How Are Ricardian Contracts Different From Smart Contracts?

One of the most promising potential use cases of blockchain technology is the development of “live” contracts that are securely stored inside digital infrastructure and are legally valid and completely tamperproof, thanks to cryptographic identification. Ricardian contracts are bringing that idea to life and have become the latest blockchain sensation to pique the interest of crypto enthusiasts.

If you have even a passing interest in cryptocurrencies, then you’ve probably heard of smart contracts — executable code that’s stored on a blockchain and automatically runs when preset conditions are met. Ricardian contracts are similar at a base level, except that they’re legally binding.

The concept of Ricardian contracts originates from the 1990s, but it has never been implemented on a large scale before. In this guide, we’re going to cover everything you need to know about Ricardian contracts, including the technology’s history, how it differs from smart contracts, and some examples of potential use cases. 

What Are Ricardian Contracts?

A Ricardian contract is a digital contract that functions as a legally binding agreement between two parties based on agreed-upon terms and conditions. The contract is cryptographically signed and verified using the blockchain, but is readable by both people and machines.