Investigate the possibility of using smart contracts and digital signatures to create a legally binding contract, and to create a prototype opensource web application as a proof of concept

Abstract

We investigated the possibility of using blockchain to create a legally binding contract. According to our study, blockchain can be used to authenticate the identities of the involved parties, to provide a cryptographically generated electronic signature used to sign a contract, and to automate and enforce the term of an agreement. The authentication and the signing are done using a blockchain-based self-sovereign identity framework called a decentralized identity and verifiable credentials. The term can be enforced by using a smart contract, a program that runs on the blockchain. Some contracts terms are too complex to be translated into a smart contract code. Therefore, we limit the scope of our thesis to enforce just a simple lease agreement between a tenant and a landlord.

Blockchain is publicly accessible, immutable, verifiable, and timestamped by design. Therefore, the contracts signed this way are more secure and more transparent compared to the ones signed with the traditional method. The main drawback of this method is user experience. Interacting with the blockchain required a certain level of computer literacy which made it not suitable for everyone.

We built a proof-of-concept web application. We design it in such a way that it can be used by anyone, sacrificing some decentralized aspects for ease of use. The users can sign and enforce a lease agreement just by using their phone, without having to interact with the blockchain themselves at all. The code is open source, published on GitHub.