Nobel Prize-winning economist Oliver Hart shared his thoughts on the development of smart contracts.
Hart, who won the 2016 Nobel Prize in economics for his work in contract theory, spoke in an interview with Business Insider on the rise of blockchain-based smart contracts. While he admitted knowing “little about smart contracts” he said the technology would not solve the problem of incomplete contracts that formed the basis of his research.
He told Business Insider’s Sara Silverstein,
I’m doubtful that it’s going to be a cure-all. I mean, it seems that for some things it could be quite useful ’cause it can automate certain things.
Hart highlighted the use of smart contracts in automating insurance agreements and other simple transactions. However, he said smart contracts were less applicable for the “long-term” and incapable of anticipating economic and social relationships.
He continued,
They can’t do it because the future’s very uncertain, many things can happen that we don’t really expect, or are able to predict. I don’t see how smart contracts are gonna solve that problem.
Hart explained that long-term relationships require reasoning and agreement between multiple parties, rather than relying upon the rigidity of an established contract. He said he ultimately hoped technology would be able to solve the issue of incomplete contracts but predicted “we’re some way away from that.”
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