What makes smart contracts be so “smart”?

Published by Jan H. Jansen on

Blockchain in the supply chain of flower delivery, Merehead 2022

What is a smart contract? It is not so easy to answer this question. There is a lot of facts about smart contracts (Mougayar, 2016):

  • Smart contracts are not the same as a contractual agreement
  • Smart contract does not include Artificial Intelligence (AI)
  • Smart contracts are not the same as blockchain application, etc.

IBM (IBM, 2022) defines a smart contract like:

‘Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met.’

A similar definition of a smart contract can be found on Wikipedia (Wikipedia, 2022): the vending machine.

We all know vending machines: You put some physical coins in a vending machine, and you expect to receive candy, a soft drink, a box of cigarettes, etc.

In fact, the same with a smart contract: In an interactive workshop about blockchain in the supply chain (Smartsys, 2021), the smart contract is explained in a business case. Assume you expect that your cargo is transported from A to B within a certain time frame (number of days) and (100 C < temperature < 250 C). Assume that one or both conditions are not met, then the shipper receives (automatically) from the transport company the agreed fine.

So, in this simple business case we try to explain to the reader the basics of a smart contract and its advantages for business. In real business life some of the applications are not called blockchain, but they have a similar functionality. The company Essers (Essers, 2022) provides us with high level business solutions to track & trace cargo during international transport via road, rail, air, sea, and river. This example of Essers’ solution might not be called blockchain (according to the definition of blockchain), but in terms of its functionalities it is very close to distributed ledger technology in a network in the “cloud”.

Another business case is called TradeLens developed by IBM  (2022) for international container transport of Möller-Maersk (2022). The potential of such a solution is described like:

‘An open and neutral industry platform, underpinned by blockchain technology and supported by major players across the global shipping industry, that promotes the efficient, transparent and secure exchange of information in order to foster greater collaboration and trust across the global supply chain’. (TradeLens & Möller-Maersk, 2022)

The above mentioned paper (TradeLens & Möller-Maersk, 2022) describes the future impact of blockchain technology on Supply Chain Management, Logistics, and Transport (and this not only for sea containers).

As shown in figure (Merehead, 2022) above the post, a supply chain for flower delivery uses blockchain technology for shipment information. In the article is quiet well explained the added value of using this technology.


CargoLedger. (2021, December 9). CargoLedger. Retrieved from CargoLedger: https://cargoledger.nl/what-we-do/

Essers. (2022, March 20). Opening page. Retrieved from Essers: https://www.essers.com/

IBM. (2022, January 17). Smart contracts. Retrieved from IBM: https://www.ibm.com/topics/smart-contracts

IBM. (2022, March 20). TradeLens container kogsitics solution. Retrieved from IBM: https://www.ibm.com/downloads/cas/B4K3R1MP

Jansen, J. H. (2021). Principles of Supply Chain Finance. Arnhem (NL): Amazon.

Kückelhaus, M., & Chung, G. (2021, November 17). DHL. Retrieved from DHL: https://www.dhl.com/content/dam/dhl/global/core/documents/pdf/g0-core-trend-radar-widescreen-2019.pdf

Merehead. (2022, March 20). Maersk blockchain use case. Retrieved from Merehead: https://merehead.com/blog/maersk-blockchain-use-case/

Möller-Maersk. (2022, March 20). A new paradigm in supply chain: TradeLens is unleashing the potential of collaborative digitisation in logistics. Retrieved from Möller-Maersk: https://www.maersk.com/news/articles/2021/07/20/tradelens-is-unleashing-the-potential-of-collaborative-digitisation

Mougayar, W. (2016). The business blockchain. Hoboken (USA): Wiley.

Smartsys. (2021, December 9). Interactive blockchain workshops. Retrieved from Smartsys: https://2bsmart.eu/smartys-services/

TradeLens & Möller-Maersk. (2022, March 20). A new paradigm in supply chain: TradeLens is unleashing the potential of collaborative digitisation in logistics. Retrieved from Maersk: https://www.maersk.com/news/articles/2021/07/20/tradelens-is-unleashing-the-potential-of-collaborative-digitisation

Wikipedia. (2022, 01 17). Smart contract. Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Smart_contract



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