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> 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 a

> 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....
  - jkhdigital 5y ago
    > has no support from cryptographers I am a PhD student in cryptography, and judging by the papers I've read there is plenty of support from cryptographers, many of whom are directly involved in research and development. Silvio Micali is practically a founder of modern cryptography (and Turing Award winner), and he co-created the blockchain Algorand. There is also plenty of opposition, as the subject elicits strong opinions, but the assertion that cryptocurrency has no support from cryptographers is just false.
    - worik 5y ago
      True. The universally quantified statement "No cryptographers thing X" is almost certainly going to be false. Hyperbole on my part, oops. Sorry about that. I am not a cryptographer, but I do pay attention to cryptographers. Well, some cryptographers. So thanks to your helpful comment I looked up Silvio Micali. He has rather faint endorsement, but endorsement it is.
    - Shorel 5y ago
      In fact, I can think of nothing more profitable for a cryptographer than designing a better cryptocurrency.
      - worik 5y ago
        The fundamentals are all wrong though. Money is, amoung other things, a web of trust. Trying to remove trust from it is taking away some of what makes it money. I do not think there is a solution in this space that works economically or financially. What we need is a unit of exchange that: holds its value reliably, allows a lot of transactions, has low over head, allows anonymous transactions. A central bank could build a system that does the first four, but they have no incentive to do the last.
  - everfree 5y ago
    If the current financial system really can fix itself and become better than cryptocurrency through democracy, then I don't really get what it has to fear from cryptocurrency. Under that hypothetical, cryptocurrency would be inferior, nobody would use it and it would die out. Problem solves itself. And as a member of the middle class, I personally think it's a feature that cryptocurrency can't be inflated to bail out the rich. If banks knew that they weren't going to get bailed out, they wouldn't have taken as many risks and we would have avoided the whole crisis in the first place.
- lmm 5y ago
  Except when you can, e.g. the Ethereum DAO. Turns out crypto is just exchanging one shady cabal for an even shadier one.
  - rglullis 5y ago
    No, not really. The Ethereum fork was successful because the majority of the users through absolutely decentralized consensus started following the forked chain. Vitalik did not pass any legally binding decree to get people to comply, and the worst thing that happened to people who disagreed with the change? They got left to play with the other chain.
marcosdumay 5y ago
Well, to be fair, people write legal contracts without fully understanding what they are writing all the time too. I do disagree that people understand them on most cases. Things are better on consumer law because it assumes from the start that people are stupid and have no idea what they are doing. But other kinds of contracts have quite large security risks.
- ineedasername 5y ago
  Yes, and when normal contracts don't (because they can't) anticipate every possible scenario, there is a meta layer on top of that to resolve edge cases. In the case of a smart contract, it can even happen that both parties agree in how things should take place when there's a problem! But bad code doesn't work that way, and you can find yourself in a null state of indeterminacy without a built in layer to resolve that. The entire evolution of legal jargon can be viewed as an attempt to provide a linguistic framework whereby ambiguity is minimized and edge cases are anticipated. But human interactions are chaotic and all outcomes or scenarios can never be predicted, hence the need for a layer of human judgement. That layer is imperfect, sometimes wrong, sometimes biased, but still necessary. I don't see how smart contracts can work without that sort of layer, but with a human judgment layer then they're not really smart contracts in the way people want such contracts to function. Trusting any smart contract of sufficient complexity is like trusting that a code base has absolutely zero bugs and zero unanticipated edge cases. I just don't see that as realistic. If a programmer at a bank or exchanged should have coded ">=" then I want 1) for them to easily be able to act on their intentions instead of their mistake or 2) the ability to bring in a 3rd party to interpret and resolve the situation if #1 doesn't work out.
  - everfree 5y ago
    > Trusting any smart contract of sufficient complexity is like trusting that a code base has absolutely zero bugs and zero unanticipated edge cases. I just don't see that as realistic. You can do this to some extent using formal verification. Most code doesn't get formally verified because it's kind of a pain to do, and you can usually fix bugs later, but smart contracts are the perfect candidate for it since they are (1) mission critical, (2) naturally limited in size and scope, and (3) cannot be fixed after the fact. You can write perfect code if you have the right tools and do it carefully.
lupire 5y ago
eh, for a regular financial contract you need lawyers and judges. There is plenty of counterintuitive law that burns people. For this one you need programmers and computers. On both cases, if you go in blind or wing it you might get burned.
- yownie 5y ago
  most lucid comment yet.
- ineedasername 5y ago
  Yep, and programmers only have a few decades instead of hundreds of years to have built up generational knowledge of pitfalls and best practices, and even then traditional systems get things wrong. I'm not convinced that programmers and computers can bootstrap to that level of experience very quickly. I think a decade ago I was more optimistic on that possibility, but a decade of repeating history has made me a bit more pessimistic on that ability and cynical about the motives of most people involved.
pgsimp 5y ago
People use a lot of things in everyday life that they don't understand. I don't have to understand how a car works to use it, for example.

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....
- jkhdigital 5y ago
  > has no support from cryptographers I am a PhD student in cryptography, and judging by the papers I've read there is plenty of support from cryptographers, many of whom are directly involved in research and development. Silvio Micali is practically a founder of modern cryptography (and Turing Award winner), and he co-created the blockchain Algorand. There is also plenty of opposition, as the subject elicits strong opinions, but the assertion that cryptocurrency has no support from cryptographers is just false.
  - worik 5y ago
    True. The universally quantified statement "No cryptographers thing X" is almost certainly going to be false. Hyperbole on my part, oops. Sorry about that. I am not a cryptographer, but I do pay attention to cryptographers. Well, some cryptographers. So thanks to your helpful comment I looked up Silvio Micali. He has rather faint endorsement, but endorsement it is.
  - Shorel 5y ago
    In fact, I can think of nothing more profitable for a cryptographer than designing a better cryptocurrency.
    - worik 5y ago
      The fundamentals are all wrong though. Money is, amoung other things, a web of trust. Trying to remove trust from it is taking away some of what makes it money. I do not think there is a solution in this space that works economically or financially. What we need is a unit of exchange that: holds its value reliably, allows a lot of transactions, has low over head, allows anonymous transactions. A central bank could build a system that does the first four, but they have no incentive to do the last.
- everfree 5y ago
  If the current financial system really can fix itself and become better than cryptocurrency through democracy, then I don't really get what it has to fear from cryptocurrency. Under that hypothetical, cryptocurrency would be inferior, nobody would use it and it would die out. Problem solves itself. And as a member of the middle class, I personally think it's a feature that cryptocurrency can't be inflated to bail out the rich. If banks knew that they weren't going to get bailed out, they wouldn't have taken as many risks and we would have avoided the whole crisis in the first place.
lmm 5y ago
Except when you can, e.g. the Ethereum DAO. Turns out crypto is just exchanging one shady cabal for an even shadier one.
- rglullis 5y ago
  No, not really. The Ethereum fork was successful because the majority of the users through absolutely decentralized consensus started following the forked chain. Vitalik did not pass any legally binding decree to get people to comply, and the worst thing that happened to people who disagreed with the change? They got left to play with the other chain.

marcosdumay 5y ago

Well, to be fair, people write legal contracts without fully understanding what they are writing all the time too. I do disagree that people understand them on most cases. Things are better on consumer law because it assumes from the start that people are stupid and have no idea what they are doing. But other kinds of contracts have quite large security risks.

ineedasername 5y ago
Yes, and when normal contracts don't (because they can't) anticipate every possible scenario, there is a meta layer on top of that to resolve edge cases. In the case of a smart contract, it can even happen that both parties agree in how things should take place when there's a problem! But bad code doesn't work that way, and you can find yourself in a null state of indeterminacy without a built in layer to resolve that. The entire evolution of legal jargon can be viewed as an attempt to provide a linguistic framework whereby ambiguity is minimized and edge cases are anticipated. But human interactions are chaotic and all outcomes or scenarios can never be predicted, hence the need for a layer of human judgement. That layer is imperfect, sometimes wrong, sometimes biased, but still necessary. I don't see how smart contracts can work without that sort of layer, but with a human judgment layer then they're not really smart contracts in the way people want such contracts to function. Trusting any smart contract of sufficient complexity is like trusting that a code base has absolutely zero bugs and zero unanticipated edge cases. I just don't see that as realistic. If a programmer at a bank or exchanged should have coded ">=" then I want 1) for them to easily be able to act on their intentions instead of their mistake or 2) the ability to bring in a 3rd party to interpret and resolve the situation if #1 doesn't work out.
- everfree 5y ago
  > Trusting any smart contract of sufficient complexity is like trusting that a code base has absolutely zero bugs and zero unanticipated edge cases. I just don't see that as realistic. You can do this to some extent using formal verification. Most code doesn't get formally verified because it's kind of a pain to do, and you can usually fix bugs later, but smart contracts are the perfect candidate for it since they are (1) mission critical, (2) naturally limited in size and scope, and (3) cannot be fixed after the fact. You can write perfect code if you have the right tools and do it carefully.

lupire 5y ago

eh, for a regular financial contract you need lawyers and judges. There is plenty of counterintuitive law that burns people. For this one you need programmers and computers. On both cases, if you go in blind or wing it you might get burned.

yownie 5y ago
most lucid comment yet.
ineedasername 5y ago
Yep, and programmers only have a few decades instead of hundreds of years to have built up generational knowledge of pitfalls and best practices, and even then traditional systems get things wrong. I'm not convinced that programmers and computers can bootstrap to that level of experience very quickly. I think a decade ago I was more optimistic on that possibility, but a decade of repeating history has made me a bit more pessimistic on that ability and cynical about the motives of most people involved.

pgsimp 5y ago

People use a lot of things in everyday life that they don't understand. I don't have to understand how a car works to use it, for example.