6 ms·

How does real-life information enter a smart contract, and how do you make sure all sides make good on their dues?

lowkey 5y ago
One option today is Chainlink which uses a host of oracles to achieve distributed consensus on real-world prices, weather or other signals.
- mypastself 5y ago
  And how would Chainlink prove that a particular side of a contract has, say, delivered a particular item or performed a particar service and the other party’s funds must be released?
  - lowkey 5y ago
    Chainlink hasn’t solved for every external blockchain integration - I never claimed they did. Chainlink simply provides a distributed consensus mechanism for getting real world observations in a robust and difficult to manipulate way, onto a blockchain.
    - mypastself 5y ago
      It sounds to me like the technology doesn’t really replace lawyers with code, then. The one use case presented so far is a contract that relies on publicly available data arbitered by a majority of external sources, each of which is presumably inducted into the system by a trusted third party.
      - lowkey 5y ago
        Give it a chance. It may not replace every contract in every case but Ethereum in conjunction with Chainlink does address an increasing number of legacy contract use cases. This is a nascent technology and per the article, major structural transformations such as this may play out over 30 or more years. If you are genuinely curious I would suggest reading up on the details of how Chainlink works [1]. As you can see these are not trivial challenges and the solutions often require a bit of effort to understand. (Not claiming to be an expert, just an interested student) [1] https://chain.link/solutions https://chain.link/solutions
        mypastself 5y ago
        I actually am curious about the entire crypto space, and I’ve been trying to get a good theoretical grounding. I find the tech fascinating and potentially valuable. But the majority of potential use cases so far, particularly those relating to applications beyond the strictly financial, seem to rely on flawed premises. The idea of oracles seems to go against the whole point of even using the blockchain. Perhaps Chainlink or any number of competitors will eventually resolve some of these issues, but I don’t think they’ve presented a convincing case yet. Or I just don’t quite understand it.
        lowkey 5y ago
        Fair enough. Chainlink’s solution to the consensus problem is to have a large number of independent sources of real-world data for any variable. This redundancy makes it difficult for a single or a few bad actors to collude to mis-quote. To your point though most of Chainlink’s current activity is tied to crypto-asset prices, not the broader use cases mentioned (such as weather oracles). I suspect this is due to the more lucrative short-term returns available from speculation vs other use cases. I love the potential of crypto but would like to see more real-world use-cases. I suspect they will come in time and that short-term speculation is the use case to drive adoption.
    - deleted 5y ago
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- deleted 5y ago
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dcolkitt 5y ago
A real life human still has to decide about real life information to put on the chain, but the point is we’re now globally unconstrained about who we choose to arbitrate that information. That allows for an intense global competition for trustworthy and reliable sources. Say we enter a weather derivative contract that pays off based on total rainfall. If there’s a dispute, instead of a two-bit local judge playing amateur meteorologist, we can simply point our smart contract at AccuWeather’s daily data. AccuWeather is going to be far less likely to destroy their entire franchise by publicly releasing bad data to corrupt a single contract. The point of smart contracts isn’t that everything’s automated. It’s that we can identify the areas that do require human input, and mix and match the best and most trustworthy oracles with high domain expertise.
- ipython 5y ago
  But how does that change anything? I don’t like the output of the smart contract, so I sue accuweather, the smart contract owner, and anyone else involved in the transaction. Some “two bit” judge then adjudicates the dispute after all. What if the judge rules that accuweather’s record is incorrect? All I see is that now I have yet another party to trust: whomever wrote the smart contract. Why should I trust him/her? How do I know that there isn’t an intentional logic issue or unintentional bug that will end up with me losing my money? What’s my recourse then?
  - dcolkitt 5y ago
    The judge has no say. The smart contract is collateralized ahead of time. Both parties lock sufficient value in the contract to make sure that the payment can be made good. After the value is locked in the contract, there's nothing any fiat judge on Earth can do to reverse the smart contract, short of shutting down the entire blockchain. I agree that you have to trust the software underlying the contract. But it's highly likely that you'll use an open standard that's battle tested across time. Typically it's much easier to develop trust in software than it is institutions. Every day you trust your life, privacy and money to open software standards across a wide variety of contexts.
    - 5y ago

One option today is Chainlink which uses a host of oracles to achieve distributed consensus on real-world prices, weather or other signals.

mypastself 5y ago
And how would Chainlink prove that a particular side of a contract has, say, delivered a particular item or performed a particar service and the other party’s funds must be released?
- lowkey 5y ago
  Chainlink hasn’t solved for every external blockchain integration - I never claimed they did. Chainlink simply provides a distributed consensus mechanism for getting real world observations in a robust and difficult to manipulate way, onto a blockchain.
  - mypastself 5y ago
    It sounds to me like the technology doesn’t really replace lawyers with code, then. The one use case presented so far is a contract that relies on publicly available data arbitered by a majority of external sources, each of which is presumably inducted into the system by a trusted third party.
    - lowkey 5y ago
      Give it a chance. It may not replace every contract in every case but Ethereum in conjunction with Chainlink does address an increasing number of legacy contract use cases. This is a nascent technology and per the article, major structural transformations such as this may play out over 30 or more years. If you are genuinely curious I would suggest reading up on the details of how Chainlink works [1]. As you can see these are not trivial challenges and the solutions often require a bit of effort to understand. (Not claiming to be an expert, just an interested student) [1] https://chain.link/solutions https://chain.link/solutions
      - mypastself 5y ago
        I actually am curious about the entire crypto space, and I’ve been trying to get a good theoretical grounding. I find the tech fascinating and potentially valuable. But the majority of potential use cases so far, particularly those relating to applications beyond the strictly financial, seem to rely on flawed premises. The idea of oracles seems to go against the whole point of even using the blockchain. Perhaps Chainlink or any number of competitors will eventually resolve some of these issues, but I don’t think they’ve presented a convincing case yet. Or I just don’t quite understand it.
        lowkey 5y ago
        Fair enough. Chainlink’s solution to the consensus problem is to have a large number of independent sources of real-world data for any variable. This redundancy makes it difficult for a single or a few bad actors to collude to mis-quote. To your point though most of Chainlink’s current activity is tied to crypto-asset prices, not the broader use cases mentioned (such as weather oracles). I suspect this is due to the more lucrative short-term returns available from speculation vs other use cases. I love the potential of crypto but would like to see more real-world use-cases. I suspect they will come in time and that short-term speculation is the use case to drive adoption.
  - deleted 5y ago
    [deleted]
deleted 5y ago
[deleted]

dcolkitt 5y ago

A real life human still has to decide about real life information to put on the chain, but the point is we’re now globally unconstrained about who we choose to arbitrate that information. That allows for an intense global competition for trustworthy and reliable sources. Say we enter a weather derivative contract that pays off based on total rainfall. If there’s a dispute, instead of a two-bit local judge playing amateur meteorologist, we can simply point our smart contract at AccuWeather’s daily data. AccuWeather is going to be far less likely to destroy their entire franchise by publicly releasing bad data to corrupt a single contract. The point of smart contracts isn’t that everything’s automated. It’s that we can identify the areas that do require human input, and mix and match the best and most trustworthy oracles with high domain expertise.

ipython 5y ago
But how does that change anything? I don’t like the output of the smart contract, so I sue accuweather, the smart contract owner, and anyone else involved in the transaction. Some “two bit” judge then adjudicates the dispute after all. What if the judge rules that accuweather’s record is incorrect? All I see is that now I have yet another party to trust: whomever wrote the smart contract. Why should I trust him/her? How do I know that there isn’t an intentional logic issue or unintentional bug that will end up with me losing my money? What’s my recourse then?
- dcolkitt 5y ago
  The judge has no say. The smart contract is collateralized ahead of time. Both parties lock sufficient value in the contract to make sure that the payment can be made good. After the value is locked in the contract, there's nothing any fiat judge on Earth can do to reverse the smart contract, short of shutting down the entire blockchain. I agree that you have to trust the software underlying the contract. But it's highly likely that you'll use an open standard that's battle tested across time. Typically it's much easier to develop trust in software than it is institutions. Every day you trust your life, privacy and money to open software standards across a wide variety of contexts.
  - 5y ago