New York University School of Law professors Max Raskin and Jack Millman have recently published a paper in the Journal on Emerging Technologies discussing the legalities surrounding the use of blockchain-based smart contracts for “personal growth bets.”
According to the professors, personal growth bets are contracts that individuals engage in with themselves. The purpose of these contracts is generally for self-improvement, such as starting or stopping a certain behavior within a specific time frame or by a certain date.
In their paper, the researchers use examples like quitting smoking or losing weight to explain the concept:
“For example, a rough outline of such a bet would be: if Max does not lose 10 pounds over the next six months, he must pay Jack $1,000. Whereas, if he does lose the weight, Jack must buy Max a steak dinner.”
The core argument of the paper is that incentives can positively impact a person’s ability to succeed at personal challenges. However, without accountability, these incentives are less likely to be effective. The authors suggest that smart contracts can serve as enforcers and monitors to bind someone to their future commitments without involving another person in the process.
Raskin and Millman propose a scheme where smart contracts are developed on the blockchain using “contractware,” which measures or monitors the conditions of the bet to ensure compliance with the contract’s terms.
For example, in the case of quitting smoking, a person could place $10,000 in a smart contract that requires them to remain smoke-free for 30 days to regain the funds. If they fail, the funds could be sent to a charity of their choice. To enforce the terms of the bet, the researchers suggest using a carbon monoxide breathalyzer to confirm compliance.
If a user misses a check-in or fails a breathalyzer test, the terms of the smart contract would execute automatically, resulting in the forfeiture of their stake.
While the concept is straightforward, the legalities surrounding self-contracts and their enforceability are unclear. The researchers argue that individuals should be able to commit their own financial resources to bet on themselves, as long as the terms of the contract meet legal requirements. However, they acknowledge that there should be limits to what can be used as a stake, considering the autonomous nature of smart contracts.
The paper also considers a hypothetical case of an investor using a contract with a bomb implant in their skull as collateral for a loan. This extreme example would not likely be legal as a self-contract due to laws against suicide and promoting suicide.