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Smart contracts are mathematical contracts not legal contracts. They don't even have to be about IRL things. You could interact with a smart contract to, for ex

Smart contracts are mathematical contracts not legal contracts. They don't even have to be about IRL things. You could interact with a smart contract to, for example, change who can be authenticated to use a smart lock. Or you could have profile information about yourself in a contract, that can be changed.

dperfect 6y ago
Cool - glad you brought up the smart lock example. How does that work without trusting (presumably off-chain) software/firmware to honor the change as to who should be able to open the lock? The smart contract might be iron-clad in showing who should have access, but at some point, that has to be interpreted and executed by a real-world entity, human or machine. In other words, standard contracts work just fine (without any lawyers involved) when everything goes to plan. It's the failure cases that matter, and it's not hard to imagine a compromised lock (or an entire company's locks if they're connected to the internet for access to the blockchain) that no longer respect the smart contract. So you're back to calling your lawyer to help sort out the mess.
- toomuchtodo 6y ago
  Your assessment is accurate. Crypto proponents paper over this, but don’t have an answer. The part they say quietly is that the ledger supersedes the law and legal framework, and that’s clearly not how governments and their legal frameworks work.
- noman-land 6y ago
  That's definitely a good example of where things get tricky, but smart contracts are not a dispute resolution mechanism, they're part of a shared infrastructure. If you use a smart contract you don't need to maintain any sort of backend at all. Your infrastructure costs are basically zero because they're baked into the cost of using the contract, which is paid on every transaction. You also get interoperability for free without having to build out any sort of API layer. Smart contracts are not the solution to all problems but I think they have some really interesting use cases.
iso8859-1 6y ago
They can't be about IRL things because those things cannot be verified in a decentralized manner.
- notatrumper 6y ago
  Why not? The smart card and the lock are IRL. The smart contract knows who is allowed to open the lock. The lock can query the current state of the contract to check if the smart card being used on it is allowed to open the lock. I have heard several stories by now of renters being defrauded by fake landlords. A smart contract could actually help. Decentralized would mean everybody can check who owns a property, not just the owner of some obscure property database.
  - dodobirdlord 6y ago
    Until someone secures a court order transferring ownership of a property, at which point the ledger no longer reflects reality. It's an awkward problem for any distributed ledger that wants to track something that isn't intrinsically defined by the ledger itself.
    - notatrumper 6y ago
      Sure, but that is the "ownership" problem, I was talking about the smart lock problem. Yeah I was talking about ownership - but having to verify that externally does not take away from the smart lock problem. I think the typical fraud went that way: previous renters pretended to be landlords and collected upfront money from prospective new renters. If for example only the actual landlord can grant access to the smart card (or NFC phone), it would be harder for previous renters to pull off that fraud. Isn't there a public ledger of property ownership? In any case, there could be. In my country, merely transferring property rights costs a lot of money. I know a friend paid 20k just for officials to make the entry in their book. Blockchain could easily replace that. Or the "property officials" could have a key and people could verify with the smart contract that some transfer has been signed by the right key.

dperfect 6y ago

Cool - glad you brought up the smart lock example. How does that work without trusting (presumably off-chain) software/firmware to honor the change as to who should be able to open the lock? The smart contract might be iron-clad in showing who should have access, but at some point, that has to be interpreted and executed by a real-world entity, human or machine. In other words, standard contracts work just fine (without any lawyers involved) when everything goes to plan. It's the failure cases that matter, and it's not hard to imagine a compromised lock (or an entire company's locks if they're connected to the internet for access to the blockchain) that no longer respect the smart contract. So you're back to calling your lawyer to help sort out the mess.

toomuchtodo 6y ago
Your assessment is accurate. Crypto proponents paper over this, but don’t have an answer. The part they say quietly is that the ledger supersedes the law and legal framework, and that’s clearly not how governments and their legal frameworks work.
noman-land 6y ago
That's definitely a good example of where things get tricky, but smart contracts are not a dispute resolution mechanism, they're part of a shared infrastructure. If you use a smart contract you don't need to maintain any sort of backend at all. Your infrastructure costs are basically zero because they're baked into the cost of using the contract, which is paid on every transaction. You also get interoperability for free without having to build out any sort of API layer. Smart contracts are not the solution to all problems but I think they have some really interesting use cases.

iso8859-1 6y ago

They can't be about IRL things because those things cannot be verified in a decentralized manner.

notatrumper 6y ago
Why not? The smart card and the lock are IRL. The smart contract knows who is allowed to open the lock. The lock can query the current state of the contract to check if the smart card being used on it is allowed to open the lock. I have heard several stories by now of renters being defrauded by fake landlords. A smart contract could actually help. Decentralized would mean everybody can check who owns a property, not just the owner of some obscure property database.
- dodobirdlord 6y ago
  Until someone secures a court order transferring ownership of a property, at which point the ledger no longer reflects reality. It's an awkward problem for any distributed ledger that wants to track something that isn't intrinsically defined by the ledger itself.
  - notatrumper 6y ago
    Sure, but that is the "ownership" problem, I was talking about the smart lock problem. Yeah I was talking about ownership - but having to verify that externally does not take away from the smart lock problem. I think the typical fraud went that way: previous renters pretended to be landlords and collected upfront money from prospective new renters. If for example only the actual landlord can grant access to the smart card (or NFC phone), it would be harder for previous renters to pull off that fraud. Isn't there a public ledger of property ownership? In any case, there could be. In my country, merely transferring property rights costs a lot of money. I know a friend paid 20k just for officials to make the entry in their book. Blockchain could easily replace that. Or the "property officials" could have a key and people could verify with the smart contract that some transfer has been signed by the right key.