With Ricardian smart contracts, it is now possible for many industries, such as manufacturing, to use the blockchain for executing complex legal agreements.
Flexibility to Respond to Changing Business Circumstances
A major strength of Ricardian smart contracts is the ability and flexibility of both parties to change the terms of the contract. Business circumstances change all the time, especially in manufacturing and supply chain management. If businesses could have some breathing room in their automated contracts, they would be more likely to use them. Ricardian smart contracts include an element of adaptability, which allows rewrites or amendments that incorporate newly agreed terms and conditions in response to changing circumstances or unforeseen situations.
Facilitating Data Exchange
Large companies whose business operations span globally generate large amounts of data–well into the trillions of bytes per day at least. But most of that data just sits there collecting digital dust in databases and repositories. Although this data can be valuable for research purposes and gleaning business insights on an ad-hoc basis, the data is usually isolated from the rest of the world with no convenient way to monetize it. Using blockchain technology along with artificial intelligence and a natural language processor used to interpret Ricardian smart contracts, companies can make their data easy to find and easy to use–for a fee. Using Ricardian smart contracts, they can easily sell and share information within their databases without the involvement of a third party.
Security and Protection from Tampering
Document security and data integrity is one of the main concerns of every business. Because a Ricardian smart contract uses an unique cryptographic signature as an unique hash identifier, it is impossible for anyone to alter it after it has been agreed upon by all parties. Each party is protected from someone else changing their mind about the contract, or from someone underhandedly changing the terms of the contract during its execution. Because it is on the blockchain and therefore tamper-proof, any independent reviewers can be sure that the exact contents of the Ricardian smart contract have been agreed upon. These contracts are signed by all parties using private keys, and thus legally binds each party to the contract exactly as written at the time of signing. It is therefore possible to keep all involved parties accountable.
Businesses need to be able to sign contracts that allows them flexibility to respond to changing business circumstances. Ricardian contracts also allow businesses to facilitate data exchange, and to keep their documents protected from tampering. Written legal agreements are too inflexible, have not helped companies exchange data, and also are not immune to tampering. With Ricardian smart contracts on the blockchain, businesses can now enjoy additional security, monetize data exchange, and trust other parties more readily.