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Smart contracts are being suggested as the building block of "autonomous corporations" (implying "do anything!") yet nearly anything meaningful basically has to

Smart contracts are being suggested as the building block of "autonomous corporations" (implying "do anything!") yet nearly anything meaningful basically has to interact with the real world through agents external to the contract for most business cases. Given this severe limitation, could someone clarify what the whole shebang is supposed to be about? I actually saw Vitalik speak last week or so here in Shenzhen came away less convinced than ever of their theoretical utility for anything but a tiny fraction of users. In short, adding a decentralized network of paid/incentivized actors to any existing potential cryptographic problem space (a fair rough summary of the smart contract notion?), in particular the subset relevant for most businesses, doesn't seem to solve anything particularly well and typically decreases critical measures of engineering elegance such as simplicity, comprehensibility, predictability, etc. while increasing negative measures such as technical lock-in to piles of rapidly evolving technologies for which hiring and building is expensive and error-prone.

ecommerceguy 9y ago
There is no shebang. I haven't found a decent use case for smart contracts either. I'm no hawk but "coin" seems less than fiat to me.
- jsloss 9y ago
  This whole "disruption of silicon valley" from a financing perspective is pretty compelling no? Even it smart contracts on ethereum are used for nothing other than the facilitation crowdfunding coin offerings, it would still have "shebang".
  - Slartie 9y ago
    I can agree with you on the fact that ICOs have been the first actual "killer application" for Ethereum. But they only work because they're based on another lie. People buy into these ICOs because they get tokens that they assume to increase in value. It's basically a "get rich quick" scheme. It worked an astounding number of times, and once people caught up on that, the value of Ether started to skyrocket as everyone and their grandmothers wanted to have a piece of the cake. Why did the tokens increase in value? Because enough people believed in the "visions" of the startups behind the ICOs, which usually weave some story about future utility of the specific token into their business case precisely to make people think that these tokens will one day be more than just a speculation object. Once enough people believed that, the tokens became extremely good speculation objects, as they were growing in value, and that made people get rich quick, which made Ether skyrocket, which made more people get rich quick. See last paragraph. But the important takeaway is: you need that perceived utility value to kickstart this entire sequence of events! Okay, so why are the tokens supposed to have any utility value besides being speculation objects? Because the startups have business models centered around Ethereum and smart contracts and of course utilizing their token that they intend to grow into a real business. If you now assume - just as you yourself have stipulated - that smart contracts on Ethereum are used for nothing other than the facilitation of crowdfunding coin offerings, this means that any other business model is assumed to fail. This in turn means that all those tokens have no utility value whatsoever. This in turn means that they eventually lose their speculative value, which is based on people believing in them one day having utility value. It will probably take a while, since beliefs can be strong and masses of people tend to be dumb, but eventually it will happen. This in turn means that crowdsourcing yet another useless and worthless token won't work, since why should anybody invest anything into it? And this finally ruins the nice killer application of crowdfunding via ICOs.
    - deleted 9y ago
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AlwaysBCoding 9y ago
What about Kickstarter? A $500 million+ company that takes a 5% vig on all transacted funds can effectively be replaced with a few lines of code. If total ETH sent to contract address by date X > Amount Y then send the ETH to the fundraiser, else return the ETH.
- foota 9y ago
  It's true that the underlying payment systems could (should?) be built this way, but imo that's a very small portion of what most websites do.
- deleted 9y ago
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- deleted 9y ago
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- InclinedPlane 9y ago
  Sure. Sure. https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224
- tribby 9y ago
  without the 5%, kickstarter would not be a successful marketing platform. financial transactions are just part of what they do.
  - stingrae 9y ago
    I think the 5% doesn't even include the financial transaction which is another 3% that goes to stripe. People give Kickstarter the 5% for the marketing and trust the platform tries to build.
    - spookthesunset 9y ago
      I doubt kickstarter pays 3% in fees...
mrep 9y ago
Yep, the technological downsides of blockchains are so bad that the only market where it actually makes sense to use them is the illegal market because governments have a much harder time of controlling it.
jerguismi 9y ago
why you care about that, just buy some ethers, Vitalik will do his magic and soon we will all be driving lambos (sarcasm)
vosper 9y ago
The entire business of smart contracts is predicated on ignoring the oracle problem. You can't do anything interesting or useful in the real world without solving that problem, and it's more-or-less unsolvable through technology... But hey, check out my ICO - we have a "whitepaper"!
atarian 9y ago
>Anything meaningful basically has to interact with the real world through agents external to the contract This is where people are betting to take a risk that the law will change to legalize and maybe even incorporate these contracts. Take a prenuptial agreement for example. Instead of having a lawyer, a smart contract could automatically split ether from an account into two addresses. https://www.coindesk.com/prenup-ethereum-marriage-obligations/ https://www.coindesk.com/prenup-ethereum-marriage-obligation...
- flatline 9y ago
  Something in the real world still has to trigger the divorce condition in the contract. By the time all the legal documents of the divorce are finalized I don't see why a written prenup would be inadequate. Besides nobody is going to store all their assets in etherium. Even if they did how would the contract track future earnings to another account, etc? It's a completely impractical solution to a problem well-served by current means. Like pretty much every other example I've heard. On-chain gambling is the only thing of practical value that I've seen Etherium offer so far.
- will_brown 9y ago
  Unless the smart contract doesn't split the funds, but directs them all to the husband, notwithstanding what the Wife believed the smart contract would do. But yes, young families should convert all their assets to ETH and tie it up in their prenuptial smart contract until they divorce because lawyers suck. But assuming the smart contract will actually split the amounts equally...how does the smart contract know when the parties marriage is dissolved? And money isn't the only thing involved in marriage, sometimes there are children, does the smart contract automatically split the children in half too or do we have to turn to the lawyers still?
- AlexandrB 9y ago
  > Instead of having a lawyer, a smart contract could automatically split ether from an account into two addresses. Ignoring the oracle problem, all this would take to work is the couple storing all their wealth in an asset that has an unknown (possibly negative) rate of return and unknown (possibly very low) liquidity.
flyGuyOnTheSly 9y ago
I've been thinking the same thing over the last few months... I see all of these "prediction markets" and "gambling platforms" being launched and claiming that they are "fully autonomous". Well where do they get the outcome information from? It must be from a person. You cannot program a smart contract to know who has the most reliable sports scores or political information. AI does not exist yet. If I bet that Hillary Clinton won the election, and she lost to Trump, what's stopping a hoard of Clinton supporters from voting (or tweeting or however the DAO collects their "data") that Clinton actually won the election and stealing my winnings?
- jackfraser 9y ago
  > You cannot program a smart contract to know who has the most reliable sports scores or political information. You can't do that as a human, either. All you can really do is look at someone's record to see how their predictions have panned out historically. Given the right data sources, a program could do this no problem, and assign metrics to individual sports commentators as well as subsets of their consensus on any particular topic. Given the nerdy propensity of the fantasy sports guys, there's no reason to assume this kind of data won't be available eventually. As for politics, I'll agree with you there - neither human nor AI is going to be able to produce particularly reliable commentary any time soon! > If I bet that Hillary Clinton won the election, and she lost to Trump, what's stopping a hoard of Clinton supporters from voting (or tweeting or however the DAO collects their "data") that Clinton actually won the election and stealing my winnings? This is called a 'coup' when it happens IRL, and happen it does. The chief difference here is that in reality, pitchforks and torches are needed for these efforts; online it's a little bit physically safer.
  - PeterisP 9y ago
    It seems like you're talking about predictions, but the point of "reliable sports scores or political information" is about a trusted source about past/current facts. People have no problem verifying the bet results of yesterday's game or last year's elections. However, making a blockchain that can't possibly be manipulated into thinking that Clinton won the election (no pitchforks needed, you're misleading a single automated system, not everyone else) is actually much harder than it seems - especially if the decisions are enforced by the system, final and irreversible and can't be overruled by courts if it's found to be fraudulent afterwards.
colordrops 9y ago
The value comes from a hybrid of blockchain contracts and legal contracts. The contracts that actually manage an asset would run on the blockchain, and the legal contracts would enforce the rights to that asset in the physical world. Managing the asset in the blockchain would avoid unnecessary fees, opacity, and cheating, and the legal contract binds the results to the real world.
- contingencies 9y ago
  Sounds very smooth but the assumption that lawyers, escrow service providers or anyone else would allow you to pay them less because you are using a new technology runs counter to my personal experience.
  - colordrops 9y ago
    It's not a solution for everything. It would be used in cases where escrow and legal are not the major issue or cost.
TTPrograms 9y ago
> Smart contracts are being suggested as the building block of "autonomous corporations" By who? I'm not aware of any major developers suggesting this. As far as I can tell this is just a strawman promoted on HN. The Dao was a single instantiation of this sort of idea promoted by a small number of non-core developers - it doesn't define the idea of smart contracts.
- davidgerard 9y ago
  Heavily promoted by the Ethereum Foundation principals, and by, oh look, Stephen Tual of slock.it. It's an idea that's been around a long time in the airy-fairy world of smart contract hypothesising.
k__ 9y ago
Well, they could automate much of the financial side of a corporation and make many accountants obsolete. They make up a big part of many corporations that costs much money but doesn't bring any benefits to the products. They do work that I'd deem difficult, but that would also lend itself to automation with smart contracts very well.
darawk 9y ago
> In short, adding a decentralized network of paid/incentivized actors to any existing potential cryptographic problem space (a fair rough summary of the smart contract notion?), in particular the subset relevant for most businesses, doesn't seem to solve anything particularly well and typically decreases critical measures of engineering elegance such as simplicity, comprehensibility, predictability, etc. while increasing negative measures such as technical lock-in to piles of rapidly evolving technologies for which hiring and building is expensive and error-prone. You could say very much the same thing about most supply-side innovations when they came out. Why buy a factory machine when your workers do it just fine? It's complicated, error-prone, you'll have to hire expensive, specialized mechanics to deal with it when it breaks down. It decreases measures of engineering elegance, like simplicity, comprehensibility and predictability. All the locking you into that vendor with a massive upfront capital cost. Smart contracts eliminate trusted third parties (sometimes) and automate certain processes that previously couldn't be automated due to trust issues, or were automated but centralized (with the aggregating entity extracting rents). Fixing these things will reduce transaction costs globally, just as factory automation did. Will it solve everything? No, at least not soon. Will it eliminate lawyers, courts, and so on? Not even close. But it will do some things. Things like escrow, notarization, and assurance contracts (e.g. kickstarter) are all easily amenable to blockchain / smart contract solutions. Prediction markets are another good one. My point is basically this: People have been making unbelievably grandiose claims about cryptocurrencies. And those claims are, largely, bullshit. However, there are some things that they do very well, and they are starting to do them.
- contingencies 9y ago
  You could say very much the same thing about most supply-side innovations when they came out Maybe. If the input and output are the same, but the efficiency is larger, or the quality is greater or more controllable, then you have some value-add. If the input and output are artificially constricted and the business case is basically undefined then skepticism is expected and logical. I never denied there are use cases, just stated they are very limited. I stand by that assessment.
  - darawk 9y ago
nfriedly 9y ago
I tend to think of it as "the blockchain is a mostly read-only database, smart contracts are stored procedures that can read & write a small part of it". The benefit over a regular database is that everyone gets to see what the data and stored procedures are, so you don't have to take someone elses word for that part. Also, there's a built-in payment system, which is handy sometimes. It doesn't solve interacting with the rest of the world, you still need an external system for that, just like with most databases.
ascendantlogic 9y ago
"Why would we use this new technology when the current stuff works just fine?" I feel like this song and dance precedes all major shifts in technology.
- UncleMeat 9y ago
  It does. But it also precedes the failure of most technologies.
davidgerard 9y ago
Yep. The "oracle problem" is the crippling flaw (the main crippling flaw amongst a pile of others) in smart contracts. As Matt Levine from Bloomberg put it:"My immutable unforgeable cryptographically secure blockchain record proving that I have 10,000 pounds of aluminum in a warehouse is not much use to a bank if I then smuggle the aluminum out of the warehouse through the back door." Technology and business journalists writing about non- cryptocurrency use cases for smart contracts never seem to mention that their "trustless" system will still involve trusting humans wherever it touches the physical world. You may have a tamperproof system for running contract code, but the inputs have to come from outside this secure space.
- bpicolo 9y ago
  Doesn't the commodities futures market pose have the same baseline issue? How is that managed? My layman understanding is that it's quite similar. Disclaimer: I know almost nothing about commodities markets.
  - notahacker 9y ago
    If third parties can't or won't settle accounts they can involve lawyers or regulators, the very people that some of the "code-as-contract" evangelists were arguing could be [largely] eliminated. The point is that the blockchain makes little difference to a third party's ability to not honour most real goods and services contracts, and ascribing too much authority to its records can even reinforce their lie about paying you, because that's what the tamper proof record of the aluminium-filled warehouse says they did.
erikpukinskis 9y ago
One big benefit of crypto is you can't cook the books. So in markets where there is constant temptations for a human to say "I'm guarding he vault, why not fudge the numbers here a little and pay out my friends" those institutions will lose share to crypto. The other market that intrigues me is autonomous AIs. I can imagine an AI that can more easily trust a smart contract than a human institution. Essentially, you are right, but you're biased because you feel good in your network of human trust. Replacing that world with machines doesn't buy you anything because you'll still want to keep your human layer as the bottom line. But not everyone is so nestled in the bosom of modernity. Also consider scale. Banks won't loan you $1000. It's not worth the time to do the math, and find an appraiser. But a crypto contract can do the math for free, and a network of appraisers would contain someone who can do really fast work on a tight schedule. Like, "show up at Highland Mall on Saturday afternoon, I will appraise 50 businesses in 3 hours". That business model only works if you have infrastructure that takes care of everything else than the appraising, with much richer modeling than even banks use today.
- factorialboy 9y ago
  Sure you can cook the books. It's called forking. The DAO hack never happened after the fork.
  - deweller 9y ago
    But unlike cooking the books forking is publicly auditable to anyone running a validating node.
  - qznc 9y ago
    That only works with immature small networks. A counter example would be Bitcoin Cash.
erikpukinskis 9y ago
One big benefit of crypto is you can't cook the books. So in markets where there is constant temptations for a human to say "I'm guarding he vault, why not fudge the numbers here a little and pay out my friends" those institutions will lose share to crypto. The other market that intrigues me is autonomous AIs. I can imagine an AI that can more easily trust a smart contract than a human institution. Essentially, you are right, but you're biased because you feel good in your network of human trust. Replacing that world with machines doesn't buy you anything because you'll still want to keep your human layer as the bottom line. But not everyone is so nestled in the bosom of modernity. Also consider scale. Banks won't loan you $1000. It's not worth the time to do the math, and find an appraiser. But a crypto contract can do the math for free, and a network of appraisers would contain someone who can do really fast work on a tight schedule. Like, "show up at Highland Mall on Saturday afternoon, I will appraise 50 businesses in 3 hours". That business model only works if you have infrastructure that takes care of everything else than the appraising, with much richer modeling than even banks use today.
decentralised 9y ago
It's much more than "do anything", closer to "do anything I would normally have to get a team to do for me". Think of a blockchain a OSS Visa like payment network where you and anyone else can build their own apps, be it something as trivial as a multi-sig or a token exchange, for instance. From this angle, I think it makes more sense to investigate Ethereum and smart contracts in general. Regarding accessing external data, that is done via oracles and is a well researched topic with some notable implementations (Oraclize, Town Crier, etc), but I'd venture that the most common way to integrate a web3 with web2 is and will be at a middleware level, not directly on a smart contract.

ecommerceguy 9y ago

There is no shebang. I haven't found a decent use case for smart contracts either. I'm no hawk but "coin" seems less than fiat to me.

jsloss 9y ago
This whole "disruption of silicon valley" from a financing perspective is pretty compelling no? Even it smart contracts on ethereum are used for nothing other than the facilitation crowdfunding coin offerings, it would still have "shebang".
- Slartie 9y ago
  I can agree with you on the fact that ICOs have been the first actual "killer application" for Ethereum. But they only work because they're based on another lie. People buy into these ICOs because they get tokens that they assume to increase in value. It's basically a "get rich quick" scheme. It worked an astounding number of times, and once people caught up on that, the value of Ether started to skyrocket as everyone and their grandmothers wanted to have a piece of the cake. Why did the tokens increase in value? Because enough people believed in the "visions" of the startups behind the ICOs, which usually weave some story about future utility of the specific token into their business case precisely to make people think that these tokens will one day be more than just a speculation object. Once enough people believed that, the tokens became extremely good speculation objects, as they were growing in value, and that made people get rich quick, which made Ether skyrocket, which made more people get rich quick. See last paragraph. But the important takeaway is: you need that perceived utility value to kickstart this entire sequence of events! Okay, so why are the tokens supposed to have any utility value besides being speculation objects? Because the startups have business models centered around Ethereum and smart contracts and of course utilizing their token that they intend to grow into a real business. If you now assume - just as you yourself have stipulated - that smart contracts on Ethereum are used for nothing other than the facilitation of crowdfunding coin offerings, this means that any other business model is assumed to fail. This in turn means that all those tokens have no utility value whatsoever. This in turn means that they eventually lose their speculative value, which is based on people believing in them one day having utility value. It will probably take a while, since beliefs can be strong and masses of people tend to be dumb, but eventually it will happen. This in turn means that crowdsourcing yet another useless and worthless token won't work, since why should anybody invest anything into it? And this finally ruins the nice killer application of crowdfunding via ICOs.
  - deleted 9y ago
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AlwaysBCoding 9y ago

What about Kickstarter? A $500 million+ company that takes a 5% vig on all transacted funds can effectively be replaced with a few lines of code. If total ETH sent to contract address by date X > Amount Y then send the ETH to the fundraiser, else return the ETH.

foota 9y ago
It's true that the underlying payment systems could (should?) be built this way, but imo that's a very small portion of what most websites do.
deleted 9y ago
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deleted 9y ago
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InclinedPlane 9y ago
Sure. Sure. https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224
tribby 9y ago
without the 5%, kickstarter would not be a successful marketing platform. financial transactions are just part of what they do.
- stingrae 9y ago
  I think the 5% doesn't even include the financial transaction which is another 3% that goes to stripe. People give Kickstarter the 5% for the marketing and trust the platform tries to build.
  - spookthesunset 9y ago
    I doubt kickstarter pays 3% in fees...

mrep 9y ago

Yep, the technological downsides of blockchains are so bad that the only market where it actually makes sense to use them is the illegal market because governments have a much harder time of controlling it.

jerguismi 9y ago

why you care about that, just buy some ethers, Vitalik will do his magic and soon we will all be driving lambos (sarcasm)

vosper 9y ago

The entire business of smart contracts is predicated on ignoring the oracle problem. You can't do anything interesting or useful in the real world without solving that problem, and it's more-or-less unsolvable through technology... But hey, check out my ICO - we have a "whitepaper"!

atarian 9y ago

>Anything meaningful basically has to interact with the real world through agents external to the contract This is where people are betting to take a risk that the law will change to legalize and maybe even incorporate these contracts. Take a prenuptial agreement for example. Instead of having a lawyer, a smart contract could automatically split ether from an account into two addresses. https://www.coindesk.com/prenup-ethereum-marriage-obligations/ https://www.coindesk.com/prenup-ethereum-marriage-obligation...

flatline 9y ago
Something in the real world still has to trigger the divorce condition in the contract. By the time all the legal documents of the divorce are finalized I don't see why a written prenup would be inadequate. Besides nobody is going to store all their assets in etherium. Even if they did how would the contract track future earnings to another account, etc? It's a completely impractical solution to a problem well-served by current means. Like pretty much every other example I've heard. On-chain gambling is the only thing of practical value that I've seen Etherium offer so far.
will_brown 9y ago
Unless the smart contract doesn't split the funds, but directs them all to the husband, notwithstanding what the Wife believed the smart contract would do. But yes, young families should convert all their assets to ETH and tie it up in their prenuptial smart contract until they divorce because lawyers suck. But assuming the smart contract will actually split the amounts equally...how does the smart contract know when the parties marriage is dissolved? And money isn't the only thing involved in marriage, sometimes there are children, does the smart contract automatically split the children in half too or do we have to turn to the lawyers still?
AlexandrB 9y ago
> Instead of having a lawyer, a smart contract could automatically split ether from an account into two addresses. Ignoring the oracle problem, all this would take to work is the couple storing all their wealth in an asset that has an unknown (possibly negative) rate of return and unknown (possibly very low) liquidity.

flyGuyOnTheSly 9y ago

I've been thinking the same thing over the last few months... I see all of these "prediction markets" and "gambling platforms" being launched and claiming that they are "fully autonomous". Well where do they get the outcome information from? It must be from a person. You cannot program a smart contract to know who has the most reliable sports scores or political information. AI does not exist yet. If I bet that Hillary Clinton won the election, and she lost to Trump, what's stopping a hoard of Clinton supporters from voting (or tweeting or however the DAO collects their "data") that Clinton actually won the election and stealing my winnings?

jackfraser 9y ago
> You cannot program a smart contract to know who has the most reliable sports scores or political information. You can't do that as a human, either. All you can really do is look at someone's record to see how their predictions have panned out historically. Given the right data sources, a program could do this no problem, and assign metrics to individual sports commentators as well as subsets of their consensus on any particular topic. Given the nerdy propensity of the fantasy sports guys, there's no reason to assume this kind of data won't be available eventually. As for politics, I'll agree with you there - neither human nor AI is going to be able to produce particularly reliable commentary any time soon! > If I bet that Hillary Clinton won the election, and she lost to Trump, what's stopping a hoard of Clinton supporters from voting (or tweeting or however the DAO collects their "data") that Clinton actually won the election and stealing my winnings? This is called a 'coup' when it happens IRL, and happen it does. The chief difference here is that in reality, pitchforks and torches are needed for these efforts; online it's a little bit physically safer.
- PeterisP 9y ago
  It seems like you're talking about predictions, but the point of "reliable sports scores or political information" is about a trusted source about past/current facts. People have no problem verifying the bet results of yesterday's game or last year's elections. However, making a blockchain that can't possibly be manipulated into thinking that Clinton won the election (no pitchforks needed, you're misleading a single automated system, not everyone else) is actually much harder than it seems - especially if the decisions are enforced by the system, final and irreversible and can't be overruled by courts if it's found to be fraudulent afterwards.

colordrops 9y ago

The value comes from a hybrid of blockchain contracts and legal contracts. The contracts that actually manage an asset would run on the blockchain, and the legal contracts would enforce the rights to that asset in the physical world. Managing the asset in the blockchain would avoid unnecessary fees, opacity, and cheating, and the legal contract binds the results to the real world.

contingencies 9y ago
Sounds very smooth but the assumption that lawyers, escrow service providers or anyone else would allow you to pay them less because you are using a new technology runs counter to my personal experience.
- colordrops 9y ago
  It's not a solution for everything. It would be used in cases where escrow and legal are not the major issue or cost.

TTPrograms 9y ago

> Smart contracts are being suggested as the building block of "autonomous corporations" By who? I'm not aware of any major developers suggesting this. As far as I can tell this is just a strawman promoted on HN. The Dao was a single instantiation of this sort of idea promoted by a small number of non-core developers - it doesn't define the idea of smart contracts.

davidgerard 9y ago
Heavily promoted by the Ethereum Foundation principals, and by, oh look, Stephen Tual of slock.it. It's an idea that's been around a long time in the airy-fairy world of smart contract hypothesising.

k__ 9y ago

Well, they could automate much of the financial side of a corporation and make many accountants obsolete. They make up a big part of many corporations that costs much money but doesn't bring any benefits to the products. They do work that I'd deem difficult, but that would also lend itself to automation with smart contracts very well.

darawk 9y ago

> In short, adding a decentralized network of paid/incentivized actors to any existing potential cryptographic problem space (a fair rough summary of the smart contract notion?), in particular the subset relevant for most businesses, doesn't seem to solve anything particularly well and typically decreases critical measures of engineering elegance such as simplicity, comprehensibility, predictability, etc. while increasing negative measures such as technical lock-in to piles of rapidly evolving technologies for which hiring and building is expensive and error-prone. You could say very much the same thing about most supply-side innovations when they came out. Why buy a factory machine when your workers do it just fine? It's complicated, error-prone, you'll have to hire expensive, specialized mechanics to deal with it when it breaks down. It decreases measures of engineering elegance, like simplicity, comprehensibility and predictability. All the locking you into that vendor with a massive upfront capital cost. Smart contracts eliminate trusted third parties (sometimes) and automate certain processes that previously couldn't be automated due to trust issues, or were automated but centralized (with the aggregating entity extracting rents). Fixing these things will reduce transaction costs globally, just as factory automation did. Will it solve everything? No, at least not soon. Will it eliminate lawyers, courts, and so on? Not even close. But it will do some things. Things like escrow, notarization, and assurance contracts (e.g. kickstarter) are all easily amenable to blockchain / smart contract solutions. Prediction markets are another good one. My point is basically this: People have been making unbelievably grandiose claims about cryptocurrencies. And those claims are, largely, bullshit. However, there are some things that they do very well, and they are starting to do them.

contingencies 9y ago
You could say very much the same thing about most supply-side innovations when they came out Maybe. If the input and output are the same, but the efficiency is larger, or the quality is greater or more controllable, then you have some value-add. If the input and output are artificially constricted and the business case is basically undefined then skepticism is expected and logical. I never denied there are use cases, just stated they are very limited. I stand by that assessment.
- darawk 9y ago

nfriedly 9y ago

I tend to think of it as "the blockchain is a mostly read-only database, smart contracts are stored procedures that can read & write a small part of it". The benefit over a regular database is that everyone gets to see what the data and stored procedures are, so you don't have to take someone elses word for that part. Also, there's a built-in payment system, which is handy sometimes. It doesn't solve interacting with the rest of the world, you still need an external system for that, just like with most databases.

ascendantlogic 9y ago

"Why would we use this new technology when the current stuff works just fine?" I feel like this song and dance precedes all major shifts in technology.

UncleMeat 9y ago
It does. But it also precedes the failure of most technologies.

davidgerard 9y ago

Yep. The "oracle problem" is the crippling flaw (the main crippling flaw amongst a pile of others) in smart contracts. As Matt Levine from Bloomberg put it:"My immutable unforgeable cryptographically secure blockchain record proving that I have 10,000 pounds of aluminum in a warehouse is not much use to a bank if I then smuggle the aluminum out of the warehouse through the back door." Technology and business journalists writing about non- cryptocurrency use cases for smart contracts never seem to mention that their "trustless" system will still involve trusting humans wherever it touches the physical world. You may have a tamperproof system for running contract code, but the inputs have to come from outside this secure space.

bpicolo 9y ago
Doesn't the commodities futures market pose have the same baseline issue? How is that managed? My layman understanding is that it's quite similar. Disclaimer: I know almost nothing about commodities markets.
- notahacker 9y ago
  If third parties can't or won't settle accounts they can involve lawyers or regulators, the very people that some of the "code-as-contract" evangelists were arguing could be [largely] eliminated. The point is that the blockchain makes little difference to a third party's ability to not honour most real goods and services contracts, and ascribing too much authority to its records can even reinforce their lie about paying you, because that's what the tamper proof record of the aluminium-filled warehouse says they did.

erikpukinskis 9y ago

One big benefit of crypto is you can't cook the books. So in markets where there is constant temptations for a human to say "I'm guarding he vault, why not fudge the numbers here a little and pay out my friends" those institutions will lose share to crypto. The other market that intrigues me is autonomous AIs. I can imagine an AI that can more easily trust a smart contract than a human institution. Essentially, you are right, but you're biased because you feel good in your network of human trust. Replacing that world with machines doesn't buy you anything because you'll still want to keep your human layer as the bottom line. But not everyone is so nestled in the bosom of modernity. Also consider scale. Banks won't loan you $1000. It's not worth the time to do the math, and find an appraiser. But a crypto contract can do the math for free, and a network of appraisers would contain someone who can do really fast work on a tight schedule. Like, "show up at Highland Mall on Saturday afternoon, I will appraise 50 businesses in 3 hours". That business model only works if you have infrastructure that takes care of everything else than the appraising, with much richer modeling than even banks use today.

factorialboy 9y ago
Sure you can cook the books. It's called forking. The DAO hack never happened after the fork.
- deweller 9y ago
  But unlike cooking the books forking is publicly auditable to anyone running a validating node.
- qznc 9y ago
  That only works with immature small networks. A counter example would be Bitcoin Cash.

erikpukinskis 9y ago

decentralised 9y ago

It's much more than "do anything", closer to "do anything I would normally have to get a team to do for me". Think of a blockchain a OSS Visa like payment network where you and anyone else can build their own apps, be it something as trivial as a multi-sig or a token exchange, for instance. From this angle, I think it makes more sense to investigate Ethereum and smart contracts in general. Regarding accessing external data, that is done via oracles and is a well researched topic with some notable implementations (Oraclize, Town Crier, etc), but I'd venture that the most common way to integrate a web3 with web2 is and will be at a middleware level, not directly on a smart contract.