towards standardized regulations for smart contracts is complex, but essential for unlocking their full potential. By addressing the legal and technical challenges, fostering collaboration between experts, and prioritizing security and clarity, we can pave the way for a future where smart contracts drive innovation and efficiency across industries. Further research and collaboration are crucial to navigate these uncharted waters and ensure that smart contracts become a reliable and valuable tool for businesses and individuals alike.

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This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2403.19051,

Title: Towards Standardized Regulations For Block Chain Smart Contracts: Insights From Delphi And Swara Analysis

Subject: econ.gn q-fin.ec

Authors: Shahin Heidari, Shannon Hashemi, Mohammad-Soroush Khorsand, Alireza Daneshfar, Seyedalireza Jazayerifar

Published: 27-03-2024

Everything You Need To Know

What exactly are smart contracts and how do they function?

Smart contracts are computer programs with pre-written instructions that automatically execute when specific conditions are met. They use blockchain technology, a distributed and immutable ledger, to record transactions transparently and securely. Each transaction's verification by a network of computers ensures data integrity. Think of them as digital vending machines; they dispense the product (execute the contract) once you meet the conditions, such as correct payment. This automation reduces the need for intermediaries and minimizes manipulation risks. They have broad applications across finance, supply chain, real estate, healthcare and manufacturing.

What are the primary benefits of using smart contracts, and how do they improve traditional contract methods?

Smart contracts offer several advantages over traditional contracts. They automate execution, making transactions faster and more efficient. The terms of smart contracts are publicly visible, increasing transparency and accountability. Also, they can help prevent financial crimes by ensuring all transactions are recorded on a secure, immutable ledger. However, it's important to note that disputes sometimes require human intervention, raising complex issues of evidence, enforceability, and jurisdiction, which traditional contracts address more directly through established legal systems.

What challenges are currently hindering the widespread adoption of smart contracts?

The primary challenge is the absence of standardized regulations. Businesses and individuals hesitate to rely on smart contracts without clear legal guidelines. This uncertainty can lead to potential disputes and hinders the transformative technology's adoption. Other technical and legal challenges need to be addressed to pave the way for a future where smart contracts drive innovation and efficiency across industries.

How do Delphi and SWARA analysis contribute to the understanding and implementation of blockchain smart contracts?

Delphi and SWARA analysis help navigate the complex landscape of blockchain smart contracts and the need for legal frameworks. They offer insights into identifying critical success factors for implementing blockchain transactions as smart contracts. These methodologies assess the influence of key elements to contribute to developing a legal framework, fostering innovation while mitigating risks, and can aid in the development of standardized regulations.

What is needed to realize the full potential of smart contracts, particularly in sectors like manufacturing?

To unlock the full potential of smart contracts, standardized regulations are essential. These regulations will address the legal and technical challenges, foster collaboration between experts, and prioritize security and clarity. Further research and collaboration are crucial to ensure that smart contracts become a reliable and valuable tool for businesses. Sectors such as manufacturing would benefit significantly from the efficiency and transparency that smart contracts can provide in managing complex supply chains and ensuring quality control. The automation of processes and reduction of intermediaries can revolutionize operations, but only within a clear and enforceable legal framework.