Smart contracts are great but what if the transaction in question is illegal? Simple smart contracts that are most common now cannot do something about this as long as the set conditions are met. That means the transactions get to go through anyway regardless of their legality. In other words, there are no safeguards such as those we have in the real world to stop illegal activities – through court injunctions for instance.
Alibaba has come up with this exact solution, filed with the US patent office. As per the filing, so-called self-executing contracts can be halted by authorized third parties effectively voiding illegal contracts. This is but an effort to bring the blockchain innovation in tune with real-world situations and allow rooms for checks along the way.
“In real life … there is a type of administrative intervention activities in the category of special transactions. For example, when a user performs illegal activities, a court order may be executed to freeze the user’s account. However, this operation activity conflicts with smart contracts in existing blockchains and cannot be carried out,” the patent explains.
The idea is not however entirely. On the Ethereum blockchain, for instance, a similar method is possible with upgradable contracts. This means that developers can intervene at some stage even after the contract has been issued.
Even so, the administrative action as per the Alibaba filing will be limited in the number of transactions it can affect. Ordinary transactions should, therefore, go through without any hitch.
“The issuing account recorded in the various embodiments may be an account owned by a government agency or a trustful institution,” the patent states.