Trustless contract management: a study on the benefits of blockchain-based smart contracts

Blockchain technology and smart contracts are changing and challenging the framework in which business is conducted. Contracts are an essential part of business and legal relationships, they outline the activities agreed by the parties and the conditions under which they will carry out their obligations. The thesis discusses and demonstrates the potential use of smart contracts to improve the traditional contract management process by leveraging the advantages of the blockchain, a secure, immutable, reliable and trustworthy technology. After providing an overview of the blockchain, its main industry applications, and smart contracts, the focus shifts to contract management, covering the main characteristics of contracts and topics such as contract organization, administration, and disputes. The integration of the blockchain and smart contracts in contract management is analyzed, also examining the aspects and issues related to their recognition by the legal community. The benefits provided by blockchain-based platforms that do not require to be trusted to automatically enforce contractual terms and conditions are investigated in their application to the automation of payments, surety bonds, claims and dispute resolution. They highlight how decentralized consensus and automated and self-enforced execution of contract conditions can significantly improve traditional contract management processes, reducing their frequently associated issues consisting in long delays, cumbersome bureaucracy and paperwork, and high ancillary costs. Smart contracts allow to minimize reliance on attorneys, banks, insurance companies and other intermediaries leading to savings in administrative and legal costs. The immutability and security of the blockchain allows to perform safe storage and record keeping of contract and project data, create transparency and solve trust issues among the parties. Solutions capable to capture, analyze, and document the status of physical reality at job sites by means of sensors and autonomous vehicles, connect and broadcast the acquired off-chain real world information to smart contracts are presented. They overcome reliance on manual and intermediated workflows and allow to create fully autonomous procedures.