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Cryptocontracts Will Turn Contract Law Into a Programming Language

122 points by mcscom 13y ago

thenerdfiles 13y ago
It'd be great if it were declarative, thanks.
- thenerdfiles 13y ago
  Oh come on periods do not necessarily imply scope.
spiritplumber 13y ago
That would be fantastic.
gnoway 13y ago
It already is. Just more, idk, COBOL than Python.
thenerdfiles 13y ago
Can you write a program that would require for you to write the program forever?
patrickmay 13y ago
Charles Stross anticipated this in Accelerando: "Amber scans the READ ME quickly. Corporate instruments are strong magic, according to Daddy, and this one is exotic by any standards -- a limited company established in Yemen, contorted by the intersection between shari'a and the global legislatosaurus. Understanding it isn't easy, even with a personal net full of subsapient agents that have full access to whole libraries of international trade law -- the bottleneck is comprehension. Amber finds the documents highly puzzling. It's not the fact that half of them are written in Arabic that bothers her -- that's what her grammar engine is for -- or even that they're full of S-expressions and semidigestible chunks of LISP...." Points off for capitalizing Lisp, but otherwise prescient.
- moomin 13y ago
  I don't remember that ending well...
  - marcosdumay 13y ago
    Warning, this is a spoiler. If you want to read the book, don't read it. I simply can't get how the characters kept being human, even after not locked into a body anymore, and turning themselves into several different forms just for fun. In those circumstances, it could end in no other way... but it is a very bizarre set of circumstances. Also, the lack of ambition of post-singularity beings annoys me to no end.
- tlrobinson 13y ago
  Interestingly, he is a vocal critic of Bitcoin (as a currency, at least): http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html http://www.antipope.org/charlie/blog-static/2013/12/why-i-wa...
  - wyager 13y ago
    His criticism is unsurprising; he's a modern luddite. He thinks the tech he grew up with (and maybe a bit more advanced) is A-OK, but anything else is eeevil.
    - jjarmusch 13y ago
      There are plenty of intelligent people who believe that bitcoin is the myspace of digital money. And plenty of other intelligent people who believe that it can be made just fine by adding dozens of layers of technical complications, and then somehow creating an easily comprehensible interface across those layers. And plenty of other intelligent people who get hellbanned because they said something snarky but true about a yc moneymaker.
ThomPete 13y ago
http://virtual-notary.org/ http://virtual-notary.org/ http://hackingdistributed.com/2013/06/20/virtual-notary-intro/ http://hackingdistributed.com/2013/06/20/virtual-notary-intr...
rayiner 13y ago
> Essentially what we are talking about is a real democratization of contractual agreements. Whereas today contracts are restricted to deals with enough value to justify a lawyers time (mortgages, business deals, land transfer etc…), in the future there is no limit to what could be codified into simple contracts. You could imagine forming a self-enforcing contract around something as simple as sharing a lawnmower with your neighbor, hiring a babysitter, or forming a gourmet coffee club at work. Contracts are already totally democratized. A simple verbal agreement pertaining to lawn tools is already an enforceable contract, as is a simple English statement of terms. I don't see how making it into a programming language doesn't make it less democratic. I don't know if you had noticed, but programmers are more expensive than lawyers now. Of course simple contracts aren't "self enforcing" but I fail to see how crypto anything helps here. How does that make your neighbor return your lawnmower?
- futuresense 13y ago
  by keeping money in escrow until said conditions are met.
  - rayiner 13y ago
    How does the computer know conditions have been met, and what prevents using those same mechanisms with ordinary contracts?
    - mark212 13y ago
      exactly this. If the conditions were clear and unambiguous as to whether a contract's term was satisfied or not, there would be no need for lawsuits to enforce a breach. It's precisely because of the enormous ambiguity in human affairs, even when both parties are acting entirely in good faith, that hundreds of years of contract law exists, and courts and lawyers and lawsuits and police to enforce them. The OP's example -- publish three blog posts -- is so trivial that it's hardly even worth discussing as a contract. "Paint my house" is a typical example in first year contracts and it's fodder for all kinds of problems and issues and exceptions: was the house painted? On time? Proper color as specified in the contract ["that's not blue!" "of course it is, says so right here on the can" "No it's not" etc]? Bitcoin and other crypto currencies are interesting as a cheap escrow mechanism, but it still requires a neutral third party to verify that the conditions are satisfied and release the funds.
futuresense 13y ago
This seems like just the sort of thing big banking would've caught whiff to and become engaged in. Though I imagine it would remain under wraps...not the sort of thing well suited to be interfacing the general public. At least until perhaps some startups had gotten the ball rolling on this ball of wax. But for big multinational (secret) interactions? How better to enforce contracts? The advantages on that scale of avoiding legal entreaties and a digitized security system would be enticing.
- andrewfong 13y ago
  I think there's been some work being done here with derivatives trading contracts. Derivatives can be fairly complex to begin with and are sometimes easier to understand as code (e.g. when things are defined recursively).
deleted 13y ago
[deleted]
- decentrality 13y ago
  Yes contracts are meatspace focused, but meatspace isn't object oriented only because it is obscured by the observer right now - more the legislative bodies behind law than the practicing attorneys or the parties to contracts. With the entrance of pure theory and object oriented worldviews necessary to "open the eyes of the machine" onto what's going on in what it's tracking and providing an environment for, the programmers and administrators of legal systems can finally remake law in the image of reason, and not the obfuscations which tainted reason early on that we have now.
- seiji 13y ago
  Contracts create obligations. Obligations can be substituted with penalties. "We will attempt to acquire you. If we can't, we pay you a breakup fee." If you had formal contracts around informal things like babysitting, you'd end up requiring licensed and bonded babysitters. "Henceforth, unto be known, babysitting shall commence at 1500 on Thursday, June 22, in the year of our lord 2014. Unto forthwith, inability to sit for baby will result in a $1 (one) million dollar ($) penalty payable in DOGE." Not sure how "forming a coffee club" requires a contract unless "gourmet coffee" is code for "meth distribution."
  - deleted 13y ago
    [deleted]
    - seiji 13y ago
      Not sure what the disconnect is. Everything is a "meatspace activity," but we still have contracts around big things (buying a house, employment, warranties, ...). Are you asking "how does the software contract get written?" Well, somebody writes it. "Contract programmers," heh.
BenderV 13y ago
"While I imagine that larger contracts would likely be built with some sort of failsafe mechanism for arbitration, there is no need for such a thing to exist." I don't understand why. If I were to use a large cryptocontracts, I would make sure that an impartial third party could 'debug'/judge a bad situation.
dctoedt 13y ago
Contracts are sort of like computer programs, read and executed by people -- by the parties; by constituencies within a corporate party; and sometimes by judges and juries -- instead of by CPUs. Except that, unlike people: [EDITED FOR STYLE] * CPUs don't come up with imaginative reasons why they supposedly needn't follow a clear, unambiguous program instruction. * CPUs don't experience buyer's remorse and decide they like another program better. * CPUs never have to be persuaded to comply. EDIT: Still, there's much room for improvement in the way contracts are drafted; someday there may well be standardized, machine-parsable ways of expressing common contract concepts, so that readers aren't forced to struggle through the wordsmithing whims of J. Random Lawyer. (Shameless plug: In that regard, see the Common Draft project that I've been working on, at http://www.CommonDraft.org http://www.CommonDraft.org. It's an organized compendium of contract term sheets and clause language, heavily annotated [and also very much an unfinished work-in-progress].) The long-term goals are (1) eventually to automate 80% of routine contract review work by programmatically comparing the preferred term sheets of Party A and Party B to generate a discussion list of the parties' points of disagreement; and (2) to provide an educational resource that will help people collaborate to do good things together.
- throwaway092834 13y ago
  "Except that we don't see CPUs being astonishingly creative in coming up with reasons why they shouldn't have to follow a clear, unambiguous program instruction." That's the compiler's job ;-)
  - adestefan 13y ago
    We still don't know what Intel's microcode actually does...
- rayiner 13y ago
  Also: when program hits a missing case in a switch statement, throwing an exception and rebooting the program is an option. That's not true for the equivalent situation with contracting parties.
- JetSpiegel 13y ago
lifeisstillgood 13y ago
I really do not understand the mechanism - maybe I missed it. But A and B enter a contract - A will pay B 1000 usd for every equity research article published (think blog post someone would pay for). How is that self enforcing? how does anyone but a human decide that was a article worth paying for and it scraped off ten random pages?
- gwern 13y ago
  Add voting: say the donations are from 10 people, and 6-of-10 unlocks the payment. If people feel ripped off by a scraped page...
mcantelon 13y ago
Odd that this article doesn't mention Ethereum.
tlrobinson 13y ago
If you're interested in this stuff, Ethereum (http://www.ethereum.org/ http://www.ethereum.org/) is one of the projects you should currently be watching closely.
- tromp 13y ago
  Ripple, the IOU-oriented crypto currency, also has a scripting language for encoding contracts: https://ripple.com/wiki/Contracts https://ripple.com/wiki/Contracts
  - alwillis 13y ago
    There's more information on Ripple contracts here: https://ripple.com/wiki/User:Justmoon/Contracts:_Overview https://ripple.com/wiki/User:Justmoon/Contracts:_Overview BTW, while the Ripple network supports the ability to establish trust lines (also known as IOUs) between users, the cryptocurrency (XRP) is separate from that. In fact, XRP is the only currency on the Ripple network that does't have counter-party risk and doesn't require a trust relationship to transact in.
- vbuterin 13y ago
  For those interested, I (Ethereum founder) will be writing a "DAOs/self-enforcing-whatevers are not scary" series on Bitcoin Magazine and the Ethereum blog over the next little while talking about these kinds of issues in detail.
kens 13y ago
I don't want to be negative-HN-commenter, but this seems crazy to me. First, expressing a contract in a programming language is a much harder problem than expressing a contract in English. How would you even express babysitting or lawnmower-borrowing as a program? Second, lawyers go to great efforts to cover all the cases and even so there are usually things uncovered. Programmatic contracts aren't going to be any better at covering all the cases. Third, if something unexpected happens (either accidentally or maliciously), you'd be totally out of luck with a programmatic contract. You can think of the court system as exception handling for real-world contracts, and that's a dangerous thing to give up. Fourth, programmatic contracts are likely to be more expensive than regular contracts. How much would it cost to program a babysitting contract versus telling the babysitter you'll pay $X per hour verbally? And I can't imagine how much it would cost to write code for something complex like a lease. I can see using Bitcoin-style programmatic contracts for things like escrow payments, but contracts with any sort of real-world interface seem unfeasible. Source: I'm married to a contract attorney. I've also looked at Bitcoin script in detail, and what kind of contracts it can express.
- tlrobinson 13y ago
  "You can think of the court system as exception handling for real-world contracts, and that's a dangerous thing to give up." I was going to agree with you, but then I realized you can actually devise a contract with the equivalent of a "mediation" clause built-in. In fact, this is exactly what a multisig escrow Bitcoin contract is. If the buyer and seller agree that the transaction was successful they can finalize the contract, otherwise they have to go to the mediator who sides with one of the parties. However, you still have to be very careful constructing the contract, as well as securing your private keys (from theft and loss).
- thenerdfiles 13y ago
  The question of how is answered: — declarative syntax driven by JSON structural schemas[0] and encrypted JSON transactions stored in the blockchain. The domain of case evidence is a matter of training a bitcoin network with a modular feed-forward neural network decision engine that discovers novel situational categories. Unit Tests consist of the declarative language and its implementation in any given environment through evaluations of syntax. After you deploy it once, it theoretically becomes increasingly less costly to iterate deployments. Code first, design later. — [0]: http://json-schema.org/ http://json-schema.org/
heydenberk 13y ago
A few years ago, the SEC was mulling specifying regulations for high-frequency trading in Python[0][1]. I've wondered about the potential for specifying law in programming languages since then. Formally verified laws would be a wonderful thing. [0] http://www.itworld.com/government/105650/languages-wall-street http://www.itworld.com/government/105650/languages-wall-stre... [1] http://www.itworld.com/government/105031/will-wall-street-require-python http://www.itworld.com/government/105031/will-wall-street-re...
- Havoc 13y ago
  >high-frequency trading in Python Wait...they're willing to spend millions to build a new undersea cable that shaves a millisecond off the latency...but they use an interpreted language? How does that work?
  - heydenberk 13y ago
    I'm sorry for the grammatical ambiguity. The regulations themselves were to be written in Python. Nonetheless, I do think interpreted languages are used in HFT, but presumably not the kind of HFT that attempts to exploit inefficiencies between in, say, the prices of frozen concentrated orange juice futures on the Chicago Mercantile Exchange vs the price of agricultural companies on the New York Stock Exchange.
jarrett 13y ago
How does the automatic enforcement work? Specifically, how would the software algorithmically determine whether one party has performed satisfactorily? Determining whether one party has paid the other is relatively straightforward--compared to other contractual obligations, at least. Whether it relies on a centralized model like a bank, or something decentralized like BitCoin, it's easy to quantify and measure the exchange of money. What's harder is measuring the other side of the contract. How does the software know that the plumber has satisfactorily installed the customer's new shower? Or that the web developer has built a satisfactory website for the client? Or that the mortgager has encumbered his home in violation of the mortgage?
- dcre 13y ago
  The babysitting one is harder than the plumbing, but bear with me. For the plumber's contract, imagine sensors embedded in the pipes or the bathtub that could collect data suggesting that agreed-upon circumstances in fact obtain. Now, if the agreed-upon pattern is something simple like a certain level of water flow, it's easy to see how a criminal plumber would be able to game that system and get out of town with the money (though they probably wouldn't be able to make nearly as much money as a good plumber would). On the other hand, you can imagine a system of sensor-enabled plumbing parts made to fit with each other — shower walls, pipes, showerheads, faucets, etc. — then there could be a signature pattern in all the sensors that is much harder to fake than it is to just achieve honestly. The achievement of that pattern could then trigger the satisfaction of the contract. Babysitting is a lot weirder, but you can imagine the contract working with some combination of factors like: - the babysitter is in fact in the house, and maybe his/her movements fit some expected pattern - the sounds made by the kid match the types of sounds they normally make (or have made with other babysitters) - the kid is in bed by a certain time - the kid (depending on how old he/she is) might actually rate the quality of the babysitter - etc., etc. This is one creepy world I just envisioned.
  - vertex-four 13y ago
    Who runs these sensors? What happens when the person who runs the sensors breaks their end of the bargain?
eigenvalue 13y ago
I wrote an essay on this subject a couple months ago that discusses several of these ideas: https://docs.google.com/document/d/1EkLwTlb0sCEp023pzZfd1bv9OnLOqqogqV-0wN-K_PM/edit?usp=sharing https://docs.google.com/document/d/1EkLwTlb0sCEp023pzZfd1bv9...
adamfeldman 13y ago
The 2007 book Rainbows End by Vernor Vinge addresses this topic from a science fiction perspective. A major plot element is the ability of individuals to enter into "affliances": digital, automatically-escrowed contracts between individuals providing small services in networks created on-demand to produce larger-scale goods and services. en.wikipedia.org/wiki/Rainbows_End
dinkumthinkum 13y ago
So is this what what 72 hour bender of no sleep and reading about Bitcoin and scifi get you? This is getting into ratings of a madman sort of territory.
babs474 13y ago
I've always wondered if some programming tools couldn't help out in the legal world. It seems to me version control and diffing tools could be very applicable. I wonder if the concept of branching could help for very complex contract negotiations. Also library dependency management. Contracts often include well established clauses that can change incrementally over time. Maybe even transitive dependencies? From what I've seen the legal industry kind of sucks a technology and they tend to brute force things with hordes of junior lawyers and microsoft word.
frodopwns 13y ago
Ethereum.org is working to make things like this possible.
pjc50 13y ago
I'll put down my textbook on Scottish conveyancing law here to make an observation that this idea suffers from the same delusion that 4GLs had: they were going to be the "end of programming!" All you have to do is specify what you want and the computer will deliver it! It turns out that working out what you mean is the hard problem, both in programming and in law. You can't forsee all contingencies, just a subset; maybe you run some test cases to clear things up. That's what case law is - a stream of bugfixes and clarifications dealing with corner cases. The recent bitcoin fiasco involved the question of what "transaction id" meant, and that it was not as unique as some people thought. Likewise if you look at commercial law cases, you'll find a lot of trying to interpolate what was meant in a particular case where something wasn't specified and assumed differently by the parties. Or something unexpected goes wrong and responsibility for fixing it has to be assigned. (If you want to programmatically improve the legal system, you could for example give the US a functioning land registration system like everywhere else, abolishing the need for title insurance.)
- rayiner 13y ago
  > It turns out that working out what you mean is the hard problem, both in programming and in law. This is the heart of the issue, and is why we have both programmers and lawyers. They are domain experts in working out what people really mean. Specifying contracts in code doesn't eliminate the need for this process, and if anything makes it more laborious, because English it turns out is a pretty good language for what people mean.
danielsiders 13y ago
We've been exploring the idea of machine-readable content licensing in Tent (https://tent.io https://tent.io). The idea being that you could subscribe to content feeds based on your willingness to accept certain terms of service. For example, as a distributed system, there's no guarantee that your subscribers will delete posts you sent them when asked, so one content license might be that you agree in advance to delete any content published under this license within a specified number of hours. We've also looking at the idea of community arbiters: if two users want to enter into a contract, they could choose an arbiter to help resolve any disagreements from the intersection of their social graphs.
- Flenser 13y ago
  > one content license might be that you agree in advance to delete any content published under this license within a specified number of hours. How would you know if someone is breaking that contract? And if it's not enforceable why support it?
  - danielsiders 13y ago
    Depending on the situation it might be very obvious (they republish it after the deletion request) or you might not know without examining their system directly. There are a number of options depending on the context. If Tent ends up like email (90% of users spread across a handful of service providers), then one term of the license could be consent to regular audits by mutually trusted individuals or organizations (e.g. the EFF).
alwillis 13y ago
The author, self admittedly being a little late to cryptocurrencies, kind of buried the lead here: cryptocurrencies and cryptocontracts aren't twin technologies; the ability to create and enforce contracts is built into the Bitcoin protocol. A lot of that functionality is currently dormant, (remember, the reference Bitcoin-Qt client is still hasn't reached version 1.0) it's likely to get enabled once other issues within Bitcoin are resolved. Also, there's been a lot of thought put into these concepts already: Mike Hearn's talk at the Bitcoin 2012 London conference (https://www.youtube.com/watch?feature=player_embedded&v=mD4L7xDNCmA https://www.youtube.com/watch?feature=player_embedded&v=mD4L...) on Contracts, Smart property, etc. Bitcoin wiki entries on Contracts (https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts), Smart property (https://en.bitcoin.it/wiki/Smart_Property https://en.bitcoin.it/wiki/Smart_Property) and Agents (https://en.bitcoin.it/wiki/Agents https://en.bitcoin.it/wiki/Agents) Nick Szabo's seminal paper Formalizing and Securing Relationships on Public Networks (http://szabo.best.vwh.net/formalize.html http://szabo.best.vwh.net/formalize.html) Ripple Labs (https://ripple.com/wiki/User:Justmoon/Contracts:_Overview https://ripple.com/wiki/User:Justmoon/Contracts:_Overview) is working on contracts too.
scottdw2 13y ago
There's an interesting split here: between contract validation, contract enforcement. Both have typically been handled by courts. Contract validation is typically very "human centric". It centers on questions such as "what is a bargain?" or "is this result acceptable to the conscience (I.e. is morally acceptable)". Contract enforcement, however, is much more formulaic. Given a valid contract, and a series of events (leading to a breach), quantify what relief would look like. I don't think validity can be automated. It's analogous to Dijkstra's obsession with "formal verification". However, most contracts are valid. They typically involve genuine negotiations on reasonable terms. Assuming validation, enforcement is easily automated. I don't think bit coin is relevant though. For automated contract enforcement any payment API will work. Wether it's bit coin, or paypal in Estonian Kroon, the important part is automation.
- wyager 13y ago
  >I don't think bit coin is relevant though. For automated contract enforcement any payment API will work. Wether it's bit coin, or paypal in Estonian Kroon, the important part is automation. Maybe you're not seeing the really important part of this; these contracts are cryptographically guaranteed. Any contract managed by Paypal is subject to human error, hacking, government interference, etc. It's not just automation; it's deterministic, mathematical, perfect automation.
  - scottdw2 13y ago
    Something like that may work for digital goods. You deliver some digital assets, the key to which can only be derived if a particular crypto currency transaction is performed. But if you are delivering physical goods, there's going to be some human aspect to it. Some human, somewhere, is going to deliver the good to some other human. I'm not discounting the idea of automated contract enforcement. I think contract enforcement is really inefficient. Finding a way to automate it seems like it could be useful. That's the niche paypal originally filled (providing escrow services for ebay transactions). If you could find a way to automate such things, so that everywhere you currently see a "standard service" contract nowadays you had someone clicking on a button (and maybe entering a credit card number), it seems like it could be disruptive. Kind of like a Google App engine for executing contract logic. I'm just not sure that bit coin is central to the whole thing. The whole "free from government interference" thing is a bit of a fallacy. If the government wants to seize your bit coins, they will find a way. It may be difficult for them to manipulate the price of bit coin, and to implement wholesale theft (stealing everyone's bit coins), but seizure of a specific individual's bit coins is definitely possible. They'll find a way. Maybe some form of contracts, like options trading, might work. Equity funding of startups might work too. Basically anything that's purely digital. But I don't think that any contract involving physical goods can be rendered mathematically perfect.
tomgrek 13y ago
Firstly, IAAL. Secondly, I'm working on a crypto-currency that's designed for the automatic enforcement of contracts. Thirdly, I was (am) an engineer, and always saw writing contracts as akin to coding. I see no way to automatically enforce contracts without a third party intermediary, which sort of goes against the spirit of the coin. Be that party a crowd-sourced wisdom, an impartial oracle, or whatever. Is there another way?

122 points by mcscom 13y ago

thenerdfiles 13y ago

It'd be great if it were declarative, thanks.

thenerdfiles 13y ago
Oh come on periods do not necessarily imply scope.

spiritplumber 13y ago

That would be fantastic.

gnoway 13y ago

It already is. Just more, idk, COBOL than Python.

thenerdfiles 13y ago

Can you write a program that would require for you to write the program forever?

patrickmay 13y ago

Charles Stross anticipated this in Accelerando: "Amber scans the READ ME quickly. Corporate instruments are strong magic, according to Daddy, and this one is exotic by any standards -- a limited company established in Yemen, contorted by the intersection between shari'a and the global legislatosaurus. Understanding it isn't easy, even with a personal net full of subsapient agents that have full access to whole libraries of international trade law -- the bottleneck is comprehension. Amber finds the documents highly puzzling. It's not the fact that half of them are written in Arabic that bothers her -- that's what her grammar engine is for -- or even that they're full of S-expressions and semidigestible chunks of LISP...." Points off for capitalizing Lisp, but otherwise prescient.

moomin 13y ago
I don't remember that ending well...
- marcosdumay 13y ago
  Warning, this is a spoiler. If you want to read the book, don't read it. I simply can't get how the characters kept being human, even after not locked into a body anymore, and turning themselves into several different forms just for fun. In those circumstances, it could end in no other way... but it is a very bizarre set of circumstances. Also, the lack of ambition of post-singularity beings annoys me to no end.
tlrobinson 13y ago
Interestingly, he is a vocal critic of Bitcoin (as a currency, at least): http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html http://www.antipope.org/charlie/blog-static/2013/12/why-i-wa...
- wyager 13y ago
  His criticism is unsurprising; he's a modern luddite. He thinks the tech he grew up with (and maybe a bit more advanced) is A-OK, but anything else is eeevil.
  - jjarmusch 13y ago
    There are plenty of intelligent people who believe that bitcoin is the myspace of digital money. And plenty of other intelligent people who believe that it can be made just fine by adding dozens of layers of technical complications, and then somehow creating an easily comprehensible interface across those layers. And plenty of other intelligent people who get hellbanned because they said something snarky but true about a yc moneymaker.

ThomPete 13y ago

http://virtual-notary.org/ http://virtual-notary.org/ http://hackingdistributed.com/2013/06/20/virtual-notary-intro/ http://hackingdistributed.com/2013/06/20/virtual-notary-intr...

rayiner 13y ago

> Essentially what we are talking about is a real democratization of contractual agreements. Whereas today contracts are restricted to deals with enough value to justify a lawyers time (mortgages, business deals, land transfer etc…), in the future there is no limit to what could be codified into simple contracts. You could imagine forming a self-enforcing contract around something as simple as sharing a lawnmower with your neighbor, hiring a babysitter, or forming a gourmet coffee club at work. Contracts are already totally democratized. A simple verbal agreement pertaining to lawn tools is already an enforceable contract, as is a simple English statement of terms. I don't see how making it into a programming language doesn't make it less democratic. I don't know if you had noticed, but programmers are more expensive than lawyers now. Of course simple contracts aren't "self enforcing" but I fail to see how crypto anything helps here. How does that make your neighbor return your lawnmower?

futuresense 13y ago
by keeping money in escrow until said conditions are met.
- rayiner 13y ago
  How does the computer know conditions have been met, and what prevents using those same mechanisms with ordinary contracts?
  - mark212 13y ago
    exactly this. If the conditions were clear and unambiguous as to whether a contract's term was satisfied or not, there would be no need for lawsuits to enforce a breach. It's precisely because of the enormous ambiguity in human affairs, even when both parties are acting entirely in good faith, that hundreds of years of contract law exists, and courts and lawyers and lawsuits and police to enforce them. The OP's example -- publish three blog posts -- is so trivial that it's hardly even worth discussing as a contract. "Paint my house" is a typical example in first year contracts and it's fodder for all kinds of problems and issues and exceptions: was the house painted? On time? Proper color as specified in the contract ["that's not blue!" "of course it is, says so right here on the can" "No it's not" etc]? Bitcoin and other crypto currencies are interesting as a cheap escrow mechanism, but it still requires a neutral third party to verify that the conditions are satisfied and release the funds.

futuresense 13y ago

This seems like just the sort of thing big banking would've caught whiff to and become engaged in. Though I imagine it would remain under wraps...not the sort of thing well suited to be interfacing the general public. At least until perhaps some startups had gotten the ball rolling on this ball of wax. But for big multinational (secret) interactions? How better to enforce contracts? The advantages on that scale of avoiding legal entreaties and a digitized security system would be enticing.

andrewfong 13y ago
I think there's been some work being done here with derivatives trading contracts. Derivatives can be fairly complex to begin with and are sometimes easier to understand as code (e.g. when things are defined recursively).

deleted 13y ago

[deleted]

decentrality 13y ago
Yes contracts are meatspace focused, but meatspace isn't object oriented only because it is obscured by the observer right now - more the legislative bodies behind law than the practicing attorneys or the parties to contracts. With the entrance of pure theory and object oriented worldviews necessary to "open the eyes of the machine" onto what's going on in what it's tracking and providing an environment for, the programmers and administrators of legal systems can finally remake law in the image of reason, and not the obfuscations which tainted reason early on that we have now.
seiji 13y ago
Contracts create obligations. Obligations can be substituted with penalties. "We will attempt to acquire you. If we can't, we pay you a breakup fee." If you had formal contracts around informal things like babysitting, you'd end up requiring licensed and bonded babysitters. "Henceforth, unto be known, babysitting shall commence at 1500 on Thursday, June 22, in the year of our lord 2014. Unto forthwith, inability to sit for baby will result in a $1 (one) million dollar ($) penalty payable in DOGE." Not sure how "forming a coffee club" requires a contract unless "gourmet coffee" is code for "meth distribution."
- deleted 13y ago
  [deleted]
  - seiji 13y ago
    Not sure what the disconnect is. Everything is a "meatspace activity," but we still have contracts around big things (buying a house, employment, warranties, ...). Are you asking "how does the software contract get written?" Well, somebody writes it. "Contract programmers," heh.

BenderV 13y ago

"While I imagine that larger contracts would likely be built with some sort of failsafe mechanism for arbitration, there is no need for such a thing to exist." I don't understand why. If I were to use a large cryptocontracts, I would make sure that an impartial third party could 'debug'/judge a bad situation.

dctoedt 13y ago

Contracts are sort of like computer programs, read and executed by people -- by the parties; by constituencies within a corporate party; and sometimes by judges and juries -- instead of by CPUs. Except that, unlike people: [EDITED FOR STYLE] * CPUs don't come up with imaginative reasons why they supposedly needn't follow a clear, unambiguous program instruction. * CPUs don't experience buyer's remorse and decide they like another program better. * CPUs never have to be persuaded to comply. EDIT: Still, there's much room for improvement in the way contracts are drafted; someday there may well be standardized, machine-parsable ways of expressing common contract concepts, so that readers aren't forced to struggle through the wordsmithing whims of J. Random Lawyer. (Shameless plug: In that regard, see the Common Draft project that I've been working on, at http://www.CommonDraft.org http://www.CommonDraft.org. It's an organized compendium of contract term sheets and clause language, heavily annotated [and also very much an unfinished work-in-progress].) The long-term goals are (1) eventually to automate 80% of routine contract review work by programmatically comparing the preferred term sheets of Party A and Party B to generate a discussion list of the parties' points of disagreement; and (2) to provide an educational resource that will help people collaborate to do good things together.

throwaway092834 13y ago
"Except that we don't see CPUs being astonishingly creative in coming up with reasons why they shouldn't have to follow a clear, unambiguous program instruction." That's the compiler's job ;-)
- adestefan 13y ago
  We still don't know what Intel's microcode actually does...
rayiner 13y ago
Also: when program hits a missing case in a switch statement, throwing an exception and rebooting the program is an option. That's not true for the equivalent situation with contracting parties.
JetSpiegel 13y ago

lifeisstillgood 13y ago

I really do not understand the mechanism - maybe I missed it. But A and B enter a contract - A will pay B 1000 usd for every equity research article published (think blog post someone would pay for). How is that self enforcing? how does anyone but a human decide that was a article worth paying for and it scraped off ten random pages?

gwern 13y ago
Add voting: say the donations are from 10 people, and 6-of-10 unlocks the payment. If people feel ripped off by a scraped page...

mcantelon 13y ago

Odd that this article doesn't mention Ethereum.

tlrobinson 13y ago

If you're interested in this stuff, Ethereum (http://www.ethereum.org/ http://www.ethereum.org/) is one of the projects you should currently be watching closely.

tromp 13y ago
Ripple, the IOU-oriented crypto currency, also has a scripting language for encoding contracts: https://ripple.com/wiki/Contracts https://ripple.com/wiki/Contracts
- alwillis 13y ago
  There's more information on Ripple contracts here: https://ripple.com/wiki/User:Justmoon/Contracts:_Overview https://ripple.com/wiki/User:Justmoon/Contracts:_Overview BTW, while the Ripple network supports the ability to establish trust lines (also known as IOUs) between users, the cryptocurrency (XRP) is separate from that. In fact, XRP is the only currency on the Ripple network that does't have counter-party risk and doesn't require a trust relationship to transact in.
vbuterin 13y ago
For those interested, I (Ethereum founder) will be writing a "DAOs/self-enforcing-whatevers are not scary" series on Bitcoin Magazine and the Ethereum blog over the next little while talking about these kinds of issues in detail.

kens 13y ago

I don't want to be negative-HN-commenter, but this seems crazy to me. First, expressing a contract in a programming language is a much harder problem than expressing a contract in English. How would you even express babysitting or lawnmower-borrowing as a program? Second, lawyers go to great efforts to cover all the cases and even so there are usually things uncovered. Programmatic contracts aren't going to be any better at covering all the cases. Third, if something unexpected happens (either accidentally or maliciously), you'd be totally out of luck with a programmatic contract. You can think of the court system as exception handling for real-world contracts, and that's a dangerous thing to give up. Fourth, programmatic contracts are likely to be more expensive than regular contracts. How much would it cost to program a babysitting contract versus telling the babysitter you'll pay $X per hour verbally? And I can't imagine how much it would cost to write code for something complex like a lease. I can see using Bitcoin-style programmatic contracts for things like escrow payments, but contracts with any sort of real-world interface seem unfeasible. Source: I'm married to a contract attorney. I've also looked at Bitcoin script in detail, and what kind of contracts it can express.

tlrobinson 13y ago
"You can think of the court system as exception handling for real-world contracts, and that's a dangerous thing to give up." I was going to agree with you, but then I realized you can actually devise a contract with the equivalent of a "mediation" clause built-in. In fact, this is exactly what a multisig escrow Bitcoin contract is. If the buyer and seller agree that the transaction was successful they can finalize the contract, otherwise they have to go to the mediator who sides with one of the parties. However, you still have to be very careful constructing the contract, as well as securing your private keys (from theft and loss).
thenerdfiles 13y ago
The question of how is answered: — declarative syntax driven by JSON structural schemas[0] and encrypted JSON transactions stored in the blockchain. The domain of case evidence is a matter of training a bitcoin network with a modular feed-forward neural network decision engine that discovers novel situational categories. Unit Tests consist of the declarative language and its implementation in any given environment through evaluations of syntax. After you deploy it once, it theoretically becomes increasingly less costly to iterate deployments. Code first, design later. — [0]: http://json-schema.org/ http://json-schema.org/

heydenberk 13y ago

A few years ago, the SEC was mulling specifying regulations for high-frequency trading in Python[0][1]. I've wondered about the potential for specifying law in programming languages since then. Formally verified laws would be a wonderful thing. [0] http://www.itworld.com/government/105650/languages-wall-street http://www.itworld.com/government/105650/languages-wall-stre... [1] http://www.itworld.com/government/105031/will-wall-street-require-python http://www.itworld.com/government/105031/will-wall-street-re...

Havoc 13y ago
>high-frequency trading in Python Wait...they're willing to spend millions to build a new undersea cable that shaves a millisecond off the latency...but they use an interpreted language? How does that work?
- heydenberk 13y ago
  I'm sorry for the grammatical ambiguity. The regulations themselves were to be written in Python. Nonetheless, I do think interpreted languages are used in HFT, but presumably not the kind of HFT that attempts to exploit inefficiencies between in, say, the prices of frozen concentrated orange juice futures on the Chicago Mercantile Exchange vs the price of agricultural companies on the New York Stock Exchange.

jarrett 13y ago

How does the automatic enforcement work? Specifically, how would the software algorithmically determine whether one party has performed satisfactorily? Determining whether one party has paid the other is relatively straightforward--compared to other contractual obligations, at least. Whether it relies on a centralized model like a bank, or something decentralized like BitCoin, it's easy to quantify and measure the exchange of money. What's harder is measuring the other side of the contract. How does the software know that the plumber has satisfactorily installed the customer's new shower? Or that the web developer has built a satisfactory website for the client? Or that the mortgager has encumbered his home in violation of the mortgage?

dcre 13y ago
The babysitting one is harder than the plumbing, but bear with me. For the plumber's contract, imagine sensors embedded in the pipes or the bathtub that could collect data suggesting that agreed-upon circumstances in fact obtain. Now, if the agreed-upon pattern is something simple like a certain level of water flow, it's easy to see how a criminal plumber would be able to game that system and get out of town with the money (though they probably wouldn't be able to make nearly as much money as a good plumber would). On the other hand, you can imagine a system of sensor-enabled plumbing parts made to fit with each other — shower walls, pipes, showerheads, faucets, etc. — then there could be a signature pattern in all the sensors that is much harder to fake than it is to just achieve honestly. The achievement of that pattern could then trigger the satisfaction of the contract. Babysitting is a lot weirder, but you can imagine the contract working with some combination of factors like: - the babysitter is in fact in the house, and maybe his/her movements fit some expected pattern - the sounds made by the kid match the types of sounds they normally make (or have made with other babysitters) - the kid is in bed by a certain time - the kid (depending on how old he/she is) might actually rate the quality of the babysitter - etc., etc. This is one creepy world I just envisioned.
- vertex-four 13y ago
  Who runs these sensors? What happens when the person who runs the sensors breaks their end of the bargain?

eigenvalue 13y ago

I wrote an essay on this subject a couple months ago that discusses several of these ideas: https://docs.google.com/document/d/1EkLwTlb0sCEp023pzZfd1bv9OnLOqqogqV-0wN-K_PM/edit?usp=sharing https://docs.google.com/document/d/1EkLwTlb0sCEp023pzZfd1bv9...

adamfeldman 13y ago

The 2007 book Rainbows End by Vernor Vinge addresses this topic from a science fiction perspective. A major plot element is the ability of individuals to enter into "affliances": digital, automatically-escrowed contracts between individuals providing small services in networks created on-demand to produce larger-scale goods and services. en.wikipedia.org/wiki/Rainbows_End

dinkumthinkum 13y ago

So is this what what 72 hour bender of no sleep and reading about Bitcoin and scifi get you? This is getting into ratings of a madman sort of territory.

babs474 13y ago

I've always wondered if some programming tools couldn't help out in the legal world. It seems to me version control and diffing tools could be very applicable. I wonder if the concept of branching could help for very complex contract negotiations. Also library dependency management. Contracts often include well established clauses that can change incrementally over time. Maybe even transitive dependencies? From what I've seen the legal industry kind of sucks a technology and they tend to brute force things with hordes of junior lawyers and microsoft word.

frodopwns 13y ago

Ethereum.org is working to make things like this possible.

pjc50 13y ago

I'll put down my textbook on Scottish conveyancing law here to make an observation that this idea suffers from the same delusion that 4GLs had: they were going to be the "end of programming!" All you have to do is specify what you want and the computer will deliver it! It turns out that working out what you mean is the hard problem, both in programming and in law. You can't forsee all contingencies, just a subset; maybe you run some test cases to clear things up. That's what case law is - a stream of bugfixes and clarifications dealing with corner cases. The recent bitcoin fiasco involved the question of what "transaction id" meant, and that it was not as unique as some people thought. Likewise if you look at commercial law cases, you'll find a lot of trying to interpolate what was meant in a particular case where something wasn't specified and assumed differently by the parties. Or something unexpected goes wrong and responsibility for fixing it has to be assigned. (If you want to programmatically improve the legal system, you could for example give the US a functioning land registration system like everywhere else, abolishing the need for title insurance.)

rayiner 13y ago
> It turns out that working out what you mean is the hard problem, both in programming and in law. This is the heart of the issue, and is why we have both programmers and lawyers. They are domain experts in working out what people really mean. Specifying contracts in code doesn't eliminate the need for this process, and if anything makes it more laborious, because English it turns out is a pretty good language for what people mean.

danielsiders 13y ago

We've been exploring the idea of machine-readable content licensing in Tent (https://tent.io https://tent.io). The idea being that you could subscribe to content feeds based on your willingness to accept certain terms of service. For example, as a distributed system, there's no guarantee that your subscribers will delete posts you sent them when asked, so one content license might be that you agree in advance to delete any content published under this license within a specified number of hours. We've also looking at the idea of community arbiters: if two users want to enter into a contract, they could choose an arbiter to help resolve any disagreements from the intersection of their social graphs.

Flenser 13y ago
> one content license might be that you agree in advance to delete any content published under this license within a specified number of hours. How would you know if someone is breaking that contract? And if it's not enforceable why support it?
- danielsiders 13y ago
  Depending on the situation it might be very obvious (they republish it after the deletion request) or you might not know without examining their system directly. There are a number of options depending on the context. If Tent ends up like email (90% of users spread across a handful of service providers), then one term of the license could be consent to regular audits by mutually trusted individuals or organizations (e.g. the EFF).

alwillis 13y ago

The author, self admittedly being a little late to cryptocurrencies, kind of buried the lead here: cryptocurrencies and cryptocontracts aren't twin technologies; the ability to create and enforce contracts is built into the Bitcoin protocol. A lot of that functionality is currently dormant, (remember, the reference Bitcoin-Qt client is still hasn't reached version 1.0) it's likely to get enabled once other issues within Bitcoin are resolved. Also, there's been a lot of thought put into these concepts already: Mike Hearn's talk at the Bitcoin 2012 London conference (https://www.youtube.com/watch?feature=player_embedded&v=mD4L7xDNCmA https://www.youtube.com/watch?feature=player_embedded&v=mD4L...) on Contracts, Smart property, etc. Bitcoin wiki entries on Contracts (https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts), Smart property (https://en.bitcoin.it/wiki/Smart_Property https://en.bitcoin.it/wiki/Smart_Property) and Agents (https://en.bitcoin.it/wiki/Agents https://en.bitcoin.it/wiki/Agents) Nick Szabo's seminal paper Formalizing and Securing Relationships on Public Networks (http://szabo.best.vwh.net/formalize.html http://szabo.best.vwh.net/formalize.html) Ripple Labs (https://ripple.com/wiki/User:Justmoon/Contracts:_Overview https://ripple.com/wiki/User:Justmoon/Contracts:_Overview) is working on contracts too.

scottdw2 13y ago

There's an interesting split here: between contract validation, contract enforcement. Both have typically been handled by courts. Contract validation is typically very "human centric". It centers on questions such as "what is a bargain?" or "is this result acceptable to the conscience (I.e. is morally acceptable)". Contract enforcement, however, is much more formulaic. Given a valid contract, and a series of events (leading to a breach), quantify what relief would look like. I don't think validity can be automated. It's analogous to Dijkstra's obsession with "formal verification". However, most contracts are valid. They typically involve genuine negotiations on reasonable terms. Assuming validation, enforcement is easily automated. I don't think bit coin is relevant though. For automated contract enforcement any payment API will work. Wether it's bit coin, or paypal in Estonian Kroon, the important part is automation.

wyager 13y ago
>I don't think bit coin is relevant though. For automated contract enforcement any payment API will work. Wether it's bit coin, or paypal in Estonian Kroon, the important part is automation. Maybe you're not seeing the really important part of this; these contracts are cryptographically guaranteed. Any contract managed by Paypal is subject to human error, hacking, government interference, etc. It's not just automation; it's deterministic, mathematical, perfect automation.
- scottdw2 13y ago
  Something like that may work for digital goods. You deliver some digital assets, the key to which can only be derived if a particular crypto currency transaction is performed. But if you are delivering physical goods, there's going to be some human aspect to it. Some human, somewhere, is going to deliver the good to some other human. I'm not discounting the idea of automated contract enforcement. I think contract enforcement is really inefficient. Finding a way to automate it seems like it could be useful. That's the niche paypal originally filled (providing escrow services for ebay transactions). If you could find a way to automate such things, so that everywhere you currently see a "standard service" contract nowadays you had someone clicking on a button (and maybe entering a credit card number), it seems like it could be disruptive. Kind of like a Google App engine for executing contract logic. I'm just not sure that bit coin is central to the whole thing. The whole "free from government interference" thing is a bit of a fallacy. If the government wants to seize your bit coins, they will find a way. It may be difficult for them to manipulate the price of bit coin, and to implement wholesale theft (stealing everyone's bit coins), but seizure of a specific individual's bit coins is definitely possible. They'll find a way. Maybe some form of contracts, like options trading, might work. Equity funding of startups might work too. Basically anything that's purely digital. But I don't think that any contract involving physical goods can be rendered mathematically perfect.

tomgrek 13y ago

Firstly, IAAL. Secondly, I'm working on a crypto-currency that's designed for the automatic enforcement of contracts. Thirdly, I was (am) an engineer, and always saw writing contracts as akin to coding. I see no way to automatically enforce contracts without a third party intermediary, which sort of goes against the spirit of the coin. Be that party a crowd-sourced wisdom, an impartial oracle, or whatever. Is there another way?