The Law Offices of Sanford F. Young, P.C.

Getting results since 1978

Smart contract dispute resolutions protect crypto transactions

On Behalf of | Aug 15, 2022 | Contract Disputes

Whenever dealing with cryptocurrency across borders, it’s beneficial to understand what a smart contract is, what happens when they’re disputed, and how to use dispute resolution to resolve the matter quickly and effectively in New York. Smart contract dispute resolution refers to the alternative dispute resolution measures (or ADR) that may come into play when a smart contract is used in a transaction.

What is a smart contract and what is it for?

A smart contract is a self-executing program that’s stored on a blockchain that uses blockchain storage such as Ethereum, Bitcoin, or Litecoin. The point of this program is to make sure that the terms agreed upon in the contract are adhered to. This makes it so neither of the parties has to rely on trust alone, something that is usually the case when signing a contract without using a smart contract.

The idea of safeguarding contract agreements in this way has noticeably caught on as more companies and individuals see the need for a robust ADR solution. It’s all the more true for companies frequently dealing with international contracts.

Decentralized finance companies help people who trade with cryptocurrency when transaction issues arise from blockchain smart contracts. With a smart contract, although this issue of trust is eliminated, there are still contract disputes that sometimes arise and must be resolved.

Helping with cross-boarder disputes

Contract law is anything but uniform from country to country. The differences in these laws tend to be the most daunting problem when settling international contract disputes.

By utilizing the technology that makes blockchains possible in the first place, these startup companies can produce new solutions for smart contract dispute resolution. Decentralized justice platforms, for example, are blockchain-based apps that make it possible to arbitrate or mediate these disputes.