Blockchain technology has enabled so-called smart contracts between different parties on a decentralized network. These self-enforceable and self-executable computerized contracts could initiate a fundamental paradigm shift in the understanding and functioning of our legal practices. Opportunities for their application are increasingly understood, and numerous tests of feasibility have been completed. However, only very few use cases have yet been implemented at scale. This article—as the first of its kind—comprehensively analyzes the underlying challenges and locates a key reason for the slow adoption in the discrepancy between legal requirements and IT capabilities. Our work combines a wide range of academic sources and interviews with 30 domain experts from IT, the legal domain and private industry. First, we establish that smart contracts still fall within the boundaries of the general legal framework. We then systematically dissect current shortcomings of smart contracts on three distinct levels, namely, (1) how smart contracts are likely to cause conflicts with existing laws, (2) how smart contracts are intrinsically limited on an individual contract level and (3) how they are impeded by their current technical design. Across those levels, we dissect 20 distinct issues concerning the current implementation of smart contracts for which we derive potential remedies. We further outline implications for policy-makers as well as IT management, and examine how information systems research can play an important role in advancing smart contracts. Finally, we show how managerial and organizational issues might represent an ongoing challenge for the widespread adoption of smart contracts.

Financialization describes a phenomenon whereby financial markets assume an increasingly dominant role within the economy. This paper seeks to dissect the role of information and communications technology (ICT) in financialization by following a cross-disciplinary approach across finance, economics and information systems. Accordingly, we develop a general framework describing the relationship between ICT and financialization. This framework allows us to investigate the recent rise of online marketplaces for credit. Consequently, ICT is not only facilitating, but fundamentally driving a disintermediation of banks through advances in computing, communication and information technology. We also provide supporting evidence from interviews with almost 40 senior experts and C-level executives. Interestingly, only rather recent innovations have enabled the popularity of marketplace lending, such as cloud computing, big data, scalable IT infrastructures and comprehensive ecosystems of programming interfaces. In contrast, we observe a slow integration of advanced analytics in the field of risk management. Based on our analysis, the paper also discusses cross-country implications for marketplace lending, financialization and regulation.

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