Smart Contracts: Put Art in Smart
Data science is the best weapon in the war of smart contracts. Stay on target.
The Promise of Smart Contracts
It’s about time our agreements worked harder for us. My thermostat is trusted with enough computing power to beat a Chess Grandmaster while the information that governs my business is lifelessly sitting on a shelf gathering dust — what sense does that make?
Smart contracts are a promising solution. Instead of a static document, clauses execute. We tap the power of computation that’s already helping (pretty much) every other part of our lives to transform into something more intelligent.
We’re capable people — let’s build a system to make your paperwork… work. We have IoT sending data to some cloud infrastructure. Once there, our AI automatically uses NLP to generate some self-executing clauses. All built on blockchain ledgers for trusted transactions (of course).
Missing anything?
Like all things, the complexity of implementation can’t be trivialized. Smart contracts take all the complexity of negotiating contract intent and multiply that with tech implementation.
Keep in mind with new win conditions are created in this complexity. Here the data science is the secret weapon for creating agreements — for both sides!
Step One: Data Input
We are what we eat — same with Smart Contracts. Even the best IoT data stream will have blackouts, interference, signal drift. What’s your contingency for when (it’s never if) that happens?
Or better yet, what advantage can be attained in negotiation knowing those limitations?
Signal processing, data treatment and trust weighting are now negotiable coefficients hard-baked into something like a sales contract. At a minimum, prevent ‘garbage in/garbage out’ with your expertise. Ideally, translate your business position into the math that will limit your risk while maximizing your return.
For example, a smart contract automatically processes payment for a product measured twice — first early and imprecise then late and precise.
A cash-starved producer wants to tie payment to early data and get paid faster — risking costs from later adjustment payments.
A holding warehouse wants to impose levies on differences between measurements as variation prevents optimizing storage space.
A buyer may want to add bonuses for delivery time and be completely ambivalent to negotiating over this data stream at all.
All parties can have wins even in this simple system. All parties should have wins at the same time. A quality smart contract will be built with the flexibility and foresight to keep all parties profiting — no matter what curve-balls life throws at them.
Step Two: Execution
Once data is safely locked into our system, a smart contract will apply the logic and calculations to execute negotiated terms. Again, every coefficient in every formula will be a battleground.
The expectation is that a smart contract will run itself. With many inputs interacting in complex ways, a contract control system will be required to keep the contract stable.
So there is even greater freedom to focus your strengths into — now it’s not just coefficients, but entire transforms negotiated for advantage (linearity optional).
Some parts are not numerical — NLP will be required to make the gears in the background accessible to non-technical stakeholders. This is even more critical if you plan on making smart contracts repeatable.
Automated description of math into clauses requires heavy AI implementation. Bad translations hurt business by adding ambiguity or even undesirable meaning.
Flipped the other way, a clean translation will shrink deal times by increasing trust. Trust comes from honest disclosure and clear description. Short deal times are worth money.
Step Most Important: Focus on Goals
Selling one plumbus for payment should be automated quickly and easily. Real life is more complex and smart contracts need to capture that complexity in order to be relevant. Our jobs are to now make that reality.
Keep in mind: the real value of data science has always been making data meaningful — actionable insights, data-supported recommendations. Smart contracts move this from a conversation to execution.
Be part of the negotiation team. Don’t just barf data onto a live graph and embed it in a cloud document. Use this chance to fight for what you — and your company — need using all your knowledge and creativity.
Have the empathy to give and take (as with any negotiation), but use your intelligence to create a contract intelligence that works as hard as you do.
