*5.1. Digital Smart Contracts*

While human-to-human business enactments are governed by oral, or written contracts, they are not applicable to the highly-automated, machine-driven and human-focused M2X Economy. First, human-centered oral and written contracts are difficult to process even for smart machines [1]. Second, traditional contracts [48] are often under-specified and do not provide sufficient details about the actual transaction processes as well as

about the parties obligations and rights [23,34]. Third, they do not allow for extensive automation, scale badly and lack a computerized transaction protocol [49]. Fourth, efficient and automated means of conflict-resolution are missing [1,23].

While we propose the utilization of electronic smart contracts to address the issues above, one may argue that a cloud-based online shop for services of the M2X Economy would be sufficient, e.g., Amazon's web shop proves to scale well and even partially automates business enactments. Still, such types of business enactments suffer from transparency issues which complicate—or even prevent and sabotage—conflict-resolution mechanisms. Especially the unequal power relations between a single entity and the service-offering cloud shop prevent fair markets and business enactments.

In contrast, smart contracts allow for the automated, consistent, transparent, and auditable enactment of contracts by a network of mutually distrusting nodes where no arbitration of a trusted authority is required [24,50,51]. As a result, allowing for fact tracking, non-repudiation, auditability, and tamper-resistant storage of information in a distributed multi-stakeholder setting. In case of any conflicts, pre-defined rollback mechanisms are applied as described in [23].

Finally, Amazon-resembling service provision promotes lock-in effects, and obstructs much needed interoperability and openness of the M2X ecosystem as discussed in the subsequent Section 5.2. Neither traditional contracts, nor a cloud-hosted shop-resembling service provisions, allow for dynamic, P2P- (even local) ad-hoc enactments.
