Abstract:
The concept is called smart contract and its advancement with the help of artificial intelligence. The traditional contracts are those with deals with money for consideration but in the case of smart contracts it is powered by bitcoins which is a very convenient way of dealing with the transactions. Through the practice of smart contracts concept this eliminates the need for intermediaries such as agents, banks etc., AI have potentially evolved the usage of smart contract and it makes the process of smart contract easy and reliable for all the prudent person. AI in many ways have influenced the smart contract positively such as in security purposes, self-executing contracts, natural language processors, enhancement in decision making, futuristic approach but the coin always has the other side which deals with the risk and challenges that are attached to it. This article lights the future development of smart contract and self-executing agreements.
Key words: smart contract, artificial intelligence, cryptocurrencies, revolutionize, challenges.
Introduction:
Law of Contracts are the one which is applicable in our day-to-day life where one way or another everyone will come in contact with one another. The traditional way of contract is governed by the Indian contract act, 1896. There is a concept called smart contract where the agreements are made out digitally and the transactions are made through cryptocurrencies and bitcoins. There is no need for human interaction or interventions. Through this process of smart contract, it is less time consuming and enhanced security is attached. The traditional smart contract is powered by the help of artificial intelligence. In the automated world it is important to be digitally developed and should be ready to adopt the new changes in the world. In this world where everything is moving Fastly with the help of AI (artificial intelligence). It is essential that smart contracts are also developed with the help of AI artificial intelligence.
IMPACTS OF AI IN SMART CONTRACT.
Enhanced Decision making:
The smart Contracts are run with the help of AI algorithms which consist of a vast number of data inputs. Through the help of data that are already being stored in the algorithms it will be easy to make a decision because it gives us all kinds of expected output. In the concept of machine learning is the process where the set of training data is inserted along with the expected. the machine will learn the output through the experience and it reduces the involvement of manual data entry or input all the time. The machine itself learns the process and gives the expected output every time without human intervention. By using this machine learning process it will be effective to make decisions in smart contracts as it has experienced similar data output.
Natural language processor
The major challenge faced by the traditional smart contract is the complexity of its coding language which is ambiguous and high chances of being interpreted wrongly but with the help of natural language processors the complexity of the terms of the smart contract is reduced and become more precise to understand. This reduced the risk of misleading the terms of the smart contract. Natural language processors revolutionized the usage of smart contracts by everyone, even the normal prudent person can access and get the understanding of the content of the contract as it simplifies the terms and conditions of the smart contract. This process not only enhanced the accessibility of the contract but also reduced the disputes that arise from the misinterpretation of the contract.
Futuristic approach;
As stated above the AI algorithms have all the history of data and inputs through which we can predict the output and outcomes in the future. As stated, smart contracts are those built in contracts which have the flexibility to change the terms and conditions of the contract. For example, in the case of crop insurance the parties can change the terms of the contract by the AI powered predictions of climate change or due to the weather conditions. Through the help of the AI anticipatory potential risk and dangers are predicted and by having that in mind the contract clauses can be entered and drafted.
Security approach:
Smart contract power by AI is run with the aid of bitcoin technology. Through the usage of bitcoin, it is very easy for transacting the consideration for the contract securely. As stated above, the process of machine learning which has learnt from all the previous experiences, acts as the medium through which the new types of attack, data breach, fraud and potential risk are identified before they are exploited. Through the collaboration of AI with the smart contract it ensures the maximum security and protection.
RISK AND CHALLENGES:
Legality issues and protection: In India the usage of bitcoins, cryptocurrencies are not illegal but it is not the accepted medium of transactions only the traditional way of transferring is the widely accepted medium of transaction in India. Absence of explicit provisions or statute in protecting the usage of bitcoins. The protection and security act as the challenges in smart contracts.
Complexity of usage: The usage of smart contracts in itself is difficult to use because collaborating with Artificial intelligence makes it more complicated for the utilization. Not all are well aware about the existence of such a concept called smart contract. There should be a rigorous testing and audit process to ensure the reliability and credibility of the smart contracts.
Data privacy: As stated above, the machine learning process includes numerous data and inputs to create an algorithm which often leads to the risk of data breach and tampering with the information of the parties involved in the smart contract. Since there is no law to protect the use of bitcoins in India it is possible for wide range data privacy issues in the smart contract.
FUTURE OF AI POWERED SELF EXECUTING AGREEMENT:
The major development in AI involves the contract which leads to self-improving contracts in the market. The self-improving contracts are more or less similar to the concept of machine learning which learns from experience and history. These contracts generate the automatic responses without the involvement of the human at every point and time. The collaboration of both AI and smart contract could lead to the fully automated or autonomous body of organisation without human interventions. Further, there is the concept called personalized contract where the user can personalise or customise their need and preferences from the already existing history available in the source.
CONCLUSION:
The AI empowered smart contract is the revolutionary concept which is very important in the automated functioning of the society. The main suggestions through this article is that it is necessary for the law enforcing agencies to evolve as the society evolves. The recommendation to the legislature to be updated to the current trend of the society and act accordingly. There should be laws which enforce and protect the use of cryptocurrencies and bitcoins so that it will be helpful for the smooth functioning of smart contracts.
“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal falls into the category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”
WRITTEN BY: MUTHULAKSHMI B
