The aim of the present essay is to investigate whether and how blockchain technology platforms and smart contracts could be considered a modern form of private authority, which at least partially escapes the application of mandatory rules and traditional enforcement mechanisms. Blockchain technology presents itself as democratic in nature, as it is based on an idea of radical decentralization. This is in stark contrast to giant Big Tech corporations working over the internet in the fields of social networking, online search, online shopping, etc, with blockchain, technology users put their trust in a network of peers. Nevertheless, as happened with the internet, market powers could create monopolies or highly imbalanced legal relationships. In this sense, contractual automation seems to play a key role in understanding the potentialities and the risks involved in the technology. In general terms, one of the main characteristics of a smart contract is its self-executing character, which should eliminate the possibility of a breach of contract. But smart contracts may also provide for effective self-help against breaches of traditional contracts. Finally, when implemented on blockchain platforms, smart contract relationships may also benefit from the application of innovative dispute resolution systems, which present themselves as entirely independent from state authorities.
Sirena, Pietro and Patti, Francesco Paolo, Smart Contracts and Automation of Private Relationships (July 28, 2020). Bocconi Legal Studies Research Paper No 3662402, July 2020.