11 ms·

> There is no court or lawyer who can interpret the spirit of the contract. That's obviously the point, though. You are trading one set of risks for a complete

> There is no court or lawyer who can interpret the spirit of the contract. That's obviously the point, though. You are trading one set of risks for a completely different set of risks that might suit your use case much better; your counterparty being able to contest a contract in court could very well be a "bad" thing for you.

toomuchtodo 5y ago
> your counterparty being able to contest a contract in court could very well be a "bad" thing for you. Evading the law (whether the court or a regulatory body such as the SEC [civil] or DOJ [criminal]) is typically a "bad thing" for the person or people intending to or successfully doing so. https://www.sec.gov/spotlight/cybersecurity-enforcement-actions https://www.sec.gov/spotlight/cybersecurity-enforcement-acti... (SEC Cyber Enforcement Actions, control-f "blockchain" | "crypto") https://www.ropesgray.com/en/newsroom/alerts/2021/March/The-CFTC-Signals-New-Era-in-Enforcement-of-Cryptocurrency-Trading-with-Action-Against-Antivirus https://www.ropesgray.com/en/newsroom/alerts/2021/March/The-... (The CFTC Signals New Era in Enforcement of Cryptocurrency Trading with Action Against Antivirus Software Pioneer John McAfee) https://www.jdsupra.com/legalnews/doj-activity-on-cryptocurrency-a-six-1846233/ https://www.jdsupra.com/legalnews/doj-activity-on-cryptocurr... (DOJ Activity on Cryptocurrency: A Six-Month Review) https://www.reuters.com/world/us/us-court-authorizes-irs-seek-identities-taxpayers-who-have-used-cryptocurrency-2021-05-05/ https://www.reuters.com/world/us/us-court-authorizes-irs-see... (U.S. court authorizes IRS to seek identities of taxpayers who have used cryptocurrency)
- thebean11 5y ago
  Are you saying the only time a contract is disputed is when the other party is evading the law? Nobody abuses the legal system to screw over people without enough resources to fight in court?
  - toomuchtodo 5y ago
    I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. https://digitalchamber.org/wp-content/uploads/2018/02/Smart-Contracts-Legal-Primer-02.01.2018.pdf https://digitalchamber.org/wp-content/uploads/2018/02/Smart-... > Is A Smart Contract Always A Legal Contract? > No. Because a smart contract is computer code, a smart contract may represent all, part, or none of a valid legal contract under U.S. law. Smart contracts function – in whole or in part – to give effect to legal contracts. Thus, smart contracts are the programmatic means by which some or all of the terms of the legal contract are performed. It is the underlying contractual terms that are given legal effect. That legal contract and the contractual terms is what is evaluated and governed by the legal system. Smart contracts are fancy business logic snake oil salespeople are attempting to sell as the law of the land.
    - thebean11 5y ago
      Not quite sure what you're saying, that you expect the DOJ to somehow overturn the judgements of smart contracts, with possibly anonymous participants or participants outside of the DOJ's jurisdiction?
      - ceejayoz 5y ago
        I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.
        thebean11 5y ago
        Sure, I don't disagree with that. For example, defrauding someone with a smart contract obviously doesn't offer the scammer legal protections.
        toomuchtodo 5y ago
        Who defines fraud if the contract is contested?
  - criddell 5y ago
    They said "typically", so they aren't saying it's true in all cases, but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society.
    - thebean11 5y ago
      They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. > but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society Reminds me of the "nothing to hide" argument, that only someone trying to commit a crime would need or want protection from the legal system. History paints a different picture.
      - cool_dude85 5y ago
        >They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. The parties might "agree", but who cares? If they are in the US, for example, and the two parties have a smart contract that breaks US contract law, one of the parties can file a lawsuit and attempt to get their money back. You can't go to the judge and say "sorry, the code is the legal authority here".
        thebean11 5y ago
        Yeah I agree with that. Once the contract has executed, enforcement actions can certainly happen in meatspace. But do you not see the difference between: 1. A normal contract (legal or illegal) that requires outside enforcement in the first place to force parties to comply. 2. A smart contract (legal or illegal) that executes itself without outside enforcement and can be overturned later (not literally overturned, but a subsequent transaction can be forced) by meatspace mechanisms
        5y ago
- deleted 5y ago
  [deleted]
- andrepd 5y ago
  > Evading the law (whether the court or a regulatory body such as the SEC [civil] or DOJ [criminal]) is typically a "bad thing" for the person or people intending to or successfully doing so. Oh wow. If only this were true. If only they were so diligent in punishing other kinds of things. Here's something I read recently, from the aftermath of the Libor scandal: https://www.sec.gov/news/statement/stein-waivers-granted-dissenting-statement.html https://www.sec.gov/news/statement/stein-waivers-granted-dis... . Really highlights how crazy this whole thing is and how there are really two qualitatively different classes with two different sets of rules in our society.
  - deleted 5y ago
    [deleted]
  - joe_the_user 5y ago
    I think the gp just meant that when a person comes to the attention of courts and regulatory bodies, that the person had the intention of evading these authorities will taken badly by them and likely result in more sanctions than just what would happen for breaking the various rules. All the different ways people evade authorities is a large topic. But, you're right, friends in high places help.
  - lmm 5y ago
    Nonsense. There's severe punishment for acts that demonstrate clear malice (e.g. violence, possession of substances well-known to be illegal) and light punishment for ambiguous cases (making a subjective judgement call in a particular way), at every level of society. If anything the error is in the other direction - legislation that requires people to make subjective noisy judgments and get them right is futile and absurd.
    - andrepd 5y ago
      Nope. Clear malice was proven beyond doubt in Libor fixing, in credits ratings fixing in the leadup to 2008, etc. There's severe punishment for crimes committed by regular people, and no punishment for crimes committed by wealthy people, even if all things considered the latter manage to harm millions of people with their actions.
xyzzy123 5y ago
Some chains/coins are backed and developed by fairly well defined "legal entities" (presumably for reasons related to securities law). I am waiting with popcorn in hand for the day someone loses money via smart contract and then takes the entity behind the chain to court to overturn it. (We've seen disastrous bugs overturned by community-consensus hard fork but not to my knowledge by court order). Not yet, but it seems inevitable.
- toomuchtodo 5y ago
  > Some chains/coins are backed and developed by fairly well defined "legal entities" (presumably for reaso). I am waiting with popcorn in hand for the day someone loses money via smart contract and then takes the entity behind the chain to court to overturn it. I would very much like to see regulators purposely engage in these activities, and then directly pursue those within their reach. There's no reason to wait for more citizen victims when the model is proven and the government has the resources to set the stage to demonstrate the failure scenario. This is simply a more elaborate sting versus putting a car on the street to be boosted.
RcouF1uZ4gsC 5y ago
> You are trading one set of risks for a completely different set of risks that might suit your use case much better; your counterparty being able to contest a contract in court could very well be a "bad" thing for you. There is no trade of risks. The judicial system is still going to assert their authority over contracts. Your counterparty will still be able to contest a contract in court. The guys with guns the court sends out to enforce their verdict are not going to be impressed with "code is the contract" and "blockchain". They will lead you to a (jail cell) block in chains (handcuffs) if you try to defy the court order. Instead you are trading specification of contracts in a legal language where there has been centuries of experience in writing and interpreting those contracts, for specifying the contract in a new language that is still evolving and where there is not a whole lot of legal precedent on how to interpret them and how to resolve bugs. These "smart contracts" are not decreasing your risk, but rather increasing it.
cortesoft 5y ago
Bad news for you, then… your counterparty can’t still bring you to court.
lmilcin 5y ago
> That's obviously the point, though. You are trading one set of risks for a completely different set of risks. But that's exactly the point. People are not able to interpret "smart" contracts. For normal contracts most people can understand the contract and if there is a dispute you have laws and courts who can interpret in every case. In case of "smart" contracts even the contract developers more often than not seem to not be able to understand all consequences. So if we are trading one set of risks for another it kinda seems to me to be a a really shitty tradeoff.
- bob33212 5y ago
  This is how ALL of Crypto works. A decentralized ledger means that you cannot call the CEO or CFO of the ledger and have a clearly fraudulent transfer revoked. That is the tradeoff.
  - xyzzy123 5y ago
    What I think a lot of people don't appreciate yet is that computationally decentralised systems can still have legal single points of failure. Lots of chains have holding entities or foundations (nominally for governance, really to justify their premine or "reserves") and seem rather vulnerable, especially if they pay the core developers. The CEO of that entity won't take your calls but they are absolutely exposed to the whims of the legal system in their founding jurisdiction.
  - worik 5y ago
    Yes. Trading off hundreds of years of experience and judicial tradition and precedent for a brand new shiny (just trust us programmers) system. If the former system were to be irretrievably corrupt, teetering on the edge of collapse, and the proposed replacement were capable of replacing it then it would be worthwhile. The existing international financial system is corrupt, the judiciary in most of our world is complicit, but it is not on the edge of collapse (look how brilliantly it sailed through the 2008 crises. It used its political power to get the middle classes to bail out the super rich). The proposed replacement (cryptro currencies) has no support from cryptographers (I am not one) nor finance geeks (that I have been). It is even worse that that which it proposes to replace. Additionally in most of the Western World we have the democratic institutions that can be put to use to fix the system. Economists are slowly coming around to recognising the catastrophic mess that the current system is, how it is sapping our vitality as a community, enriching the few (hi Unicorn founders - fly to Mars please) and impoverishing the middle classes. We can fix this. But we have to give up on single fixes (like crypto). This requires modern system thinking....
kordlessagain 5y ago
Anyone interested in codified risk should read about rai stones.

toomuchtodo 5y ago

> your counterparty being able to contest a contract in court could very well be a "bad" thing for you. Evading the law (whether the court or a regulatory body such as the SEC [civil] or DOJ [criminal]) is typically a "bad thing" for the person or people intending to or successfully doing so. https://www.sec.gov/spotlight/cybersecurity-enforcement-actions https://www.sec.gov/spotlight/cybersecurity-enforcement-acti... (SEC Cyber Enforcement Actions, control-f "blockchain" | "crypto") https://www.ropesgray.com/en/newsroom/alerts/2021/March/The-CFTC-Signals-New-Era-in-Enforcement-of-Cryptocurrency-Trading-with-Action-Against-Antivirus https://www.ropesgray.com/en/newsroom/alerts/2021/March/The-... (The CFTC Signals New Era in Enforcement of Cryptocurrency Trading with Action Against Antivirus Software Pioneer John McAfee) https://www.jdsupra.com/legalnews/doj-activity-on-cryptocurrency-a-six-1846233/ https://www.jdsupra.com/legalnews/doj-activity-on-cryptocurr... (DOJ Activity on Cryptocurrency: A Six-Month Review) https://www.reuters.com/world/us/us-court-authorizes-irs-seek-identities-taxpayers-who-have-used-cryptocurrency-2021-05-05/ https://www.reuters.com/world/us/us-court-authorizes-irs-see... (U.S. court authorizes IRS to seek identities of taxpayers who have used cryptocurrency)

thebean11 5y ago
Are you saying the only time a contract is disputed is when the other party is evading the law? Nobody abuses the legal system to screw over people without enough resources to fight in court?
- toomuchtodo 5y ago
  I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. https://digitalchamber.org/wp-content/uploads/2018/02/Smart-Contracts-Legal-Primer-02.01.2018.pdf https://digitalchamber.org/wp-content/uploads/2018/02/Smart-... > Is A Smart Contract Always A Legal Contract? > No. Because a smart contract is computer code, a smart contract may represent all, part, or none of a valid legal contract under U.S. law. Smart contracts function – in whole or in part – to give effect to legal contracts. Thus, smart contracts are the programmatic means by which some or all of the terms of the legal contract are performed. It is the underlying contractual terms that are given legal effect. That legal contract and the contractual terms is what is evaluated and governed by the legal system. Smart contracts are fancy business logic snake oil salespeople are attempting to sell as the law of the land.
  - thebean11 5y ago
    Not quite sure what you're saying, that you expect the DOJ to somehow overturn the judgements of smart contracts, with possibly anonymous participants or participants outside of the DOJ's jurisdiction?
    - ceejayoz 5y ago
      I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.
      - thebean11 5y ago
        Sure, I don't disagree with that. For example, defrauding someone with a smart contract obviously doesn't offer the scammer legal protections.
        toomuchtodo 5y ago
        Who defines fraud if the contract is contested?
- criddell 5y ago
  They said "typically", so they aren't saying it's true in all cases, but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society.
  - thebean11 5y ago
    They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. > but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society Reminds me of the "nothing to hide" argument, that only someone trying to commit a crime would need or want protection from the legal system. History paints a different picture.
    - cool_dude85 5y ago
      >They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. The parties might "agree", but who cares? If they are in the US, for example, and the two parties have a smart contract that breaks US contract law, one of the parties can file a lawsuit and attempt to get their money back. You can't go to the judge and say "sorry, the code is the legal authority here".
      - thebean11 5y ago
        Yeah I agree with that. Once the contract has executed, enforcement actions can certainly happen in meatspace. But do you not see the difference between: 1. A normal contract (legal or illegal) that requires outside enforcement in the first place to force parties to comply. 2. A smart contract (legal or illegal) that executes itself without outside enforcement and can be overturned later (not literally overturned, but a subsequent transaction can be forced) by meatspace mechanisms
        5y ago
deleted 5y ago
[deleted]
andrepd 5y ago
> Evading the law (whether the court or a regulatory body such as the SEC [civil] or DOJ [criminal]) is typically a "bad thing" for the person or people intending to or successfully doing so. Oh wow. If only this were true. If only they were so diligent in punishing other kinds of things. Here's something I read recently, from the aftermath of the Libor scandal: https://www.sec.gov/news/statement/stein-waivers-granted-dissenting-statement.html https://www.sec.gov/news/statement/stein-waivers-granted-dis... . Really highlights how crazy this whole thing is and how there are really two qualitatively different classes with two different sets of rules in our society.
- deleted 5y ago
  [deleted]
- joe_the_user 5y ago
  I think the gp just meant that when a person comes to the attention of courts and regulatory bodies, that the person had the intention of evading these authorities will taken badly by them and likely result in more sanctions than just what would happen for breaking the various rules. All the different ways people evade authorities is a large topic. But, you're right, friends in high places help.
- lmm 5y ago
  Nonsense. There's severe punishment for acts that demonstrate clear malice (e.g. violence, possession of substances well-known to be illegal) and light punishment for ambiguous cases (making a subjective judgement call in a particular way), at every level of society. If anything the error is in the other direction - legislation that requires people to make subjective noisy judgments and get them right is futile and absurd.
  - andrepd 5y ago
    Nope. Clear malice was proven beyond doubt in Libor fixing, in credits ratings fixing in the leadup to 2008, etc. There's severe punishment for crimes committed by regular people, and no punishment for crimes committed by wealthy people, even if all things considered the latter manage to harm millions of people with their actions.

xyzzy123 5y ago

Some chains/coins are backed and developed by fairly well defined "legal entities" (presumably for reasons related to securities law). I am waiting with popcorn in hand for the day someone loses money via smart contract and then takes the entity behind the chain to court to overturn it. (We've seen disastrous bugs overturned by community-consensus hard fork but not to my knowledge by court order). Not yet, but it seems inevitable.

toomuchtodo 5y ago
> Some chains/coins are backed and developed by fairly well defined "legal entities" (presumably for reaso). I am waiting with popcorn in hand for the day someone loses money via smart contract and then takes the entity behind the chain to court to overturn it. I would very much like to see regulators purposely engage in these activities, and then directly pursue those within their reach. There's no reason to wait for more citizen victims when the model is proven and the government has the resources to set the stage to demonstrate the failure scenario. This is simply a more elaborate sting versus putting a car on the street to be boosted.

RcouF1uZ4gsC 5y ago

> You are trading one set of risks for a completely different set of risks that might suit your use case much better; your counterparty being able to contest a contract in court could very well be a "bad" thing for you. There is no trade of risks. The judicial system is still going to assert their authority over contracts. Your counterparty will still be able to contest a contract in court. The guys with guns the court sends out to enforce their verdict are not going to be impressed with "code is the contract" and "blockchain". They will lead you to a (jail cell) block in chains (handcuffs) if you try to defy the court order. Instead you are trading specification of contracts in a legal language where there has been centuries of experience in writing and interpreting those contracts, for specifying the contract in a new language that is still evolving and where there is not a whole lot of legal precedent on how to interpret them and how to resolve bugs. These "smart contracts" are not decreasing your risk, but rather increasing it.

cortesoft 5y ago

Bad news for you, then… your counterparty can’t still bring you to court.

lmilcin 5y ago

> That's obviously the point, though. You are trading one set of risks for a completely different set of risks. But that's exactly the point. People are not able to interpret "smart" contracts. For normal contracts most people can understand the contract and if there is a dispute you have laws and courts who can interpret in every case. In case of "smart" contracts even the contract developers more often than not seem to not be able to understand all consequences. So if we are trading one set of risks for another it kinda seems to me to be a a really shitty tradeoff.

bob33212 5y ago
This is how ALL of Crypto works. A decentralized ledger means that you cannot call the CEO or CFO of the ledger and have a clearly fraudulent transfer revoked. That is the tradeoff.
- xyzzy123 5y ago
  What I think a lot of people don't appreciate yet is that computationally decentralised systems can still have legal single points of failure. Lots of chains have holding entities or foundations (nominally for governance, really to justify their premine or "reserves") and seem rather vulnerable, especially if they pay the core developers. The CEO of that entity won't take your calls but they are absolutely exposed to the whims of the legal system in their founding jurisdiction.
- worik 5y ago
  Yes. Trading off hundreds of years of experience and judicial tradition and precedent for a brand new shiny (just trust us programmers) system. If the former system were to be irretrievably corrupt, teetering on the edge of collapse, and the proposed replacement were capable of replacing it then it would be worthwhile. The existing international financial system is corrupt, the judiciary in most of our world is complicit, but it is not on the edge of collapse (look how brilliantly it sailed through the 2008 crises. It used its political power to get the middle classes to bail out the super rich). The proposed replacement (cryptro currencies) has no support from cryptographers (I am not one) nor finance geeks (that I have been). It is even worse that that which it proposes to replace. Additionally in most of the Western World we have the democratic institutions that can be put to use to fix the system. Economists are slowly coming around to recognising the catastrophic mess that the current system is, how it is sapping our vitality as a community, enriching the few (hi Unicorn founders - fly to Mars please) and impoverishing the middle classes. We can fix this. But we have to give up on single fixes (like crypto). This requires modern system thinking....

kordlessagain 5y ago

Anyone interested in codified risk should read about rai stones.