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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

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.
  - jacquesm 9y ago
    Look, once more: I'm not saying smart contracts work at present. But if they work then judges would be without tools to do anything about it, that's a matter of definition, if you choose to define a smart contract in a way that does not agree with how the rest of the world views them then that's fine with me but it voids the discussion. Any contract that has all the outward aspects of being a smart contract but that allows a judge (or anybody else for that matter) to influence the outcome once it is activated is by definition a failed smart contract.
    - bsaul 9y ago
      so the scope of smart contract in your definition can only cover areas not already governed by traditional regulatory system / laws. Imho that doesn't cover a lot. or laws will have to be adapted to grant values to them. But then it isn't much different from today's contracts.
      - jacquesm 9y ago
        > so the scope of smart contract in your definition can only cover areas not already governed by traditional regulatory system / laws. Correct, if you don't need a smart contract using one won't give you any advantages. > Imho that doesn't cover a lot. We're going to have to disagree on that. > or laws will have to be adapted to grant values to them. Absent a global government I don't see how that could be done. > But then it isn't much different from today's contracts. Well, it is, but not for most normal transactions. if smart contracts can really be made to work they will be an enabler much like the laser, we didn't really have an application for those either when they were first invented. But people are already getting creative with them and the DAO is a nice example of what could be done if smart contracts can be reliably built and executed. I don't think this will happen in the near future because writing a regular contract is hard enough, a smart contract has to be perfect for it to be of value because any bugs will be beyond the regular safe-guards ability to be fixed, you will most likely simply lose your money or your goods without recourse.
        9y ago
- TeMPOraL 9y ago
  Correct me if I'm wrong, but I think it's also worth pointing out that from the point of view of judges, people losing money on ETH are really losing abstract Internet points. Even if it all happened in the same jurisdiction, would a judge be willing to consider that a theft has happened?
  - jacquesm 9y ago
    I don't think that's the material issue, but it is definitely possible that a judge would consider the matter too abstract to make a ruling over. But as a plaintiff or a defendant in such a case I really would not want to base my case on that.
  - kcanini 9y ago
    Considering that the US government has decreed that Bitcoin is an asset and capital gains taxes are due when they are sold/spent, I'm inclined to answer yes.
learc83 9y ago
Assuming you live in a certain subset of countries, sure that could happen (take a look at what happens when an American sues a Chinese citizen). But it defeats the purpose of a smart contract. If everyone agrees that smart contracts will pay out when they are fufilled. But only if they are fufilled in the specific way each party believes they should be (as opposed to what the code actually says)--then there is no point in smart contracts. A potential solution is some form of very explicit disclaimer that states you are agreeing X should be paid when the code in contract Y executes, not when the condition you believe the code in contract Y tests for is met. Of course a court could still ignore the disclaimer.
- marcoperaza 9y ago
  The problem is that, for better or for worse, people do not have full freedom of contract by law. There are volumes upon volumes of laws and regulations limiting the kind of financial contracts, for example, that you are allowed to enter into. Every bank has a massive compliance department dedicated to making sure that they abide by those rules. You can't just ignore these rules by making a system that executes contracts automatically. The judge will simply order you to make the other party whole. Then, if the law allows it, he might hit you with a massive fine for breaking the rules.
  - learc83 9y ago
    That's what I meant when I said courts might chose to ignore the disclaimer. It is possible you could eventually be able to sign something making the smart contract a form of binding arbitration. But you're correct, courts law enforcement isn't going to let you enter into illegal contracts just because it's a smart contract.

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.
- jacquesm 9y ago
  Look, once more: I'm not saying smart contracts work at present. But if they work then judges would be without tools to do anything about it, that's a matter of definition, if you choose to define a smart contract in a way that does not agree with how the rest of the world views them then that's fine with me but it voids the discussion. Any contract that has all the outward aspects of being a smart contract but that allows a judge (or anybody else for that matter) to influence the outcome once it is activated is by definition a failed smart contract.
  - bsaul 9y ago
    so the scope of smart contract in your definition can only cover areas not already governed by traditional regulatory system / laws. Imho that doesn't cover a lot. or laws will have to be adapted to grant values to them. But then it isn't much different from today's contracts.
    - jacquesm 9y ago
      > so the scope of smart contract in your definition can only cover areas not already governed by traditional regulatory system / laws. Correct, if you don't need a smart contract using one won't give you any advantages. > Imho that doesn't cover a lot. We're going to have to disagree on that. > or laws will have to be adapted to grant values to them. Absent a global government I don't see how that could be done. > But then it isn't much different from today's contracts. Well, it is, but not for most normal transactions. if smart contracts can really be made to work they will be an enabler much like the laser, we didn't really have an application for those either when they were first invented. But people are already getting creative with them and the DAO is a nice example of what could be done if smart contracts can be reliably built and executed. I don't think this will happen in the near future because writing a regular contract is hard enough, a smart contract has to be perfect for it to be of value because any bugs will be beyond the regular safe-guards ability to be fixed, you will most likely simply lose your money or your goods without recourse.
      - 9y ago
TeMPOraL 9y ago
Correct me if I'm wrong, but I think it's also worth pointing out that from the point of view of judges, people losing money on ETH are really losing abstract Internet points. Even if it all happened in the same jurisdiction, would a judge be willing to consider that a theft has happened?
- jacquesm 9y ago
  I don't think that's the material issue, but it is definitely possible that a judge would consider the matter too abstract to make a ruling over. But as a plaintiff or a defendant in such a case I really would not want to base my case on that.
- kcanini 9y ago
  Considering that the US government has decreed that Bitcoin is an asset and capital gains taxes are due when they are sold/spent, I'm inclined to answer yes.

learc83 9y ago

Assuming you live in a certain subset of countries, sure that could happen (take a look at what happens when an American sues a Chinese citizen). But it defeats the purpose of a smart contract. If everyone agrees that smart contracts will pay out when they are fufilled. But only if they are fufilled in the specific way each party believes they should be (as opposed to what the code actually says)--then there is no point in smart contracts. A potential solution is some form of very explicit disclaimer that states you are agreeing X should be paid when the code in contract Y executes, not when the condition you believe the code in contract Y tests for is met. Of course a court could still ignore the disclaimer.

marcoperaza 9y ago
The problem is that, for better or for worse, people do not have full freedom of contract by law. There are volumes upon volumes of laws and regulations limiting the kind of financial contracts, for example, that you are allowed to enter into. Every bank has a massive compliance department dedicated to making sure that they abide by those rules. You can't just ignore these rules by making a system that executes contracts automatically. The judge will simply order you to make the other party whole. Then, if the law allows it, he might hit you with a massive fine for breaking the rules.
- learc83 9y ago
  That's what I meant when I said courts might chose to ignore the disclaimer. It is possible you could eventually be able to sign something making the smart contract a form of binding arbitration. But you're correct, courts law enforcement isn't going to let you enter into illegal contracts just because it's a smart contract.