Smart contracts are a relatively new form of contracting between consumers and companies. A smart contract is an agreement embedded in computer code, mutually agreed to by the parties, and stored on the blockchain. Once the pre-defined terms of the contract are satisfied, the smart contract is automatically enforced.
As cybercriminals turn to blockchain technology to perpetrate fraud, smart contracts have become highly attractive due to the ability of the parties to create the rules of the contract that are eventually transferred to the blockchain. Criminals prey on the lack of knowledge and regulations surrounding smart contracts and use sophisticated malware against consumers and companies to steal intellectual property, personal identifiable information, health records, and financial data, according to a Deloitte Report on Blockchain and Cybersecurity. In 2016, the DAO was hacked when a criminal exploited a programming mistake in the smart contract and stole over $50 million of the virtual currency, Ether. These vulnerabilities make it easy for cyber criminals to hack smart contracts and are likely to increase in 2020.