The well-known financial analysis company, S&P Global, has published a report in which it details the advantages and disadvantages of smart contracts in several strategic sectors.
S&P Global puts smart contracts in the spotlight
S&P Global, the globally recognized financial analyst firm, returned to smart contracts in one of its latest reports this week. This company is notably known for being the parent company of the rating agency Standard & Poor’sfamous, among other things, for its S&P 500 index.
In reality, this report does not show a real desire of the group to embark on smart contracts, but it is more to be interpreted as educational content promoting their potentialfaced with the limitations of traditional contracts.
Thus, S&P Global lists the application cases where smart contracts have real added value. We find for example tokenized securities, insurance or decentralized autonomous organizations (DAO).
Although the company points to strong growth in the sector, it nevertheless points regulatory shortcomings, which still hinder its development on a very large scale.
“Smart contracts are an integral part of financial and non-financial applications, and blockchain platforms, but many questions about liability and how and where regulation would be applied remain unanswered. Legal and regulatory ambiguities around their implementation can raise questions about the validity of results when executing smart contracts […]. »
👉 To go further – What is a smart contract?
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The pros and cons of smart contracts
Despite a positive observation, S&P Global still notes some risks in the use of smart contracts.
In addition to the legal vagueness, the possible bugs in a programming error are to be taken seriously. Oracles, which provide data on the blockchain used, must also be carefully monitored. Indeed, erroneous imported data will necessarily lead to a bad result, which can lead to harmful consequences.
On the other hand, the company welcomes the transparency, the reduction of costs as well as the improvement of the efficiency of operations. enabled by smart contracts.
Without any real surprises, the document mainly focuses on the technological aspect of blockchain and smart contracts, not on cryptocurrencies. This observation is also usual when it comes to traditional finance, which often prefers the technical contributions of our ecosystem to its own assets. However, this gives credit to the innovations of recent years in the sector.
👉 Also read – Find all of our guides on blockchain concepts
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Source: S&P Global
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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