5 ms·

> Of course, this only works when the smart contracts perfectly meet a correctly defined spec and have no bugs. In practice, if using a smart contract as a con

by derefr 6y ago

> Of course, this only works when the smart contracts perfectly meet a correctly defined spec and have no bugs. In practice, if using a smart contract as a contract, the way you'd use a paper contract, then two parties would sit down and negotiate; draft the negotiated agreement into the form of a smart contract; and then agree (signatures, handshake, multi-sig deployment, whatever) that "what the smart contract does — as executed by the network-consensus abstract machine — is our explicit mutual intent, and damn any statement by either of us to the contrary." This is the same thing you're doing with a paper contract: by both signing it, you're agreeing that "what the paper contract says — as interpreted by a judge — is our explicit mutual intent, and damn any statement by either of us to the contrary." Of course, nobody's actually using smart contracts as contracts. They're just using them as trusts/agents. For now. But a smart contract used as a contract wouldn't have "bugs." It's a negotiated agreement; negotiated agreements have loopholes. And loopholes are perfectly legal. If you left one in, and your counterparty exploits it? Too bad for you. You should have run your contract through a better (code) lawyer.

astrange 6y ago
Signing a paper contract doesn't mean you're bound to any bad thing that happens because of it for life. If a smart contract is so strict that eg it can be against public policy then it's not a real contract.
- derefr 6y ago
  Note that in my above statement, the "network-consensus abstract machine" is the same kind of thing as "a judge": namely, both an arbitrator, and an official that declares certain clauses objectively void even if both parties like them. See also: the DAO hard-fork that created Ethereum Classic.
  - crooked-v 6y ago
    Except it's not the same kind of thing, because an actual judge has legal power. Your abstract machine is going to be sidelined pretty quickly if a judge decides it's doing something illegal or unconscionable and issues injunctions to that effect.
    - derefr 6y ago
      I meant that the abstract machine's behavior is dictated by the legislation of the "society" of node operators, in the same way that the judge's behavior is dictated by the legislation of the society you live in. They're both appointed arbiters. And they've both got the responsibility of enforcing, among other things, certain 'inalienable rights' — i.e. making certain contracts (or certain legal motions based on the wording of a contract) invalid, if they would be greatly damaging to one party in a way deemed unacceptable to "society." > if a judge decides it's doing something illegal or unconscionable and issues injunctions to that effect A judge can't tell a distributed network that has equal presence in countries with mutually-antagonistic economies what to do. They can at most ban the network's nodes from being operated in their country — but people in that country can still continue to use the network through a VPN. Think of it like offshore gambling, except that it's 'offshore' respective to every country on Earth, and there's nowhere a sufficiently-motivated Navy can send a bunch of boats to shoot at it, either. Much of the economic value of blockchains comes from the fact that they allow private citizens of countries that have no trade/treaty compatibility (e.g. countries actively at war with one-another), to have a basis for trust allowing them to enter into contracts with one-another. The basis for this trust is the virtual 'overlay' legal framework of "whatever the software the majority of node operators decide to install says, goes." Of course, if you and I are both in America, and we enter into a smart-contract contract, then we're also entering into a civil legal contract evidenced by that smart contract (just like we're entering into a legal contract if we make a verbal "handshake agreement.") But if we have a compatible legal framework to operate in, that grants our contract as valid†, then why would we even need a blockchain? † (A common reason to not grant a civil contract as valid: because it's a contract for purchase of illegal goods. In such cases, you don't have a compatible legal framework to operate in, even if you're operating in the same country.)
      - crooked-v 6y ago
        > A judge can't tell a distributed network that has equal presence in countries with mutually-antagonistic economies what to do. They can at most ban the network's nodes from being operated in their country — but people in that country can still continue to use the network through a VPN. The distributed network is to some degree a red herring here: in most cases, an unhappy judge would be issuing orders compelling behaviors from specific people (e.g. "you're going to send that $10M back to the person who had it"), and if that contradicts the code, too bad - do it some other way. > Think of it like offshore gambling, except that it's 'offshore' respective to every country on Earth Except it's not: if you're in Iraq and I'm in Brazil and we enter into a contract (as would be legally understood in either or both countries), we are now in a contract under the jurisdictions of both countries. Even being literally "offshore" doesn't really matter: almost every country will claim jurisdiction over its own citizens if they're not already under the jurisdiction of some other nation (by way of being on a ship registered under that nation's flag). You can't actually escape the law just by going out into the middle of the ocean.
  - deleted 6y ago
    [deleted]
  - astrange 6y ago
    I mean, I agree with that, but I don't think having to restart the entire financial system or get 51% approval to edit any existing program is a good way to deal with problems like this.
samatman 6y ago
There's a name for this, it's called a Ricardian contract. https://en.wikipedia.org/wiki/Ricardian_contract https://en.wikipedia.org/wiki/Ricardian_contract It's slightly different than what you describe, because the parallel contract is an actual contract: a written and binding agreement between multiple parties, which explicitly grants consent for some bit of software to govern a given business arrangement. Most "smart contracts" aren't Ricardian contracts, though, they're just chunks of software running on a blockchain. They probably should be though, because contract law applies to business whether a specific legal contract is drafted or not, and no, that implicit contract doesn't say "whatever the software does is fine".

by derefr 6y ago

astrange 6y ago

Signing a paper contract doesn't mean you're bound to any bad thing that happens because of it for life. If a smart contract is so strict that eg it can be against public policy then it's not a real contract.

derefr 6y ago
Note that in my above statement, the "network-consensus abstract machine" is the same kind of thing as "a judge": namely, both an arbitrator, and an official that declares certain clauses objectively void even if both parties like them. See also: the DAO hard-fork that created Ethereum Classic.
- crooked-v 6y ago
  Except it's not the same kind of thing, because an actual judge has legal power. Your abstract machine is going to be sidelined pretty quickly if a judge decides it's doing something illegal or unconscionable and issues injunctions to that effect.
  - derefr 6y ago
    I meant that the abstract machine's behavior is dictated by the legislation of the "society" of node operators, in the same way that the judge's behavior is dictated by the legislation of the society you live in. They're both appointed arbiters. And they've both got the responsibility of enforcing, among other things, certain 'inalienable rights' — i.e. making certain contracts (or certain legal motions based on the wording of a contract) invalid, if they would be greatly damaging to one party in a way deemed unacceptable to "society." > if a judge decides it's doing something illegal or unconscionable and issues injunctions to that effect A judge can't tell a distributed network that has equal presence in countries with mutually-antagonistic economies what to do. They can at most ban the network's nodes from being operated in their country — but people in that country can still continue to use the network through a VPN. Think of it like offshore gambling, except that it's 'offshore' respective to every country on Earth, and there's nowhere a sufficiently-motivated Navy can send a bunch of boats to shoot at it, either. Much of the economic value of blockchains comes from the fact that they allow private citizens of countries that have no trade/treaty compatibility (e.g. countries actively at war with one-another), to have a basis for trust allowing them to enter into contracts with one-another. The basis for this trust is the virtual 'overlay' legal framework of "whatever the software the majority of node operators decide to install says, goes." Of course, if you and I are both in America, and we enter into a smart-contract contract, then we're also entering into a civil legal contract evidenced by that smart contract (just like we're entering into a legal contract if we make a verbal "handshake agreement.") But if we have a compatible legal framework to operate in, that grants our contract as valid†, then why would we even need a blockchain? † (A common reason to not grant a civil contract as valid: because it's a contract for purchase of illegal goods. In such cases, you don't have a compatible legal framework to operate in, even if you're operating in the same country.)
    - crooked-v 6y ago
      > A judge can't tell a distributed network that has equal presence in countries with mutually-antagonistic economies what to do. They can at most ban the network's nodes from being operated in their country — but people in that country can still continue to use the network through a VPN. The distributed network is to some degree a red herring here: in most cases, an unhappy judge would be issuing orders compelling behaviors from specific people (e.g. "you're going to send that $10M back to the person who had it"), and if that contradicts the code, too bad - do it some other way. > Think of it like offshore gambling, except that it's 'offshore' respective to every country on Earth Except it's not: if you're in Iraq and I'm in Brazil and we enter into a contract (as would be legally understood in either or both countries), we are now in a contract under the jurisdictions of both countries. Even being literally "offshore" doesn't really matter: almost every country will claim jurisdiction over its own citizens if they're not already under the jurisdiction of some other nation (by way of being on a ship registered under that nation's flag). You can't actually escape the law just by going out into the middle of the ocean.
- deleted 6y ago
  [deleted]
- astrange 6y ago
  I mean, I agree with that, but I don't think having to restart the entire financial system or get 51% approval to edit any existing program is a good way to deal with problems like this.

samatman 6y ago

There's a name for this, it's called a Ricardian contract. https://en.wikipedia.org/wiki/Ricardian_contract https://en.wikipedia.org/wiki/Ricardian_contract It's slightly different than what you describe, because the parallel contract is an actual contract: a written and binding agreement between multiple parties, which explicitly grants consent for some bit of software to govern a given business arrangement. Most "smart contracts" aren't Ricardian contracts, though, they're just chunks of software running on a blockchain. They probably should be though, because contract law applies to business whether a specific legal contract is drafted or not, and no, that implicit contract doesn't say "whatever the software does is fine".