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With all this fuss over ethereum security flaws, can someone explain to me the practical use case for these smart contracts? I just don't understand where the b

With all this fuss over ethereum security flaws, can someone explain to me the practical use case for these smart contracts? I just don't understand where the benefit comes in. It seems like any type of contract that would be useful requires a human to qualify the meaning of the terms since these contracts cannot autonomously measure the state of the world. Even something as trivial as betting on sports requires deference to a trusted authority to say "this team won". What advantages does an ethereum smart contract provide over, say, some kind of trusted bitcoin escrow site?

aakilfernandes 10y ago
In the scenario you gave, the trusted oracle never needs access to the funds. This is important for legal/regulatory reasons. This would not be possible without smart contracts. Yes, its not 100% trustless, but its far more trustless than the alternative.
gomox 10y ago
Some simple use cases: - a multisignature wallet, that requires more than one person to sign off on a transaction before it can happen. - payment schedules or any kind of transaction that does not function exactly like a one time, full size payment (payments, debt, etc). - more ambitious ideas, like the Slock.it ones, involve smart locks that hold funds while granting use to a resource, and only return them after access has been revoked In all of the above the inputs are contained in the blockchain and therefore have no need for trusted oracles.
- homogeneous 10y ago
  > a multisignature wallet, that requires more than one person to sign off on a transaction before it can happen. This is possible with bitcoin isn't it? What does the added complexity of ethereum bring to the table? > payment schedules or any kind of transaction that does not function exactly like a one time, full size payment This also seems possible with bitcoin, but it's also a problem that has already been solved better by the traditional payment system (e.g. netflix debits my credit card every month, why would I use a cryptocurrency solution instead?) > more ambitious ideas, like the Slock.it ones, involve smart locks that hold funds while granting use to a resource, and only return them after access has been revoked Can you go into specifics here? I'm not really understanding. It sounds like you're describing a kind of autonomous collateral system, but I can't really think of any practical examples where this would be useful (without bringing human judgement into the mix).
  - chriswarbo 10y ago
    > netflix debits my credit card every month, why would I use a cryptocurrency solution instead? Presumably you trust Netflix enough to give them your credit card details, and you trust your credit card company enough to pay them when they present you with a list of transactions they claim you made. That's fine for such big, entrenched players; presumably you wouldn't put as much trust in some unknown, anonymous online entity. (Although presumably trust in Ethereum isn't exactly high right now)
    - homogeneous 10y ago
      I suppose it depends on the product, the merchant, and the cost of the subscription. Certainly, it'd be foolish to give out a credit card to a merchant I do not entirely trust, however, it seems more risky to move cryptocurrency into a contract with a merchant I do not entirely trust (and a contract I probably don't fully understand, even if I take the time to read the code) since a credit card can protect me from fraudulent and erroneous charges that are forfeited if I opt for cryptocurrency.
      - gomox 10y ago
        This might sound funny in light of recent events, but the idea is that a smart contract requires no trust in a 3rd party as the rules are specified within the contract and the Ethereum platform guarantees proper execution of the contract.
        homogeneous 10y ago
        I understand how it works, I just don't see how it is useful in this instance. How is a smart contract helpful in the case of an online subscription service like netflix? A credit card is less work because I don't have to "refill" the contract every month and it's safer because of the added protection from fraud and erroneous charges that a credit card company guarantees.
  - jsprogrammer 10y ago
    >Can you go into specifics here? I'm not really understanding. It sounds like a security deposit, of a type. For example, I had to leave one of my shoes at the front counter of a store that hosted a small gaming LAN in the back.
CephalopodMD 10y ago
I think the basic idea is that with Bitcoin, you sort of have to hack at it to achieve any unintended functionality. These things can and do exist in the Bitcoin world, but when you get down to it, Bitcoin is meant to be a currency; anything built on top of that is just a hack that happens to work. Ethereum and its smart contracts, on the other hand, are structured to handle these sorts of extensions by design. There's nothing that Ethereum can do that Bitcoin absolutely can't be used for in some hacky way AFAIK, but it's generally much easier to do complex things with Ethereum that aren't strictly transactions of currency.
- homogeneous 10y ago
  This makes sense, but I guess I just don't see much practical utility beyond what is already achievable and less prone to security flaws with bitcoin. There just doesn't seem to be much useful code that can come out of "money as variables in a program" since just about everything related to how humans intend to distribute money hinges on the facts of the real world for which the program must rely on humans to input.
DennisP 10y ago
Contracts I'm working on include variants of anti-theft vaulting, blind auctions, crowdfunding, person-to-person gambling, currencies, exchanges, and a simple implementation of Bitcoin's Lightning. None of them require external data. For those contracts that do, at least you're reducing the third-party trust to "provide accurate data" instead of "hold my funds without stealing them." To reduce trust in a single entity you can use various schemes that allow multiple independent parties to provide the data.
- homogeneous 10y ago
  > anti-theft vaulting Can you go into more details about this? > blind auctions Or this? How does the contract ensure that the winner of the auction receives what they have purchased? > crowdfunding In what respects beyond simply collecting funds? How does the contract judge that the terms of the funding are adhered to or ensure that the crowdfunders receive whatever it is they are entitled to as funders? > person-to-person gambling Any examples? In my post I gave the example of betting on a sports game but this requires a trusted 3rd party to officiate the outcome of the game. > currencies, exchanges These are vague descriptions and these things have already been done by bitcoin. I'm not trying to nitpick, but I'm looking for specific practical examples that demonstrates the potential utility of ethereum.
  - DennisP 10y ago
    So this gets into the difference between the rhetoric about smart contracts, and what they actually do. Obviously a smart contract can't ensure that an auction winner or crowdfunder gets the item. At best there could be some kind of reputation system. But to enforce something in the real world, you'd have to get an actual court involved. The smart contract removes the need to have an auctioneer running the auction and handling funds, that's all. But that still means that, for example, when I'm trying to implement a new variant on crowdfunding, I can write the whole backend in several pages of code and just publish it, instead of renting servers, administering databases, signing up with a payment provider and having to comply with its terms of service. An example of a vault is this scheme: http://hackingdistributed.com/2016/02/26/how-to-implement-secure-bitcoin-vaults/ http://hackingdistributed.com/2016/02/26/how-to-implement-se... ...which some researchers proposed for Bitcoin, saying it'd be "easy" to implement with a hard fork adding a new opcode. I implemented the same scheme in a smart contract and it took 20 minutes. Sports betting needs third-party data, but casino games don't.

aakilfernandes 10y ago

In the scenario you gave, the trusted oracle never needs access to the funds. This is important for legal/regulatory reasons. This would not be possible without smart contracts. Yes, its not 100% trustless, but its far more trustless than the alternative.

gomox 10y ago

Some simple use cases: - a multisignature wallet, that requires more than one person to sign off on a transaction before it can happen. - payment schedules or any kind of transaction that does not function exactly like a one time, full size payment (payments, debt, etc). - more ambitious ideas, like the Slock.it ones, involve smart locks that hold funds while granting use to a resource, and only return them after access has been revoked In all of the above the inputs are contained in the blockchain and therefore have no need for trusted oracles.

homogeneous 10y ago
> a multisignature wallet, that requires more than one person to sign off on a transaction before it can happen. This is possible with bitcoin isn't it? What does the added complexity of ethereum bring to the table? > payment schedules or any kind of transaction that does not function exactly like a one time, full size payment This also seems possible with bitcoin, but it's also a problem that has already been solved better by the traditional payment system (e.g. netflix debits my credit card every month, why would I use a cryptocurrency solution instead?) > more ambitious ideas, like the Slock.it ones, involve smart locks that hold funds while granting use to a resource, and only return them after access has been revoked Can you go into specifics here? I'm not really understanding. It sounds like you're describing a kind of autonomous collateral system, but I can't really think of any practical examples where this would be useful (without bringing human judgement into the mix).
- chriswarbo 10y ago
  > netflix debits my credit card every month, why would I use a cryptocurrency solution instead? Presumably you trust Netflix enough to give them your credit card details, and you trust your credit card company enough to pay them when they present you with a list of transactions they claim you made. That's fine for such big, entrenched players; presumably you wouldn't put as much trust in some unknown, anonymous online entity. (Although presumably trust in Ethereum isn't exactly high right now)
  - homogeneous 10y ago
    I suppose it depends on the product, the merchant, and the cost of the subscription. Certainly, it'd be foolish to give out a credit card to a merchant I do not entirely trust, however, it seems more risky to move cryptocurrency into a contract with a merchant I do not entirely trust (and a contract I probably don't fully understand, even if I take the time to read the code) since a credit card can protect me from fraudulent and erroneous charges that are forfeited if I opt for cryptocurrency.
    - gomox 10y ago
      This might sound funny in light of recent events, but the idea is that a smart contract requires no trust in a 3rd party as the rules are specified within the contract and the Ethereum platform guarantees proper execution of the contract.
      - homogeneous 10y ago
        I understand how it works, I just don't see how it is useful in this instance. How is a smart contract helpful in the case of an online subscription service like netflix? A credit card is less work because I don't have to "refill" the contract every month and it's safer because of the added protection from fraud and erroneous charges that a credit card company guarantees.
- jsprogrammer 10y ago
  >Can you go into specifics here? I'm not really understanding. It sounds like a security deposit, of a type. For example, I had to leave one of my shoes at the front counter of a store that hosted a small gaming LAN in the back.

CephalopodMD 10y ago

I think the basic idea is that with Bitcoin, you sort of have to hack at it to achieve any unintended functionality. These things can and do exist in the Bitcoin world, but when you get down to it, Bitcoin is meant to be a currency; anything built on top of that is just a hack that happens to work. Ethereum and its smart contracts, on the other hand, are structured to handle these sorts of extensions by design. There's nothing that Ethereum can do that Bitcoin absolutely can't be used for in some hacky way AFAIK, but it's generally much easier to do complex things with Ethereum that aren't strictly transactions of currency.

homogeneous 10y ago
This makes sense, but I guess I just don't see much practical utility beyond what is already achievable and less prone to security flaws with bitcoin. There just doesn't seem to be much useful code that can come out of "money as variables in a program" since just about everything related to how humans intend to distribute money hinges on the facts of the real world for which the program must rely on humans to input.

DennisP 10y ago

Contracts I'm working on include variants of anti-theft vaulting, blind auctions, crowdfunding, person-to-person gambling, currencies, exchanges, and a simple implementation of Bitcoin's Lightning. None of them require external data. For those contracts that do, at least you're reducing the third-party trust to "provide accurate data" instead of "hold my funds without stealing them." To reduce trust in a single entity you can use various schemes that allow multiple independent parties to provide the data.

homogeneous 10y ago
> anti-theft vaulting Can you go into more details about this? > blind auctions Or this? How does the contract ensure that the winner of the auction receives what they have purchased? > crowdfunding In what respects beyond simply collecting funds? How does the contract judge that the terms of the funding are adhered to or ensure that the crowdfunders receive whatever it is they are entitled to as funders? > person-to-person gambling Any examples? In my post I gave the example of betting on a sports game but this requires a trusted 3rd party to officiate the outcome of the game. > currencies, exchanges These are vague descriptions and these things have already been done by bitcoin. I'm not trying to nitpick, but I'm looking for specific practical examples that demonstrates the potential utility of ethereum.
- DennisP 10y ago
  So this gets into the difference between the rhetoric about smart contracts, and what they actually do. Obviously a smart contract can't ensure that an auction winner or crowdfunder gets the item. At best there could be some kind of reputation system. But to enforce something in the real world, you'd have to get an actual court involved. The smart contract removes the need to have an auctioneer running the auction and handling funds, that's all. But that still means that, for example, when I'm trying to implement a new variant on crowdfunding, I can write the whole backend in several pages of code and just publish it, instead of renting servers, administering databases, signing up with a payment provider and having to comply with its terms of service. An example of a vault is this scheme: http://hackingdistributed.com/2016/02/26/how-to-implement-secure-bitcoin-vaults/ http://hackingdistributed.com/2016/02/26/how-to-implement-se... ...which some researchers proposed for Bitcoin, saying it'd be "easy" to implement with a hard fork adding a new opcode. I implemented the same scheme in a smart contract and it took 20 minutes. Sports betting needs third-party data, but casino games don't.