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Smart contracts don't even work for insurance. Smart contracts require the insuring party to tie up capital to make sure they can satisfy the claim in the event
by barbegal 9y ago
Smart contracts don't even work for insurance. Smart contracts require the insuring party to tie up capital to make sure they can satisfy the claim in the event that a claim is made. The problem is that each insurance smart contract may pay out large amounts but only rarely. Typical insurance policies often have maximum payouts north of $1 million. If every insurance company had to hold $1 million in smart coins for every insurance smart contract they produce, they'd quickly run out of capital. And if you allow capital to be pooled together where claims are payed out from one large pool for multiple insurance contracts (as is used in insurance today) then you have to trust that the insurer will have enough capital available when you want to make a claim. In this case the smart contract element is pretty useless because it doesn't guarantee you anything.
- mhluongo 9y agoLeverage doesn't make the blockchain aspect useless- in fact, the chain means the consumer can choose their insurance provider based on backing asset characteristics and how leveraged the risk pool is. Similar to what we had before, but with more democratic capital allocation.
- swiley 9y agoThat's not insurance, that's just ridiculous. An insurance smart contract should require the insuring party hold some fraction of the payout based on the expected number of claims.