5 ms·

Ethereum and smart contracts blockchain in general have real potential and utility imo. The use cases are still niche, but it's not a ponzi/MLM, not even close.

by rafale 5y ago

lalaland1125 5y ago
What would be an example of a smart contract that provides value compared to simpler/cheaper centralized solutions?
- cma 5y ago
  There is probably a more advanced version of ransomware they can enable. The other big use case envisioned when they were conceived was automated payouts on distributed assassination markets, where several news articles about an assassination could trigger a payout.
  - lalaland1125 5y ago
    Yep. Smart contracts and cryptocurrencies really helped accelerate the ransomware market.
- dcolkitt 5y ago
  When I bought my house, I paid the title escrow company thousands of dollars to perform a very simple service. Hold the deposit money in escrow, and release it specific parties based on certain conditions. There's no reason in the future why that service couldn't be performed by an off-the-shelf smart contract for essentially nothing. Home buyer sends deposit money to the contract. If buyer exercises a contingency before date M, release money back. If user doesn't, transfer funds to home seller. In case of dispute, defer decision to a pre-agreed upon adjudication agent and pay said agent to render a decision. There are so many stories like this in the plumbing of the financial system. It's ironic, because high finance is built upon layers and layers of complex abstraction. The way someone a sophisticated hedge fund decides how to allocates assets, hedge exposures, levers positions, manage risk, and execute trades is like something straight out of science fiction. But the way the money actually moves from point A to point B is stuck in the 19th century. It's hard to overstate how much of the value collected by the financial industry is actually just handling the nuts and bolts of physically moving money around in a trusted way. For every quant building a derivatives pricing model based on stochastic calculus, there's a dozen low-level clerks sending each other wire instructions by fax and filling out boilerplate KYC notifications.
  - shkkmo 5y ago
    The hard part of escrow is where it meets the real world. The ability to determine when an event has taken place in the real world, without being tricked, is hard for automated blockchain agents. ("Smart contract" is a misnomer because they are pretty dumb and generally are not legally binding contracts.)
  - gnopgnip 5y ago
    >There's no reason in the future why that service couldn't be performed by an off-the-shelf smart contract for essentially nothing. The existence of the legal system, quiet title suits, how property is recorded is why this will never happen
- everfree 5y ago
  The Compound Finance smart contract, and similar contracts, let you deposit digital assets, including digital dollars, and earn borrowing fees from others who want to take on leverage. Unlike in traditional finance, the barrier to entry is relatively low, so there's lots of competition and the fees end up being very low meaning users keep most of the profits. Compare this to traditional stock brokers - unless you're in the 1% with a very fancy brokerage account, usually the broker retains 100% of the profits of lending your shares out, with a really good deal being when they share 50% with you. As soon as stocks get meaningfully tokenized on the blockchain, I believe p2p lending of stocks will explode just as p2p lending of cryptocurrency has. It just makes sense for people to keep all the money their shares are earning from stock lending rather than give half or more of it to a brokerage. It would also let stocks settle instantly and non custodially, so there's no "Robinhood had to halt stock purchases because they ran out of money" moment. That's not to get into the fact that a lot of this is traditionally inaccessible from a lot of countries, and smart contracts are global by default.
- Raidion 5y ago
  I'm not a huge crypo fanboy, but I think there are a ton of "killer apps" that are kinda being sorted out. Basically think of something that has a middleman in a financial transaction and remove it. Distributed Betting Markets (Transaction locked up depending on outcome of a sports game) Distributed Derivatives (financial instruments locked up based on price/date) Distributed Insurance (If I'm a farmer, I could put money up based on rainfall, price of wheat, or other metrics). These aren't simpler, but they can be cheaper. Think insurance at a true market rate based on your specific details. No paying for advertising, or other cohorts with different risk profiles bundled. Not saying that there aren't problems to be solved, or that it's worth it's current value, but there are some pretty cool stuff that you can do with it if they tech gets good enough. It's like an electric car, pretty terrible in a lot of situations previously, but if someone is able to come up with a good enough battery, the game changes.
  - mullingitover 5y ago
    > Distributed Betting Markets (Transaction locked up depending on outcome of a sports game) Distributed Derivatives (financial instruments locked up based on price/date) Distributed Insurance (If I'm a farmer, I could put money up based on rainfall, price of wheat, or other metrics). Don't the executions of these contracts still depend on a (centralized) outside source of information which pretty much wrecks the decentralized aspect of the network?
    - thebean11 5y ago
      No, the outcome is decided by the consensus of betting market participants, with mechanisms to "punish" liars/bad oracles. https://augur.net/faqs https://augur.net/faqs
      - mullingitover 5y ago
        Reading through this, I don't see any guarantee that your contract would be safe from bad oracles if the stakes are high enough and the attacker has adequate resources. If your attack is successful, you not only get steal the amount at stake in the contract, you steal what the good oracles have staked, and all with zero recourse.
- clipradiowallet 5y ago
  Data storage/transfer comes to mind.. consider the following: 1. you request a stored piece of data from me 2. i send an encrypted blob to you 3. you publish smart contract that accepts 1 argument(encryption key) against a sample of encrypted blob. successful execution transfers the balance to me That's just a random example, but the smart contract portion ensures it's impossible for me to receive payment without you also receiving your data - and vice versa. edit: formatting list
  - npsf3000 5y ago
    Can you explain in detail further? How would the smart contract confirm the decryption works... without having access to the key and data (and therefor making it all public?) How does this protect against meaningless data being sent - all you've confirmed is that something can be decrypted... but says nothing about what is being decrypted. What use case do you have for this. What situation is there where you need data from someone, but so little trust exists you can't pay them before or after the data is sent?
    - clipradiowallet 5y ago
      Sure, I've tried to answer all your points below. >How would the smart contract confirm the decryption works... without having access to the key and data (and therefor making it all public?) The encryption is symmetric, and a sample of the encrypted blob is included with the smart contract, eg the first 2048 bytes. The 2048 bytes and hash of the decrypted original are included in the smart contract. The encryption key is the parameter supplied to the contract. This ensures that the key used to solve the contract is valid to decrypt the encrypted payload sent to the client. IE...if the contract can be solved, then the payer can use the same key sent to the smart contract to decrypt the blob you sent him. > How does this protect against meaningless data being sent - all you've confirmed is that something can be decrypted... but says nothing about what is being decrypted. See above. If the person who stored the data retained a checksum of the first 2048 bytes, they can compare the decrypted 2048 byte hash to the hash they have stored. Now they can be assured that key will decrypt the entire blob you sent them. You could mix it up, and use an arbitrary offset of a 2048 byte block size if paranoid. > What use case do you have for this. What situation is there where you need data from someone, but so little trust exists you can't pay them before or after the data is sent? To incentivize one or more peers to store encrypted data, with the expectation they would be paid for supplying it later. The peers would have no knowledge of the payload. A use-case could be that I have _very_ sensitive data, and I want to make sure it is available in the future, but do not trust anyone to store it in plaintext. I could encrypt the data, and ask peer(s) to store it for me. When I request the data back in the future, any peer that has a copy would be incentivized to under-bid other peers(if there are any) to set a price we agree upon to transmit the data back to me. The end result is my data is resilient, and the people storing it are doing it with some expectation of payment at a point in the future. disclaimer: this is a contrived example....but do you remember the wikileaks "insurance file" in the past? If that insurance file was stored in the manner above, it would be even more likely to exist far in the future when the people storing it have the possibility of being paid for storing it. It also gives them plausible deniability of _what_ exactly they were storing if it is encrypted.
- meetups323 5y ago
  One idea I've been playing with in my head for a bit is a blockchain/smart contract based approach to digital gaming/gambling. I've devised a protocol for a blockchain-based RNG that can be used to tick the game state along, and a smart contract would transfer the pot to the winner. It would be quite liberating to play strategic games with random elements online without any trust in the platform required, even more so if you can get paid to do it! Placing any significant amount of real money into a system when the platform can fudge the numbers around to make sure the house always wins is a non-starter IMO.
root_axis 5y ago
Smart contracts don't have any utility beyond the utility already achieved by cryptocurrencies in general. The use cases are indeed "niche" and they will always remain that way due to the fundamental limitations of how a smart contract works.
mypastself 5y ago
I’ve been on a deep dive into crypto and Ethereum in particular for a while now, and I’ve yet to find any actual utility for the technology other than currency. And even that one is as yet unproven. The vast majority of smart contracts seem to rely on a trusted external source for their operation. Others seem not to benefit from the decentralized solution at all. There is also a serious question of whether the excessive democratization will lead to tyranny of the majority. In the case of Ethereum, the majority has gone along with each of the hard forks proposed so far. I find the technical aspects of crypto compelling, but I still remain highly skeptical of its applications.

Ethereum and smart contracts blockchain in general have real potential and utility imo. The use cases are still niche, but it's not a ponzi/MLM, not even close.

by rafale 5y ago

Ethereum and smart contracts blockchain in general have real potential and utility imo. The use cases are still niche, but it's not a ponzi/MLM, not even close.

lalaland1125 5y ago

What would be an example of a smart contract that provides value compared to simpler/cheaper centralized solutions?

cma 5y ago
There is probably a more advanced version of ransomware they can enable. The other big use case envisioned when they were conceived was automated payouts on distributed assassination markets, where several news articles about an assassination could trigger a payout.
- lalaland1125 5y ago
  Yep. Smart contracts and cryptocurrencies really helped accelerate the ransomware market.
dcolkitt 5y ago
When I bought my house, I paid the title escrow company thousands of dollars to perform a very simple service. Hold the deposit money in escrow, and release it specific parties based on certain conditions. There's no reason in the future why that service couldn't be performed by an off-the-shelf smart contract for essentially nothing. Home buyer sends deposit money to the contract. If buyer exercises a contingency before date M, release money back. If user doesn't, transfer funds to home seller. In case of dispute, defer decision to a pre-agreed upon adjudication agent and pay said agent to render a decision. There are so many stories like this in the plumbing of the financial system. It's ironic, because high finance is built upon layers and layers of complex abstraction. The way someone a sophisticated hedge fund decides how to allocates assets, hedge exposures, levers positions, manage risk, and execute trades is like something straight out of science fiction. But the way the money actually moves from point A to point B is stuck in the 19th century. It's hard to overstate how much of the value collected by the financial industry is actually just handling the nuts and bolts of physically moving money around in a trusted way. For every quant building a derivatives pricing model based on stochastic calculus, there's a dozen low-level clerks sending each other wire instructions by fax and filling out boilerplate KYC notifications.
- shkkmo 5y ago
  The hard part of escrow is where it meets the real world. The ability to determine when an event has taken place in the real world, without being tricked, is hard for automated blockchain agents. ("Smart contract" is a misnomer because they are pretty dumb and generally are not legally binding contracts.)
- gnopgnip 5y ago
  >There's no reason in the future why that service couldn't be performed by an off-the-shelf smart contract for essentially nothing. The existence of the legal system, quiet title suits, how property is recorded is why this will never happen
everfree 5y ago
The Compound Finance smart contract, and similar contracts, let you deposit digital assets, including digital dollars, and earn borrowing fees from others who want to take on leverage. Unlike in traditional finance, the barrier to entry is relatively low, so there's lots of competition and the fees end up being very low meaning users keep most of the profits. Compare this to traditional stock brokers - unless you're in the 1% with a very fancy brokerage account, usually the broker retains 100% of the profits of lending your shares out, with a really good deal being when they share 50% with you. As soon as stocks get meaningfully tokenized on the blockchain, I believe p2p lending of stocks will explode just as p2p lending of cryptocurrency has. It just makes sense for people to keep all the money their shares are earning from stock lending rather than give half or more of it to a brokerage. It would also let stocks settle instantly and non custodially, so there's no "Robinhood had to halt stock purchases because they ran out of money" moment. That's not to get into the fact that a lot of this is traditionally inaccessible from a lot of countries, and smart contracts are global by default.
Raidion 5y ago
I'm not a huge crypo fanboy, but I think there are a ton of "killer apps" that are kinda being sorted out. Basically think of something that has a middleman in a financial transaction and remove it. Distributed Betting Markets (Transaction locked up depending on outcome of a sports game) Distributed Derivatives (financial instruments locked up based on price/date) Distributed Insurance (If I'm a farmer, I could put money up based on rainfall, price of wheat, or other metrics). These aren't simpler, but they can be cheaper. Think insurance at a true market rate based on your specific details. No paying for advertising, or other cohorts with different risk profiles bundled. Not saying that there aren't problems to be solved, or that it's worth it's current value, but there are some pretty cool stuff that you can do with it if they tech gets good enough. It's like an electric car, pretty terrible in a lot of situations previously, but if someone is able to come up with a good enough battery, the game changes.
- mullingitover 5y ago
  > Distributed Betting Markets (Transaction locked up depending on outcome of a sports game) Distributed Derivatives (financial instruments locked up based on price/date) Distributed Insurance (If I'm a farmer, I could put money up based on rainfall, price of wheat, or other metrics). Don't the executions of these contracts still depend on a (centralized) outside source of information which pretty much wrecks the decentralized aspect of the network?
  - thebean11 5y ago
    No, the outcome is decided by the consensus of betting market participants, with mechanisms to "punish" liars/bad oracles. https://augur.net/faqs https://augur.net/faqs
    - mullingitover 5y ago
      Reading through this, I don't see any guarantee that your contract would be safe from bad oracles if the stakes are high enough and the attacker has adequate resources. If your attack is successful, you not only get steal the amount at stake in the contract, you steal what the good oracles have staked, and all with zero recourse.
clipradiowallet 5y ago
Data storage/transfer comes to mind.. consider the following: 1. you request a stored piece of data from me 2. i send an encrypted blob to you 3. you publish smart contract that accepts 1 argument(encryption key) against a sample of encrypted blob. successful execution transfers the balance to me That's just a random example, but the smart contract portion ensures it's impossible for me to receive payment without you also receiving your data - and vice versa. edit: formatting list
- npsf3000 5y ago
  Can you explain in detail further? How would the smart contract confirm the decryption works... without having access to the key and data (and therefor making it all public?) How does this protect against meaningless data being sent - all you've confirmed is that something can be decrypted... but says nothing about what is being decrypted. What use case do you have for this. What situation is there where you need data from someone, but so little trust exists you can't pay them before or after the data is sent?
  - clipradiowallet 5y ago
    Sure, I've tried to answer all your points below. >How would the smart contract confirm the decryption works... without having access to the key and data (and therefor making it all public?) The encryption is symmetric, and a sample of the encrypted blob is included with the smart contract, eg the first 2048 bytes. The 2048 bytes and hash of the decrypted original are included in the smart contract. The encryption key is the parameter supplied to the contract. This ensures that the key used to solve the contract is valid to decrypt the encrypted payload sent to the client. IE...if the contract can be solved, then the payer can use the same key sent to the smart contract to decrypt the blob you sent him. > How does this protect against meaningless data being sent - all you've confirmed is that something can be decrypted... but says nothing about what is being decrypted. See above. If the person who stored the data retained a checksum of the first 2048 bytes, they can compare the decrypted 2048 byte hash to the hash they have stored. Now they can be assured that key will decrypt the entire blob you sent them. You could mix it up, and use an arbitrary offset of a 2048 byte block size if paranoid. > What use case do you have for this. What situation is there where you need data from someone, but so little trust exists you can't pay them before or after the data is sent? To incentivize one or more peers to store encrypted data, with the expectation they would be paid for supplying it later. The peers would have no knowledge of the payload. A use-case could be that I have _very_ sensitive data, and I want to make sure it is available in the future, but do not trust anyone to store it in plaintext. I could encrypt the data, and ask peer(s) to store it for me. When I request the data back in the future, any peer that has a copy would be incentivized to under-bid other peers(if there are any) to set a price we agree upon to transmit the data back to me. The end result is my data is resilient, and the people storing it are doing it with some expectation of payment at a point in the future. disclaimer: this is a contrived example....but do you remember the wikileaks "insurance file" in the past? If that insurance file was stored in the manner above, it would be even more likely to exist far in the future when the people storing it have the possibility of being paid for storing it. It also gives them plausible deniability of _what_ exactly they were storing if it is encrypted.
meetups323 5y ago
One idea I've been playing with in my head for a bit is a blockchain/smart contract based approach to digital gaming/gambling. I've devised a protocol for a blockchain-based RNG that can be used to tick the game state along, and a smart contract would transfer the pot to the winner. It would be quite liberating to play strategic games with random elements online without any trust in the platform required, even more so if you can get paid to do it! Placing any significant amount of real money into a system when the platform can fudge the numbers around to make sure the house always wins is a non-starter IMO.

root_axis 5y ago

Smart contracts don't have any utility beyond the utility already achieved by cryptocurrencies in general. The use cases are indeed "niche" and they will always remain that way due to the fundamental limitations of how a smart contract works.

mypastself 5y ago

I’ve been on a deep dive into crypto and Ethereum in particular for a while now, and I’ve yet to find any actual utility for the technology other than currency. And even that one is as yet unproven. The vast majority of smart contracts seem to rely on a trusted external source for their operation. Others seem not to benefit from the decentralized solution at all. There is also a serious question of whether the excessive democratization will lead to tyranny of the majority. In the case of Ethereum, the majority has gone along with each of the hard forks proposed so far. I find the technical aspects of crypto compelling, but I still remain highly skeptical of its applications.