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Smart contracts can be said to be a great innovation of blockchain technology. They are computer protocols that implement contract functions. And these smart contracts have huge potential in the future. As we all know, blockchain technology is an innovation of Satoshi Nakamoto, and without this technology, cryptocurrency would simply not be possible. Vitalik
Buterin used his Ethereum blockchain to drive the next innovation, known as Blockchain 2.0. Ethereum enabled the development of decentralized applications and smart contracts for the first time. In fact, smart contracts are protocols that perform certain tasks on their own. Some investors wonder what are the disadvantages of smart contracts? Let the editor of the currency circle introduce to you the shortcomings of this smart contract.

 What are the disadvantages of smart contracts?

Running smart contracts on the blockchain brings privacy and IT security risks, as shown below:

·Only as good as their code: No software is perfect. Ultimately, it is humans who write digital contracts. They can also make mistakes. In the worst-case scenario, this could lead to billions of euros in losses. DeFi hackers are on the rise. For example, in August 2021, hackers exploited Poly
Breach in Network captured $600.3 million.

·IT security risks: Take the Ethereum blockchain as an example. Most smart contracts executed on the Ethereum blockchain contain references to mutable data or other smart contracts. This is provided by Swiss
Reported by Infosec. In other words, without trust in a third party, it cannot work, as the Ethereum system promised its users. After all, many observers are examining the system's open source code and finding bugs.

·Unclear legal situation: Lawmakers have so far struggled with how to classify automated digital contracts. The automation of various processes can lead to legal uncertainty when it comes to damages and legal violations.

·Inflexible: Once data is logged into the blockchain, it is fixed. Correction is difficult and users have few options to undo.

·Self-contained: Both smart contracts and blockchain form self-contained systems. Therefore, they have difficulty accessing real-world data. Therefore, smart contract platforms rely on third parties who can provide this data. This provides further avenues for tampering or error. Oracle services are designed to solve this problem.

 Analysis of future trends of smart contracts

In a decentralized autonomous organization (DAO), smart contracts can be used to make decisions on behalf of humans based on built-in complex conditional logic. For example, if raw material supply falls below a certain threshold, a smart contract can trigger an order from a supplier/manufacturer to deliver new raw materials.

The future adoption of smart contracts depends on how we address the above challenges. Simpler and more straightforward traditional contracts can be easily standardized into smart contract templates. However, more complex contracts that require frequent changes due to their unique nature and changing circumstances may have to remain routine until we find common ground to address some of the issues noted above. As this technology matures, we will see more and more smart contracts used in all aspects of daily life.

The above content is a detailed introduction by the editor of the currency circle on the shortcomings of smart contracts. With the rise of the NFT market, it is now more important than ever to solve the problem of smart contracts. Smart contracts may affect changes in certain industries, especially law. This is because lawyers will move from writing traditional contracts to making standardized smart contract templates, similar to the standardized traditional contracts you can find on LegalZoom. Merchant acquirers, credit companies and accountants can also use smart contracts to complete tasks such as real-time auditing and risk assessment, and smart contracts are converging into a hybrid of paper and digital content.