IEEE Technology and Society Magazine - March 2020 - 71

from the platform's web site (e.g., https://bitcoin.org/en/
how-it-works for Bitcoin).
A smart contract is a computer program that represents an agreement between two parties to perform
transactions (or not perform them) under conditions that
can be checked by the program. The algorithm for
extending the blockchain with a new block of transactions ensures that only transactions correctly carried out
by a smart contract are added to the chain. Alice and
Bob might agree, for example, that some amount of currency should be transferred from Alice to Bob if the latter
performs some service. A smart contract between the
two will automatically perform this transfer as soon as
the program determines that the service has been successfully performed.
A smart contract is therefore something like a license
in a digital rights management system, but controls transactions rather than the use of digital works. One notable
difference is that transactions occur within the smart
contract system, so that smart contracts have direct control over them, whereas the use of digital works must
occur outside of the trusted system, so that it does not
have direct control over how people watch, listen to, or
read the works that have been licensed to them.
On a technical level, the languages used for writing
smart contracts are also quite different to those used for
writing licenses. Languages like XrML and ODRL are special-purpose languages designed to make it relatively
straightforward for rights owners to describe who can and
can't use the work being licensed, and how. Smart contract languages, on other hand, typically resemble general-purpose programming languages that can only be
understood by computer programmers. Ethereum, in particular, emphasizes the point that its smart contract language is "Turing-complete," that is, able to express any
computation that can, in principle, be performed by any
computer. Smart contracts might therefore be seen to be
more flexible, but potentially more demanding to implement and understand.

Objections to Digital Rights Management
From the foregoing, it is clear that smart contracts have
at least some superficial similarity to digital rights management systems in terms of what they aim to achieve.
Might objections to digital rights management also
apply to smart contracts?
No doubt much of the angst directed at digital rights
management came from people who simply liked the
idea of downloading stuff for free - around 50% of file
sharers were prepared to admit that this was their reason for making illegal downloads in several anonymous
surveys [5], [6]. We can suppose that smart contracts
would attract the same kind of self-interested objection,
if they protect things that people think themselves
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entitled to, or if people do not care very much about the
other party to the contract. Imagine the disposition of a
would-be tax evader towards a smart contract obliging
him or her to pay a transaction tax, for example. But
this sort of objection is unlikely to have much force with
serious scholars or policy makers.
Legal scholars and others proposed a number of more
robust objections to digital rights management in the
copyright context. Many of these turn on specific points
of copyright law, but can be seen as a specific instance of
a more general problem in which one party imposes a
contract (license) that protects that party's interests over
and above what ordinary law allows. Lawrence Lessig
refers to contracts of this sort as "privatized law" in his
influential book Code: and Other Laws of Cyberspace [7].
An implicit assumption in much smart contract rhetoric is that two parties enter into the contract of their
own free will, having determined that this agreement is
mutually beneficial to them and that they are therefore
willing to be bound its terms. But this not what happened in digital rights management: licenses were
offered on a take-it-or-leave-it basis by copyright owners,
with no possibility of negotiation by copyright users,
and none of the carve-outs established by the state.
Copyright owners can do this for at least two reasons:
firstly, they have a monopoly on the particular good (song,
film, etc.) that they were selling and, secondly, most people have neither the time nor expertise to argue the fine
points of contracts. If a fan of some musician doesn't like
the terms offered by the record company who distributes
that musician's work, for example, the fan can neither
negotiate a more favorable contract with that record company nor seek a better deal from another record company.
It is easy to imagine similar imbalances of power
existing when smart contracts are agreed. Suppose Bob
is a contractor who receives payment in a cryptocurrency in return for his services, as determined by a smart
contract with Alice. If Alice is a large organization with
access to serious contract-writing resources, whereas
Bob needs the work lest he become destitute, what
power does Bob have to ensure that the smart contract
protects his interests? Indeed, it could be argued that
smart contracts are a chain of commerce and a way of
remotely policing workers.
A second kind of objection to digital rights management concerned the so-called "paracopyright" provisions
of copyright law and the indirect effects of digital rights
management on system features not related to copyright
at all. "Paracopyright" refers to law designed to protect the
digital rights management systems themselves, including
restrictions on reverse engineering or on circumventing
such systems. Companies including Lexmark and John
Deere have attempted to use these provisions to prevent
other companies from building products interoperable with

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