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A point that most crypto heads miss is that the world does not run algorithmically. Legal contracts do not work like a software program and that characteristic

by omk 5y ago

A point that most crypto heads miss is that the world does not run algorithmically. Legal contracts do not work like a software program and that characteristic is a feature not a bug. Not being able to reverse transactions that were part of an exploit is in infact a bug. Businesses need that tolerance for error. You need an oracle in your system. The oracle can maintain transparency of the attestations carried out if that is what matters. An extreme anti-establishment view is driving most crypto enthusiasts into opting for tech that isn't going to remain in everyone's interest for too long. These lessons started with DAO.

MattGaiser 5y ago
Indeed. Credit cards are far less decentralized than cash. But because credit cards have an administrator to protect the consumer, they are also preferable to cash.
- drcross 5y ago
  The majority of people in the world can't get a credit card.
  - wnevets 5y ago
    but they can get and use {meme}coin?
  - toomuchtodo 5y ago
    This is true, but with that said 54 countries have instant payments [1] [2]. This number will only grow, as you’re just pushing messages around queues. Once Congress lit a fire under the Fed, it’s only taking ~4-5 years to roll out instant payments in the US. This is very fast for such endeavors. Your average financial consumer in most countries is going to trust their bank and government to protect their fiat vs cryptopunks, blockchains, “smart contracts”, and “stablecoins”. To compete with fiat, you need to sell trust and recourse, not speed, and that’s something crypto inherently doesn’t support. (No need to point out Venezuela and the like about where crypto might have a chance, ground truth shows those folks overwhelming used Zelle and clandestine US deposit accounts to circumvent government monetary controls [3] [4]) [1] https://www.moderntreasury.com/journal/real-time-payments-around-the-world https://www.moderntreasury.com/journal/real-time-payments-ar... [2]https://empower1.fisglobal.com/rs/650-KGE-239/images/Report_Flavors_of_Fast_2019.pdf https://empower1.fisglobal.com/rs/650-KGE-239/images/Report_... (pdf, start at page 30) [3] https://www.coindesk.com/venezuela-is-a-testing-ground-for-digital-dollarization-and-zelle-doesnt-like-it https://www.coindesk.com/venezuela-is-a-testing-ground-for-d... [4] https://mobile.twitter.com/jp_koning/status/1254009112263868416 https://mobile.twitter.com/jp_koning/status/1254009112263868...
    - phreack 5y ago
      The crypto movement in South America is growing explicitly because people are increasingly not trusting their banks and government to protect their fiat. I've never heard of Zelle and not everyone has access to a clandestine US account, while anyone can buy open a crypto wallet and get some DAI.
      - toomuchtodo 5y ago
        Could you provide evidence or a citation of crypto uptake in South America?
        phreack 5y ago
        Here's a survey[0] that says the following: > In addition to users in Africa and Southeast Asia, one more world region where many cryptocurrency users are located is Latin America. Peru leads adoption with 16 percent of respondents, while Brazil, Colombia, Argentina, Mexico and Chile all reached double digits. If you follow local news, you see reports every day saying how growth is constant and spiking, this[1] Chilean headline reads "people who deal Bitcoin grow over 100% in a year" just to give a quick example. I suggest googling news for "<country> criptomonedas" and you'll see most of them will have news of the sort from the past year at the most reflecting on just how many people are getting into it. Google trends for "crypto" for every country in South America have also spiked recently. I also have anecdata, which is worthless of course but it's there. Nearly everyone I've spoken with who saves here either already has some crypto or is learning about it in order to get started. [0] https://www.statista.com/chart/18345/crypto-currency-adoption/ https://www.statista.com/chart/18345/crypto-currency-adoptio... [1] https://www.df.cl/noticias/mercados/bolsa-monedas/se-disparan-los-criptolovers-en-chile-personas-que-transan-bitcoin/2021-06-10/125323.html https://www.df.cl/noticias/mercados/bolsa-monedas/se-dispara...
  - jvanderbot 5y ago
    This argument does not help. Those same folks cannot carry around a crypto-buck either. There are plenty of mobile-only banking solutions that are widely used in non-western worlds, and that's likely a model for emerging economies. When electronic banking comes, OP is saying that standard banking ("perfected over millenia TM") is honestly quite preferable over algorithmic contracts.
    - CydeWeys 5y ago
      > This argument does not help. Those same folks cannot carry around a crypto-buck either I'm not a big DeFi booster, but I don't think that's true. All it takes is a mobile phone. There's some pretty compelling videos coming out of El Salvador showing just how easy it is to instantly transact Bitcoin between two people simply by scanning a QR code on the other person's phone and then sending a Lightning Network transaction. This is already reality on the ground, and seemingly more accessible than getting access to credit.
      - jvanderbot 5y ago
        You'd have to ignore the rest of the comment to honestly think this is a reply to the point OP was making and I was clarifying.
      - gowld 5y ago
        How is that different from M-Pesa or Venmo? The difference is that no one has shown up yet in that particular location to set those up, but someone did come set up Bitcoin infra in El Salvador. Still, the ease of spending crypto in El Salvador, great as it is, does not prove it's safe and that everyone won't get hacked and robbed.
    - thebean11 5y ago
      > Those same folks cannot carry around a crypto-buck either. Many of them can. Smartphones have much higher adoption than credit cards in these areas.
      - jvanderbot 5y ago
  - paxys 5y ago
    Those same people are way less equipped to use crypto. I have been to shops in rural areas in third world countries which have credit card machines running over telephone lines. Broadband internet and fancy tech is still a decade+ away for a lot of parts of the world.
staticassertion 5y ago
This is consistently the case too, not just in financial systems. Even language, which is loosely structured and something we get 'wrong' a lot on a day to day basis, is better for that reason - strictness just doesn't fit into the world of human beings. We're much better at using context to make case by case calls - a rigorous, inflexible system is playing against our greatest strengths.
derac 5y ago
Yes, secure your own keys or risk losing everything doesn't work in the real world. This is a level of required diligence by the end-user that is unacceptable for any real world use. With billions being syphened from African countries, it's hard to make the case that crypto microloans are a net good for the continent.
- rednerrus 5y ago
  Many of those taken in some of these elaborate scams, are security EXPERTS. Assuming that Joe T Dillhole is going to be better at securing their bag than security experts is a stretch.
derefr 5y ago
> that the world does not run algorithmically Sure it does: moving gold and commodities between countries in non-mutually-friendly regimes, very much resembles crypto. Fiat finance is a system of contract law built on top of a de-facto "state of nature" of irreversible no-arbitrator commodity transfers. It exists in places where people can agree on who the arbitrating party should be. It does not exist outside of those places. It especially does not exist between powers that are actively at war. Cryptocurrency platforms are, at a base layer, a digital equivalent to the commodities-transfer "state of nature." Many crypto platforms also have the mechanisms within them to build fiat finance systems atop them. (The keyword to search here is "security tokens".) I personally think that's for the best. Build something that can simulate all the kinds of finance the real world operates on, rather than only some. Most people, most of the time, if they touch crypto at all, should be doing so using one of the fiat "layers" on top of crypto, rather than the commodities-transfer base layer. Just like people should be buying things using credit cards, rather than by sending gold bullion in the mail. But if the fiat layer were the only layer, then you'd have a system that only worked where contract law works, which would be no better than the existing fiat ecosystem, in the sense that it wouldn't enable many of the use-cases that cryptocurrency enables. Chief among those use-cases being securely transferring commodities to people in countries that your own fiat regime's financial infrastructure refuses to deal with, for them to then convert to local fiat money. (See e.g. the saga of this YouTuber https://www.youtube.com/channel/UCAPrhJwVweWZA8GEPoClSdw https://www.youtube.com/channel/UCAPrhJwVweWZA8GEPoClSdw trying to pay his employees/contractors in Nigeria, Liberia, etc. for their work.)
- notsureaboutpg 5y ago
  I can't tell if this is a joke or not but the example of moving gold between non-friendly countries (do you mean smuggling?) is probably the least algorithmic thing out there... It's something where you absolutely will fail if you don't have tolerance for faults and flexibility to recover potential losses or change course while transacting... The parent comment's real point was that the world isn't run algorithmically. An enterprise which tries to smuggle goods may not be able to reverse transactions if they transfer too much, but they should be able to react to an overcharge and shut down operations before they lose everything. Or they should be able to stop a shipment before it reaches the border. Or they should be able to change the rules of their trade if government rules change in between. That's the kind of stuff smart contracts tend to ignore or forget about. They have little flexibility in them in a world that's constantly in flux.
Barrin92 5y ago
I'm gonna be honest I don't know what the audience is for a product where you risk losing your entire life savings because you typed a wrong word in a smart contract rather than paying a middleman a fraction of a percent. It's almost like a sort of willful ignorance of division of labour and the concept of pooling risk.
- brianwawok 5y ago
  Doing illegal things, mostly. If you are working a w2 job and paying taxes and paying your mortgage / auto loan... crypto doesn't really help you. Blackmail? Awesome. Buying illegal substances? Awesome. Gambling? You got it...
  - WanderPanda 5y ago
    You said it, when you are a debtor fiat with its constant debasement is great. For creditors fiat doesn't work that well.
  - UIGYUIUYG 5y ago
    You can literally say that about cold hard cash. Blackmail? Pay cash. Buying illegal substances? Cash. Gambling? Get your cash out. It's all in how you use it. https://eandt.theiet.org/content/articles/2021/05/moon-mission-paid-entirely-with-dogecoin-set-for-2022-launch-with-spacex/ https://eandt.theiet.org/content/articles/2021/05/moon-missi... Anything is a store of value, wood, gold, water, dogecoin ect. If people want to accept something for something else this is a way of life. It's just sad that people only see the bad use cases. How about if I transact only in crypto (Monolith card), now every purchase I make is via crypto, nothing different to using a bank card with US dollars backing it, just you have the full control over your own money.
    - pavel_lishin 5y ago
      Do people who had SafeDollar have control over their own money? Did the people whose money got locked in the DAO because of a software bug have control over their own money? > How about if I transact only in crypto (Monolith card), now every purchase I make is via crypto Do you in fact do this? > nothing different to using a bank card with US dollars backing it There certainly is if you read Monolith's fine print, and it's wildly disingenuous to pretend otherwise: The Monolith account and Visa Debit Card are electronic money products which are not covered by the Financial Services Compensation Scheme or the Deposit Insurance System of the Republic of Lithuania. The funds will be safeguarded by Contis Financial Services Ltd or UAB „Finansinės paslaugos „Contis“. For any disputes, the Financial Ombudsman Service and the Bank of Lithuania consumers disputes resolutions institution are available.
krrishd 5y ago
I don’t disagree with you, but I think the only fallacy here is that it’s an extremely zero-sum way to look at things. Are we perhaps better off for many — maybe even all — of our status quo legal contracts not working like software programs? Sure. Is there a class of legal contracts — either already in existence, or made possible by crypto — that’d make much more sense if ran like software (with different requirements/constraints than the error tolerance you described)? I don’t see why not, and why this would be mutually exclusive with the first premise.
- verdverm 5y ago
  Where does the legality of a contract get determined? The execution of a contract seems distinct from is legal validation.
- crote 5y ago
  What would such a contract look like? The whole point of crypto-like contracts is that the terms of the contract are defined solely by code. Ambiguity is, by definition, impossible. If you remove that, why not just use a regular contract?
- omk 5y ago
  I agree that it isn't a zero sum game and that there are valid use cases. But I don't see any of these use cases operating over a multi-million dollar business. There has to be a way to override an exploit when a sum like that is at stake.
  - krrishd 5y ago
    Not to suggest that this is the best way to do it, but that’s already happened on Ethereum: https://en.wikipedia.org/wiki/The_DAO_(organization) https://en.wikipedia.org/wiki/The_DAO_(organization)
TrainedMonkey 5y ago
A point that most people miss is that the world is slowly being eaten by algorithms. One example would be trading floors being converter from mosh pits to electronic ledger books. Another example would be slow advent of self driving, sure it's not here yet, but I think we can agree it is possible. So, is it that much of a stretch to assume that some day a significant fraction of contracts will be more algorithmic? "The best way to predict future is to create it" - unatributed.
- lamontcg 5y ago
  The backstop needs to be humans. The rest of the world doesn't want to lose millions due to an exceptional condition in a contract that wasn't apparent on audit. That isn't how the law works, and that's a good thing. When it comes to contract disputes you ultimately wind up before a human with hopefully decades of experience trained by a system with centuries of experience which can deploy some level of nuance. Which is not how geeks think the legal system works. Or if they do understand it works that way they feel that it is flawed. That isn't a flaw, that's a feature. Sometimes it goes wrong. But if you're ever the beneficiary of a judge going "yeah that contract term was always bullshit. you think you're clever, but i wasn't born yesterday. nullified." then you'll appreciate it.
Sevii 5y ago
This is the reason crypto enthusiasts are enthusiastic in the first place. Crypto enthusiasts want to defect from the system of democratic law in favor of algorithmic law.
dcolkitt 5y ago
Much of the world literally does run algorithmically. Literally every day you trust your life, privacy and money to algorithms that make decisions without human intervention. The financial system trades trillions of dollars in automated systems that make split-second decisions in a way that precludes human supervision. Hedge funds and banks already trust algorithms that if broken could lose billions. The existence of flawed software does not mean that it’s impossible to make reliable or trustworthy software. If you’ll never trust your money to a smart contract no matter how vetted, then I’d recommend you never fly a plane or store personal data in the cloud.
- jtbayly 5y ago
  Sure. But when you get pissed off at those algorithms, you can turn to the government to force the entities behind the algorithms to change the result. That's the whole point. It's not algorithmic in the end. Code is not law, and if it is, that's a bug, not a feature, to most people.
- dswalter 5y ago
  But in many cases, there are ways to dispute and/or retrospectively fix or amend a transaction that is mis-classified. In the exceptionally rare case that something is exploited within a cryptocurrency, there is no recourse for the victim.
- crazygringo 5y ago
  > Much of the world literally does run algorithmically. I think you're missing the parent's point, which is around the world running on legal contracts. It's that legal disputes are settled non-algorithmically. If someone harms you through fraud or other illegal action, a judge can order a transaction reversed, etc. None of this has anything to do with algorithmic trading, or using algorithms in finance generally for efficiency.
- tptacek 5y ago
  It literally does not. The world runs advised by algorithms, but not governed by them. It's a fundamental difference. When algorithms in the real world create lose-lose outcomes, people override them, which is why when your credit card gets stolen you don't end up paying for stuff. You can bake that logic into a software contract, but if the design of your system is that the totality of software contracts are the final word, you have the same problem; you can't predict all the corner cases. It turns out a lot of the human beings that work for companies engaged in the financial system actually do stuff to solve problems.
Kiro 5y ago
I'm a crypto head but I don't think it will ever replace traditional systems in any way. For me, DeFi is its own cyberpunk universe where this stuff is part of the game.
sneak 5y ago
> Legal contracts do not work like a software program and that characteristic is a feature not a bug. Not everyone agrees with that. Everyone using smart contracts is opting in to code-as-law - nobody who doesn't want that needs to use or touch them.
Bancakes 5y ago
So long as these are software errors, we can fix them. We can't drain swamps, though.
G3rn0ti 5y ago
I think the word „smart contract“ does not actually describe them very good. Of course, a piece of software can not replace a legal contract, really, because software is stupid and inflexible. Think of smart contracts rather as vending machines for financial transactions. For example: You enter some crypto coins, maybe select an option and the machine returns a receipt for redeeming your investment plus some interest later. If the machine is well designed it will forever do the same thing and, hence, be reliable and convenient. Of course, bugs can happen. But like with vending machines, you test and audit its code before deploying it everywhere.
- remram 5y ago
  In a very real way, those contracts are less smart than existing legal contracts. In the same way a "smart speaker" allows for interactive and sensitivity to its environment compared to a "dumb speaker", a "legal contract" allows for arguing and bugfixing and sensitivity to its environment compared to an block chain "contract". They should call them "strict contracts" or "inflexible contracts" or "software-enforced contracts". The smarts have been taken out on purpose.
  - G3rn0ti 5y ago
    > The smarts have been taken out on purpose. Yes. Where dumb contracts make sense, they make many financial services much cheaper. But investing your life savings somewhere will probably forever demand counselling by a human being.
  - kybernetikos 5y ago
    > In a very real way, those contracts are less smart than existing legal contracts. It's more that they're just entirely separate things. Smart contracts are programmable money. Contracts are agreements between parties. The fact that you can use smart contracts to automatically take actions required by an actual contract is interesting and useful, but it's not enough to make the two comparable.
    - remram 5y ago
la_fayette 5y ago
When I was young I remember when I showed Excel to my parents, they always calculated through the numbers because they didn't trust computers. Maybe we have a similar phenomenon with blockchains nowadays... Of course there will be errors in the source code somewhere, it is software written by humans!? It is just a matter of creating another level of abstraction as a safeguard in the smart contract, maybe even with 4 eye principles...
kybernetikos 5y ago
These topics are orthogonal to the technology. It's perfectly possible to create tokens using smart contracts on the ethereum blockchain that have keys that can reverse transactions. I deployed a simple one to a testnet a while back as a proof of concept for a bank (any time an enforcement action was taken, a reason had to be provided, and it was broadcast as an event). And just because you're using a smart contract, doesn't mean that the legal system of the jurisdiction you're in no longer has an opinion or the ability to make judgements against you. So, I agree, some of these things are features not bugs to normal humans, but to most cryptocurrency enthusiasts they are anathema. Ultimately we'll need systems that are a bit more friendly to error. It's early days though, and the technology is flexible enough to incorporate nearly any kind of system you want.
- omk 5y ago
  That’s precisely my point. An oracle in the system is needed for an override. But introduction of such an oracle is viewed by most crypto enthusiasts as a undebatable compromise.

by omk 5y ago

MattGaiser 5y ago

Indeed. Credit cards are far less decentralized than cash. But because credit cards have an administrator to protect the consumer, they are also preferable to cash.

drcross 5y ago
The majority of people in the world can't get a credit card.
- wnevets 5y ago
  but they can get and use {meme}coin?
- toomuchtodo 5y ago
  This is true, but with that said 54 countries have instant payments [1] [2]. This number will only grow, as you’re just pushing messages around queues. Once Congress lit a fire under the Fed, it’s only taking ~4-5 years to roll out instant payments in the US. This is very fast for such endeavors. Your average financial consumer in most countries is going to trust their bank and government to protect their fiat vs cryptopunks, blockchains, “smart contracts”, and “stablecoins”. To compete with fiat, you need to sell trust and recourse, not speed, and that’s something crypto inherently doesn’t support. (No need to point out Venezuela and the like about where crypto might have a chance, ground truth shows those folks overwhelming used Zelle and clandestine US deposit accounts to circumvent government monetary controls [3] [4]) [1] https://www.moderntreasury.com/journal/real-time-payments-around-the-world https://www.moderntreasury.com/journal/real-time-payments-ar... [2]https://empower1.fisglobal.com/rs/650-KGE-239/images/Report_Flavors_of_Fast_2019.pdf https://empower1.fisglobal.com/rs/650-KGE-239/images/Report_... (pdf, start at page 30) [3] https://www.coindesk.com/venezuela-is-a-testing-ground-for-digital-dollarization-and-zelle-doesnt-like-it https://www.coindesk.com/venezuela-is-a-testing-ground-for-d... [4] https://mobile.twitter.com/jp_koning/status/1254009112263868416 https://mobile.twitter.com/jp_koning/status/1254009112263868...
  - phreack 5y ago
    The crypto movement in South America is growing explicitly because people are increasingly not trusting their banks and government to protect their fiat. I've never heard of Zelle and not everyone has access to a clandestine US account, while anyone can buy open a crypto wallet and get some DAI.
    - toomuchtodo 5y ago
      Could you provide evidence or a citation of crypto uptake in South America?
      - phreack 5y ago
        Here's a survey[0] that says the following: > In addition to users in Africa and Southeast Asia, one more world region where many cryptocurrency users are located is Latin America. Peru leads adoption with 16 percent of respondents, while Brazil, Colombia, Argentina, Mexico and Chile all reached double digits. If you follow local news, you see reports every day saying how growth is constant and spiking, this[1] Chilean headline reads "people who deal Bitcoin grow over 100% in a year" just to give a quick example. I suggest googling news for "<country> criptomonedas" and you'll see most of them will have news of the sort from the past year at the most reflecting on just how many people are getting into it. Google trends for "crypto" for every country in South America have also spiked recently. I also have anecdata, which is worthless of course but it's there. Nearly everyone I've spoken with who saves here either already has some crypto or is learning about it in order to get started. [0] https://www.statista.com/chart/18345/crypto-currency-adoption/ https://www.statista.com/chart/18345/crypto-currency-adoptio... [1] https://www.df.cl/noticias/mercados/bolsa-monedas/se-disparan-los-criptolovers-en-chile-personas-que-transan-bitcoin/2021-06-10/125323.html https://www.df.cl/noticias/mercados/bolsa-monedas/se-dispara...
- jvanderbot 5y ago
  This argument does not help. Those same folks cannot carry around a crypto-buck either. There are plenty of mobile-only banking solutions that are widely used in non-western worlds, and that's likely a model for emerging economies. When electronic banking comes, OP is saying that standard banking ("perfected over millenia TM") is honestly quite preferable over algorithmic contracts.
  - CydeWeys 5y ago
    > This argument does not help. Those same folks cannot carry around a crypto-buck either I'm not a big DeFi booster, but I don't think that's true. All it takes is a mobile phone. There's some pretty compelling videos coming out of El Salvador showing just how easy it is to instantly transact Bitcoin between two people simply by scanning a QR code on the other person's phone and then sending a Lightning Network transaction. This is already reality on the ground, and seemingly more accessible than getting access to credit.
    - jvanderbot 5y ago
      You'd have to ignore the rest of the comment to honestly think this is a reply to the point OP was making and I was clarifying.
    - gowld 5y ago
      How is that different from M-Pesa or Venmo? The difference is that no one has shown up yet in that particular location to set those up, but someone did come set up Bitcoin infra in El Salvador. Still, the ease of spending crypto in El Salvador, great as it is, does not prove it's safe and that everyone won't get hacked and robbed.
  - thebean11 5y ago
    > Those same folks cannot carry around a crypto-buck either. Many of them can. Smartphones have much higher adoption than credit cards in these areas.
    - jvanderbot 5y ago
- paxys 5y ago
  Those same people are way less equipped to use crypto. I have been to shops in rural areas in third world countries which have credit card machines running over telephone lines. Broadband internet and fancy tech is still a decade+ away for a lot of parts of the world.

staticassertion 5y ago

This is consistently the case too, not just in financial systems. Even language, which is loosely structured and something we get 'wrong' a lot on a day to day basis, is better for that reason - strictness just doesn't fit into the world of human beings. We're much better at using context to make case by case calls - a rigorous, inflexible system is playing against our greatest strengths.

derac 5y ago

Yes, secure your own keys or risk losing everything doesn't work in the real world. This is a level of required diligence by the end-user that is unacceptable for any real world use. With billions being syphened from African countries, it's hard to make the case that crypto microloans are a net good for the continent.

rednerrus 5y ago
Many of those taken in some of these elaborate scams, are security EXPERTS. Assuming that Joe T Dillhole is going to be better at securing their bag than security experts is a stretch.

derefr 5y ago

> that the world does not run algorithmically Sure it does: moving gold and commodities between countries in non-mutually-friendly regimes, very much resembles crypto. Fiat finance is a system of contract law built on top of a de-facto "state of nature" of irreversible no-arbitrator commodity transfers. It exists in places where people can agree on who the arbitrating party should be. It does not exist outside of those places. It especially does not exist between powers that are actively at war. Cryptocurrency platforms are, at a base layer, a digital equivalent to the commodities-transfer "state of nature." Many crypto platforms also have the mechanisms within them to build fiat finance systems atop them. (The keyword to search here is "security tokens".) I personally think that's for the best. Build something that can simulate all the kinds of finance the real world operates on, rather than only some. Most people, most of the time, if they touch crypto at all, should be doing so using one of the fiat "layers" on top of crypto, rather than the commodities-transfer base layer. Just like people should be buying things using credit cards, rather than by sending gold bullion in the mail. But if the fiat layer were the only layer, then you'd have a system that only worked where contract law works, which would be no better than the existing fiat ecosystem, in the sense that it wouldn't enable many of the use-cases that cryptocurrency enables. Chief among those use-cases being securely transferring commodities to people in countries that your own fiat regime's financial infrastructure refuses to deal with, for them to then convert to local fiat money. (See e.g. the saga of this YouTuber https://www.youtube.com/channel/UCAPrhJwVweWZA8GEPoClSdw https://www.youtube.com/channel/UCAPrhJwVweWZA8GEPoClSdw trying to pay his employees/contractors in Nigeria, Liberia, etc. for their work.)

notsureaboutpg 5y ago
I can't tell if this is a joke or not but the example of moving gold between non-friendly countries (do you mean smuggling?) is probably the least algorithmic thing out there... It's something where you absolutely will fail if you don't have tolerance for faults and flexibility to recover potential losses or change course while transacting... The parent comment's real point was that the world isn't run algorithmically. An enterprise which tries to smuggle goods may not be able to reverse transactions if they transfer too much, but they should be able to react to an overcharge and shut down operations before they lose everything. Or they should be able to stop a shipment before it reaches the border. Or they should be able to change the rules of their trade if government rules change in between. That's the kind of stuff smart contracts tend to ignore or forget about. They have little flexibility in them in a world that's constantly in flux.

Barrin92 5y ago

I'm gonna be honest I don't know what the audience is for a product where you risk losing your entire life savings because you typed a wrong word in a smart contract rather than paying a middleman a fraction of a percent. It's almost like a sort of willful ignorance of division of labour and the concept of pooling risk.

brianwawok 5y ago
Doing illegal things, mostly. If you are working a w2 job and paying taxes and paying your mortgage / auto loan... crypto doesn't really help you. Blackmail? Awesome. Buying illegal substances? Awesome. Gambling? You got it...
- WanderPanda 5y ago
  You said it, when you are a debtor fiat with its constant debasement is great. For creditors fiat doesn't work that well.
- UIGYUIUYG 5y ago
  You can literally say that about cold hard cash. Blackmail? Pay cash. Buying illegal substances? Cash. Gambling? Get your cash out. It's all in how you use it. https://eandt.theiet.org/content/articles/2021/05/moon-mission-paid-entirely-with-dogecoin-set-for-2022-launch-with-spacex/ https://eandt.theiet.org/content/articles/2021/05/moon-missi... Anything is a store of value, wood, gold, water, dogecoin ect. If people want to accept something for something else this is a way of life. It's just sad that people only see the bad use cases. How about if I transact only in crypto (Monolith card), now every purchase I make is via crypto, nothing different to using a bank card with US dollars backing it, just you have the full control over your own money.
  - pavel_lishin 5y ago
    Do people who had SafeDollar have control over their own money? Did the people whose money got locked in the DAO because of a software bug have control over their own money? > How about if I transact only in crypto (Monolith card), now every purchase I make is via crypto Do you in fact do this? > nothing different to using a bank card with US dollars backing it There certainly is if you read Monolith's fine print, and it's wildly disingenuous to pretend otherwise: The Monolith account and Visa Debit Card are electronic money products which are not covered by the Financial Services Compensation Scheme or the Deposit Insurance System of the Republic of Lithuania. The funds will be safeguarded by Contis Financial Services Ltd or UAB „Finansinės paslaugos „Contis“. For any disputes, the Financial Ombudsman Service and the Bank of Lithuania consumers disputes resolutions institution are available.

krrishd 5y ago

I don’t disagree with you, but I think the only fallacy here is that it’s an extremely zero-sum way to look at things. Are we perhaps better off for many — maybe even all — of our status quo legal contracts not working like software programs? Sure. Is there a class of legal contracts — either already in existence, or made possible by crypto — that’d make much more sense if ran like software (with different requirements/constraints than the error tolerance you described)? I don’t see why not, and why this would be mutually exclusive with the first premise.

verdverm 5y ago
Where does the legality of a contract get determined? The execution of a contract seems distinct from is legal validation.
crote 5y ago
What would such a contract look like? The whole point of crypto-like contracts is that the terms of the contract are defined solely by code. Ambiguity is, by definition, impossible. If you remove that, why not just use a regular contract?
omk 5y ago
I agree that it isn't a zero sum game and that there are valid use cases. But I don't see any of these use cases operating over a multi-million dollar business. There has to be a way to override an exploit when a sum like that is at stake.
- krrishd 5y ago
  Not to suggest that this is the best way to do it, but that’s already happened on Ethereum: https://en.wikipedia.org/wiki/The_DAO_(organization) https://en.wikipedia.org/wiki/The_DAO_(organization)

TrainedMonkey 5y ago

A point that most people miss is that the world is slowly being eaten by algorithms. One example would be trading floors being converter from mosh pits to electronic ledger books. Another example would be slow advent of self driving, sure it's not here yet, but I think we can agree it is possible. So, is it that much of a stretch to assume that some day a significant fraction of contracts will be more algorithmic? "The best way to predict future is to create it" - unatributed.

lamontcg 5y ago
The backstop needs to be humans. The rest of the world doesn't want to lose millions due to an exceptional condition in a contract that wasn't apparent on audit. That isn't how the law works, and that's a good thing. When it comes to contract disputes you ultimately wind up before a human with hopefully decades of experience trained by a system with centuries of experience which can deploy some level of nuance. Which is not how geeks think the legal system works. Or if they do understand it works that way they feel that it is flawed. That isn't a flaw, that's a feature. Sometimes it goes wrong. But if you're ever the beneficiary of a judge going "yeah that contract term was always bullshit. you think you're clever, but i wasn't born yesterday. nullified." then you'll appreciate it.

Sevii 5y ago

This is the reason crypto enthusiasts are enthusiastic in the first place. Crypto enthusiasts want to defect from the system of democratic law in favor of algorithmic law.

dcolkitt 5y ago

Much of the world literally does run algorithmically. Literally every day you trust your life, privacy and money to algorithms that make decisions without human intervention. The financial system trades trillions of dollars in automated systems that make split-second decisions in a way that precludes human supervision. Hedge funds and banks already trust algorithms that if broken could lose billions. The existence of flawed software does not mean that it’s impossible to make reliable or trustworthy software. If you’ll never trust your money to a smart contract no matter how vetted, then I’d recommend you never fly a plane or store personal data in the cloud.

jtbayly 5y ago
Sure. But when you get pissed off at those algorithms, you can turn to the government to force the entities behind the algorithms to change the result. That's the whole point. It's not algorithmic in the end. Code is not law, and if it is, that's a bug, not a feature, to most people.
dswalter 5y ago
But in many cases, there are ways to dispute and/or retrospectively fix or amend a transaction that is mis-classified. In the exceptionally rare case that something is exploited within a cryptocurrency, there is no recourse for the victim.
crazygringo 5y ago
> Much of the world literally does run algorithmically. I think you're missing the parent's point, which is around the world running on legal contracts. It's that legal disputes are settled non-algorithmically. If someone harms you through fraud or other illegal action, a judge can order a transaction reversed, etc. None of this has anything to do with algorithmic trading, or using algorithms in finance generally for efficiency.
tptacek 5y ago
It literally does not. The world runs advised by algorithms, but not governed by them. It's a fundamental difference. When algorithms in the real world create lose-lose outcomes, people override them, which is why when your credit card gets stolen you don't end up paying for stuff. You can bake that logic into a software contract, but if the design of your system is that the totality of software contracts are the final word, you have the same problem; you can't predict all the corner cases. It turns out a lot of the human beings that work for companies engaged in the financial system actually do stuff to solve problems.

Kiro 5y ago

I'm a crypto head but I don't think it will ever replace traditional systems in any way. For me, DeFi is its own cyberpunk universe where this stuff is part of the game.

sneak 5y ago

> Legal contracts do not work like a software program and that characteristic is a feature not a bug. Not everyone agrees with that. Everyone using smart contracts is opting in to code-as-law - nobody who doesn't want that needs to use or touch them.

Bancakes 5y ago

So long as these are software errors, we can fix them. We can't drain swamps, though.

G3rn0ti 5y ago

I think the word „smart contract“ does not actually describe them very good. Of course, a piece of software can not replace a legal contract, really, because software is stupid and inflexible. Think of smart contracts rather as vending machines for financial transactions. For example: You enter some crypto coins, maybe select an option and the machine returns a receipt for redeeming your investment plus some interest later. If the machine is well designed it will forever do the same thing and, hence, be reliable and convenient. Of course, bugs can happen. But like with vending machines, you test and audit its code before deploying it everywhere.

remram 5y ago
In a very real way, those contracts are less smart than existing legal contracts. In the same way a "smart speaker" allows for interactive and sensitivity to its environment compared to a "dumb speaker", a "legal contract" allows for arguing and bugfixing and sensitivity to its environment compared to an block chain "contract". They should call them "strict contracts" or "inflexible contracts" or "software-enforced contracts". The smarts have been taken out on purpose.
- G3rn0ti 5y ago
  > The smarts have been taken out on purpose. Yes. Where dumb contracts make sense, they make many financial services much cheaper. But investing your life savings somewhere will probably forever demand counselling by a human being.
- kybernetikos 5y ago
  > In a very real way, those contracts are less smart than existing legal contracts. It's more that they're just entirely separate things. Smart contracts are programmable money. Contracts are agreements between parties. The fact that you can use smart contracts to automatically take actions required by an actual contract is interesting and useful, but it's not enough to make the two comparable.
  - remram 5y ago

la_fayette 5y ago

When I was young I remember when I showed Excel to my parents, they always calculated through the numbers because they didn't trust computers. Maybe we have a similar phenomenon with blockchains nowadays... Of course there will be errors in the source code somewhere, it is software written by humans!? It is just a matter of creating another level of abstraction as a safeguard in the smart contract, maybe even with 4 eye principles...

kybernetikos 5y ago

These topics are orthogonal to the technology. It's perfectly possible to create tokens using smart contracts on the ethereum blockchain that have keys that can reverse transactions. I deployed a simple one to a testnet a while back as a proof of concept for a bank (any time an enforcement action was taken, a reason had to be provided, and it was broadcast as an event). And just because you're using a smart contract, doesn't mean that the legal system of the jurisdiction you're in no longer has an opinion or the ability to make judgements against you. So, I agree, some of these things are features not bugs to normal humans, but to most cryptocurrency enthusiasts they are anathema. Ultimately we'll need systems that are a bit more friendly to error. It's early days though, and the technology is flexible enough to incorporate nearly any kind of system you want.

omk 5y ago
That’s precisely my point. An oracle in the system is needed for an override. But introduction of such an oracle is viewed by most crypto enthusiasts as a undebatable compromise.