A SWOT Analysis gives an overview of the strengths, weaknesses, opportunities and threats of an application.

A SWOT ANALYSIS OF SMART CONTRACTS

Strengths

1. Track performance in real-time
   Smart contracts are continuously double-checked and synced across the blockchain network. This ensures that at any point in time, anyone allowed on the network is accessing the updated and validated contract.
    

2. Cost saving by increased efficiency and real-time effect
   Manual paperwork takes time and employs human administrators to file contracts and send them back and forth between each professional as needed. Storing all of the contract terms on a decentralized network, rather than a centrally controlled database, ensures that any party can access the contract quickly and with no additional cost.
    

3. Quick transactions
   As mentioned above, waiting times are reduced with software code executing tasks at a high speed. Easier transactions that target few parties and contract terms can be particularly quick to carry out.
    

4. Self-executing
   Smart contracts consist of a set of coded actions, may of which are dependent on the completion of previous actions. Additionally, smart contracts always have a termination sequence which ensures that the contract will stop executing after all terms have been executed, or once a term is not able to be completed due to any number of factors (e.g. an account does not have the balance required to transfer the funds specified in a term, so the contract will not execute further terms).
    

5. Self-verifying
   Smart contracts’ autonomous nature allows them to be validated by reaching a consensus of the contract's terms and execution from the computers across the distributed blockchain network on which the smart contract is stored.
    

6. Tamper-resistant
   Smart contracts hold high levels of encryption which ensures that no unauthorized party should have access to contract terms and manipulate them to their favour.
    

7. Reduced reliance on intermediaries
   As mentioned above, the decentralized and fully digital nature of smart contracts allow a reduction in intermediary presence. If more organizations were to also begin to  apply blockchain technology, there could be even more intermediary replacements (e.g. banks and real estate agents).
    

8. Transparency
   In most contracts, all terms and conditions are fully accessible and visible to all relevant parties, although network owners can also increase privacy and confidentiality.
    

9. Continuous and permanent storage
   Smart contracts record every single detail of the transactions, which are stored for future reference and cannot be erased.

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Weaknesses

1. They are not suitable for all types of contracts, which may lead to hybridization or incorrect execution of the software code
   Some terms in contracts are simply not translatable into software code as they require human judgement. Since an entire contract may not be translatable, this may lead to hybrid contracts which still require human intermediaries and expertise. Decisions about which terms to keep in natural language versus software code can lead to mistakes or miscommunication in the early stages of development.
    

2. No intermediaries to resolve conflict or assign blame
   The decentralized nature of smart contracts leads to the following unanswered questions: Who is responsible for resolving conflict or correcting software mistakes? Who is liable if monetary losses are involved?
    

3. Unforseeable conditions
   Since this technology is new, mistakes may be made in the software code that can result in the execution of specific tasks (e.g. monetary transfers) without their proper trigger occuring, hence creating a cascade of unintended actions.

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Opportunities

1. They streamline the ways to create and sign contracts
   The ability or have a decentralized platform in order to sign contracts, make adjustments, or communicate easily with parties across the world can significantly increase ease and speed of transactions.
    

2. “Forever storage” can never be lost
   Once information is on the blockchain, it cannot ever be removed nor changed. This ensures that precedence is always available for reference or as a guideline for future action.
    

3. New job opportunities in developing smart contracts
   As this technology increases in use and popularity, new career developments may occur, especially for roles which will intersect between any domain of interest and software development to implement blockchain networks. For example, legal professionals with backgrounds in software technology or coding may be privileged in order to facilitate the transition to blockchain in the legal sector.
    

4. Creates a standardized method for accelerating data exchange and processes between Internet of Things (IoT) devices
   ​There are no universally agreed upon methods for developing data exchange and connections between IoT devices and incorporating blockchain networks, which makes it more difficult for organizations and companies to develop these technologies. Smart contracts may offer a standard method for creating interactions between IoT devices.

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Threats

1. We don’t yet know all the risks that could develop
   Seemingly obvious, it is important to remember that we have yet to fully understand all of the possible consequences and ripple effects that blockchain can create over time. We may be ill-prepared in our understanding of how to fix future mistakes or miscommunications.
    

2. Lack of universal definition across jurisdictions leads to hardship in legal enforceability
   Differences in how jurisdictions define terms, such as "smart contract," may lead to different legal decisions. Jurisdictions include states, provinces, countries, international law, and industry standards. The uncertainty of how smart contracts may be treated in legal contexts is a threat to the uptake of smart contract technology and its development. Software developers and legal professionals should establish norms for smart contracts that map onto, or are consistent with, established legal terms or norms.
    

3. The transition from the current way of drafting contracts to smart contract can be difficult
   How do organizations or companies establish new norms and educational practices to learn about smart contracts? Who should be in charge? All of these unanswered questions contribute to the slow adoption of smart contracts [12].