5 ms·

As long as real people can be hauled before a real court, judges and lawyers--but more importantly, the law--will be highly relevant.

jacquesm 9y ago
You really just simply do not get it. Just like the law can not define Pi to be 3 the law should not be able to influence the outcome of a smart contract if smart contracts work at all because that is how it is intended to work, smart contracts are supposed to be the entirety of the agreement, no outside interpretation should make a difference nor could it make a difference. This is where the Ethereum crowd has - in my eyes at least - already failed with how the handled the previous hack, the concept is as currently implemented fundamentally flawed. https://www.cryptocompare.com/coins/guides/the-dao-the-hack-the-soft-fork-and-the-hard-fork/ https://www.cryptocompare.com/coins/guides/the-dao-the-hack-... I can see the dilemma (get the money back or kill Ethereum) must have been a tough one but if they really wanted Ethereum to be taken serious they should have chalked that up to their education fund and call it a day.
- marcoperaza 9y ago
  I do get it. I just don't think that's realistic. What smart contracts should be according to you is mostly irrelevant to how the law will treat them.
  - jacquesm 9y ago
    You still don't get it. The law will not have anything to say about smart contracts because the law will not be able to enforce a contract one way or another depending on some judge but it will simply execute and that's the end of that. This so that some guy in China or India and some guy in the United States can agree on terms without having to haggle over whose legal jurisdiction will kick in if and when there is a dispute about the contract. Until we get a world government and until judges are able to order millions of nodes all over the world to do a hard fork there is no way around a smart contract environment that actually works. But we don't have that at the present, Ethereum as far as I'm concerned was DOA because of DAO.
    - marcoperaza 9y ago
      However a smart contract between you and me may execute, a court can still order me to give you money, or order me to enter into a different smart contract. And if I don't comply, they will eventually hold me in contempt and at some point seize my property by force and throw me in jail if I resist. The authority of the state ultimately rests on its ability to resort to violence to enforce its will. No smart contract can change that.
      - jacquesm 9y ago
        > However a smart contract between you or me may execute, a court can still order me to give you money, Just like that judge that ordered the DAO hack to be reversed? > or order me to enter into a different smart contract. No, a judge will never order anybody to enter into a different smart contract just like they don't order people into regular contracts today. > And if I don't comply, they will eventually hold me in contempt and at some point seize my property by force and throw me in jail if I resist. Judges have a lot of power, but they can't enforce their views on people not in their jurisdiction without the cooperation of judges and governments in other countries. This is one of the major drivers behind the development of smart contracts. I think that for those situations where 'dumb' contracts suffice they will continue to be used and the courts will continue to have their power. But precisely for those situations where the courts do not have such power smart contracts are a potential solution. > The authority of the state ultimately rests on its exclusive right to resort to violence to enforce its will. No smart contract can change that. The world is larger than just your own country.
        marcoperaza 9y ago
        >The world is larger than just your own country. Not too much larger, considering that every major company and country has large amounts of assets and other financial interests that are subject to US jurisdiction. The government of Argentina recently learned that the hard way when American courts forced them to honor their sovereign debt, or have their US-based assets seized to pay them. The same applies if you want to do business in India, China, or Europe. Submit to their judgments or see your assets and interests in their jurisdiction confiscated or destroyed. Another recent example of this is French courts applying the "right to be forgotten" extraterritorially. >No, a judge will never order anybody to enter into a different smart contract just like they don't order people into regular contracts today. They certainly do, in effect. A court judgment very often creates new obligations between the parties. And if entering a new smart contract is the only way to right some legal wrong, then they can order that too. An American court, at least, can order just about anything it needs to in order to enforce its judgments.
  - canoebuilder 9y ago
    It sounds like you're both in agreement that it doesn't seem realistic. What jacquesm is explaining is that the intention of "smart contracts" is to work entirely outside the existing legal system. There is no need for adjudication of any contract by a court because the contract is the law and the court. Put in X out comes Y,every time. No room for interpretation, just pure beautiful math. That was the idea anyway, for some reason it seems they decided to implement some of these contracts in a not particularly rigorous way. Jacques is talking about the theory and premise behind the smart contracts, and you Marco are talking about the people interacting with the smart contracts. People who of course are existing under the scope of our present legal systems. As long as real people can be hauled before a real court I think this is the crux of the misunderstanding. Because actions can be taken in these crypto-systems more or less anonymously, it is not obvious that you can "haul some one before a real court" should they wrong you in some way, and in those cases when you have parties interacting in these systems anonymously, the laws of the crypto-systems are the extent of the laws they are operating under. Provided extensive investigative effort isn't undertaken to unmask anyone operating anonymously.
    - throwawayjava 9y ago
      > it is not obvious that you can "haul some one before a real court" should they wrong you in some way... the laws of the crypto-systems are the extent of the laws they are operating under Tell that to Ross Ulbricht. Anonymity is not a guarantee of immunity from the long arm and unforgiving memory of the law. Especially in the United States.
- rdlecler1 9y ago
  That's not entirely true. The law can make crypto currencies illegal and put them outside the banking system. The US government did this with online gambling payment systems like NetellerC which severely crippled that industry. They also could potentially charge the founding developers and ICOs. Basically if the law makes it too difficult and non-convertible to real currencies and mainstream goods and services then they can exert the necessary influence that will either kill it or force change via the major actors.
  - jacquesm 9y ago
    Yes, and the more such laws a country makes the less relevant that country will be in international commerce. It's very hard to outlaw progress, it will simply route around you, there are many historical examples of this.
    - yorwba 9y ago
      Under the current situation, it's more like the more countries make such laws, the less relevant the respective cryptocurrency will be in international commerce. Last I checked, state-backed fiat currencies were still more important than anything crypto. And while it's hard to outlaw progress, it's also very hard to identify progress before it happens, and even then you can never be sure whether people won't go back to the previous system.
- will_brown 9y ago
  Whether or not you (or anyone else) think the law should influence the outcome of smart contracts...it certainly does. So far a few states (US) have passed laws regarding "blockchains", "smart contracts" and the like. For example, seeking to avoid any legal uncertainty surrounding blockchain transactions and smart contracts relating to certain digital assets, Arizona passed HB 2417, the following on point: - A very specific definition of “blockchain technology” as a “distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless” and provides that the “data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth.” -A definition of “smart contracts” as an “event driven program, with state, that runs on a distributed, decentralized, shared and replicated ledger that can take custody over and instruct transfer of assets on that ledger.” Other states in various stages of legislation on point include: Maine, Illinois, Nevada, Delaware and Vermont. interesting notes: Arizona also passed a seperate law restricting the use of blockchain as "fire arm tracking technology", likely a pro gun rights lobbying effort. Delaware will likely be codifying by statute the right to issue stock on blockchains. Courts have begun accepting blockchain entries as business records under the rules of evidence. This whole notion of smart contracts being exempt from judicial review is crazy. I mean if I sign a regular contract to go sky diving and "waive all rights to sue in the instance of negligence" and they forget to pack my shute and die, the contract is express and speaks for itself but guess what, it's unenforceable, no one can contracts away negligence (no matter what the contract/smart contract says). Murder for hire; no competes in California, these things do not go from illegal/unenforceable contractually to legal because they are outside the jurisdiction of the courts.
  - jacquesm 9y ago
    It's not about whether or not it should, I'd be happier living in a world where they can be, but since the whole goal is that it can't and there are people working really hard on trying to achieve that goal it would be more realistic to adjust to the eventuality that it will at some point be done. The biggest stick that governments have is that they could make it illegal for their constituents to engage in smart contracts with some kind of very large penalty. But other than that I don't really see what could be done about it once they are a fact. Just like laws of nature do not care about what a judge thinks math does not either. Trying to overrule smart contracts from the bench is if they actually work roughly akin to outlawing math. And yes, murder for hire is a serious potential problem, but murders for hire already happen in the world as we have it today so the existence of smart contracts is not going to be an enabler in this respect, hiring someone to kill for you is illegal, whether you use a smart contract or a verbal agreement is not really relevant to that, it's the act that is illegal, not the means of codifying the arrangement.
- pdkl95 9y ago
  > the law should not be able to influence the outcome of a smart contract You don't seem to understand how the law works. The problem isn't a judge trying to interfere with any of the technical features of the contract. A judge would rule on the legality of the contract as the law sees it[1]. You will be able to argue that the code is the final authority. You will probably also have to show why the other party knew and understood that risk. Depending on the situation, the judge, how each side argues their case, etc, the judge might even agree and dismiss the case. However, a judge could, for example, rule that an important part of the contract is unconscionable, illegal, etc, and order YOU - not the contract, not the blockchain, not the software - to return the other party's money, or release the other party from their contractual obligations, or to change any particular detail of the contract's terms. The judge won't rule against the contract, they will rule against you, and it's up to you to figure out how to follow the judges order=. If the judge decides to throw the book at you for some reason, the judge isn't going to be interested in why you think about immutable contracts, or what you think the contract means. They could simply throw you in jail (or fine you $1000/day) for contempt until you follow the judge's orders. It's generally a very bad idea to ignore a judge's orders. IN some situations, this can make immutability a serious liability. [1] What was the offer? Was there a deliberately misleading or unconscionable clause in the contract? Were the terms understood and accepted? Did each party uphold their obligations under the contract? etc (this type of question will be asked regardless of how the contract is implemented)
  - jacquesm 9y ago
    This all assumes that you know your counterparty, which isn't necessarily the case. You could simply reduce your argument to 'in situations where you use a smart contract where a normal contract would suffice a judge has their usual powers'. But that wasn't the point I was making. Smart contracts will most likely be used in all kinds of situations where a judge does not have their normal powers, hence the reliance on a smart contract to begin with. If you can rely on the courts you don't need a smart contract.
    - yorwba 9y ago
      Even if you can rely on the courts, smart contracts could still make themselves useful, since the costs for enforcement are lower. Until your interpretation of the contract and its implementation disagree, which is when you start your costly litigation spree, assuming you have an idea of who to sue.

jacquesm 9y ago

You really just simply do not get it. Just like the law can not define Pi to be 3 the law should not be able to influence the outcome of a smart contract if smart contracts work at all because that is how it is intended to work, smart contracts are supposed to be the entirety of the agreement, no outside interpretation should make a difference nor could it make a difference. This is where the Ethereum crowd has - in my eyes at least - already failed with how the handled the previous hack, the concept is as currently implemented fundamentally flawed. https://www.cryptocompare.com/coins/guides/the-dao-the-hack-the-soft-fork-and-the-hard-fork/ https://www.cryptocompare.com/coins/guides/the-dao-the-hack-... I can see the dilemma (get the money back or kill Ethereum) must have been a tough one but if they really wanted Ethereum to be taken serious they should have chalked that up to their education fund and call it a day.

marcoperaza 9y ago
I do get it. I just don't think that's realistic. What smart contracts should be according to you is mostly irrelevant to how the law will treat them.
- jacquesm 9y ago
  You still don't get it. The law will not have anything to say about smart contracts because the law will not be able to enforce a contract one way or another depending on some judge but it will simply execute and that's the end of that. This so that some guy in China or India and some guy in the United States can agree on terms without having to haggle over whose legal jurisdiction will kick in if and when there is a dispute about the contract. Until we get a world government and until judges are able to order millions of nodes all over the world to do a hard fork there is no way around a smart contract environment that actually works. But we don't have that at the present, Ethereum as far as I'm concerned was DOA because of DAO.
  - marcoperaza 9y ago
    However a smart contract between you and me may execute, a court can still order me to give you money, or order me to enter into a different smart contract. And if I don't comply, they will eventually hold me in contempt and at some point seize my property by force and throw me in jail if I resist. The authority of the state ultimately rests on its ability to resort to violence to enforce its will. No smart contract can change that.
    - jacquesm 9y ago
      > However a smart contract between you or me may execute, a court can still order me to give you money, Just like that judge that ordered the DAO hack to be reversed? > or order me to enter into a different smart contract. No, a judge will never order anybody to enter into a different smart contract just like they don't order people into regular contracts today. > And if I don't comply, they will eventually hold me in contempt and at some point seize my property by force and throw me in jail if I resist. Judges have a lot of power, but they can't enforce their views on people not in their jurisdiction without the cooperation of judges and governments in other countries. This is one of the major drivers behind the development of smart contracts. I think that for those situations where 'dumb' contracts suffice they will continue to be used and the courts will continue to have their power. But precisely for those situations where the courts do not have such power smart contracts are a potential solution. > The authority of the state ultimately rests on its exclusive right to resort to violence to enforce its will. No smart contract can change that. The world is larger than just your own country.
      - marcoperaza 9y ago
        >The world is larger than just your own country. Not too much larger, considering that every major company and country has large amounts of assets and other financial interests that are subject to US jurisdiction. The government of Argentina recently learned that the hard way when American courts forced them to honor their sovereign debt, or have their US-based assets seized to pay them. The same applies if you want to do business in India, China, or Europe. Submit to their judgments or see your assets and interests in their jurisdiction confiscated or destroyed. Another recent example of this is French courts applying the "right to be forgotten" extraterritorially. >No, a judge will never order anybody to enter into a different smart contract just like they don't order people into regular contracts today. They certainly do, in effect. A court judgment very often creates new obligations between the parties. And if entering a new smart contract is the only way to right some legal wrong, then they can order that too. An American court, at least, can order just about anything it needs to in order to enforce its judgments.
- canoebuilder 9y ago
  It sounds like you're both in agreement that it doesn't seem realistic. What jacquesm is explaining is that the intention of "smart contracts" is to work entirely outside the existing legal system. There is no need for adjudication of any contract by a court because the contract is the law and the court. Put in X out comes Y,every time. No room for interpretation, just pure beautiful math. That was the idea anyway, for some reason it seems they decided to implement some of these contracts in a not particularly rigorous way. Jacques is talking about the theory and premise behind the smart contracts, and you Marco are talking about the people interacting with the smart contracts. People who of course are existing under the scope of our present legal systems. As long as real people can be hauled before a real court I think this is the crux of the misunderstanding. Because actions can be taken in these crypto-systems more or less anonymously, it is not obvious that you can "haul some one before a real court" should they wrong you in some way, and in those cases when you have parties interacting in these systems anonymously, the laws of the crypto-systems are the extent of the laws they are operating under. Provided extensive investigative effort isn't undertaken to unmask anyone operating anonymously.
  - throwawayjava 9y ago
    > it is not obvious that you can "haul some one before a real court" should they wrong you in some way... the laws of the crypto-systems are the extent of the laws they are operating under Tell that to Ross Ulbricht. Anonymity is not a guarantee of immunity from the long arm and unforgiving memory of the law. Especially in the United States.
rdlecler1 9y ago
That's not entirely true. The law can make crypto currencies illegal and put them outside the banking system. The US government did this with online gambling payment systems like NetellerC which severely crippled that industry. They also could potentially charge the founding developers and ICOs. Basically if the law makes it too difficult and non-convertible to real currencies and mainstream goods and services then they can exert the necessary influence that will either kill it or force change via the major actors.
- jacquesm 9y ago
  Yes, and the more such laws a country makes the less relevant that country will be in international commerce. It's very hard to outlaw progress, it will simply route around you, there are many historical examples of this.
  - yorwba 9y ago
    Under the current situation, it's more like the more countries make such laws, the less relevant the respective cryptocurrency will be in international commerce. Last I checked, state-backed fiat currencies were still more important than anything crypto. And while it's hard to outlaw progress, it's also very hard to identify progress before it happens, and even then you can never be sure whether people won't go back to the previous system.
will_brown 9y ago
Whether or not you (or anyone else) think the law should influence the outcome of smart contracts...it certainly does. So far a few states (US) have passed laws regarding "blockchains", "smart contracts" and the like. For example, seeking to avoid any legal uncertainty surrounding blockchain transactions and smart contracts relating to certain digital assets, Arizona passed HB 2417, the following on point: - A very specific definition of “blockchain technology” as a “distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless” and provides that the “data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth.” -A definition of “smart contracts” as an “event driven program, with state, that runs on a distributed, decentralized, shared and replicated ledger that can take custody over and instruct transfer of assets on that ledger.” Other states in various stages of legislation on point include: Maine, Illinois, Nevada, Delaware and Vermont. interesting notes: Arizona also passed a seperate law restricting the use of blockchain as "fire arm tracking technology", likely a pro gun rights lobbying effort. Delaware will likely be codifying by statute the right to issue stock on blockchains. Courts have begun accepting blockchain entries as business records under the rules of evidence. This whole notion of smart contracts being exempt from judicial review is crazy. I mean if I sign a regular contract to go sky diving and "waive all rights to sue in the instance of negligence" and they forget to pack my shute and die, the contract is express and speaks for itself but guess what, it's unenforceable, no one can contracts away negligence (no matter what the contract/smart contract says). Murder for hire; no competes in California, these things do not go from illegal/unenforceable contractually to legal because they are outside the jurisdiction of the courts.
- jacquesm 9y ago
  It's not about whether or not it should, I'd be happier living in a world where they can be, but since the whole goal is that it can't and there are people working really hard on trying to achieve that goal it would be more realistic to adjust to the eventuality that it will at some point be done. The biggest stick that governments have is that they could make it illegal for their constituents to engage in smart contracts with some kind of very large penalty. But other than that I don't really see what could be done about it once they are a fact. Just like laws of nature do not care about what a judge thinks math does not either. Trying to overrule smart contracts from the bench is if they actually work roughly akin to outlawing math. And yes, murder for hire is a serious potential problem, but murders for hire already happen in the world as we have it today so the existence of smart contracts is not going to be an enabler in this respect, hiring someone to kill for you is illegal, whether you use a smart contract or a verbal agreement is not really relevant to that, it's the act that is illegal, not the means of codifying the arrangement.
pdkl95 9y ago
> the law should not be able to influence the outcome of a smart contract You don't seem to understand how the law works. The problem isn't a judge trying to interfere with any of the technical features of the contract. A judge would rule on the legality of the contract as the law sees it[1]. You will be able to argue that the code is the final authority. You will probably also have to show why the other party knew and understood that risk. Depending on the situation, the judge, how each side argues their case, etc, the judge might even agree and dismiss the case. However, a judge could, for example, rule that an important part of the contract is unconscionable, illegal, etc, and order YOU - not the contract, not the blockchain, not the software - to return the other party's money, or release the other party from their contractual obligations, or to change any particular detail of the contract's terms. The judge won't rule against the contract, they will rule against you, and it's up to you to figure out how to follow the judges order=. If the judge decides to throw the book at you for some reason, the judge isn't going to be interested in why you think about immutable contracts, or what you think the contract means. They could simply throw you in jail (or fine you $1000/day) for contempt until you follow the judge's orders. It's generally a very bad idea to ignore a judge's orders. IN some situations, this can make immutability a serious liability. [1] What was the offer? Was there a deliberately misleading or unconscionable clause in the contract? Were the terms understood and accepted? Did each party uphold their obligations under the contract? etc (this type of question will be asked regardless of how the contract is implemented)
- jacquesm 9y ago
  This all assumes that you know your counterparty, which isn't necessarily the case. You could simply reduce your argument to 'in situations where you use a smart contract where a normal contract would suffice a judge has their usual powers'. But that wasn't the point I was making. Smart contracts will most likely be used in all kinds of situations where a judge does not have their normal powers, hence the reliance on a smart contract to begin with. If you can rely on the courts you don't need a smart contract.
  - yorwba 9y ago
    Even if you can rely on the courts, smart contracts could still make themselves useful, since the costs for enforcement are lower. Until your interpretation of the contract and its implementation disagree, which is when you start your costly litigation spree, assuming you have an idea of who to sue.