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Would someone mind explaining the concept of contracts in Ethereum? Specifically how it’s related to paper contracts, for example my rental contract, in which a

by 3rd3 13y ago

Would someone mind explaining the concept of contracts in Ethereum? Specifically how it’s related to paper contracts, for example my rental contract, in which all parties (me, the landlord and the jurisdiction) agree upon several rules like "appartment for money" and "violation leads to punishment by the jurisdiction". Who/what are the parties, what are the rules and what mechanisms prevent violations?

a-priori 13y ago
A contract in Ethereum is a basically a software agent that runs on a Bitcoin-like blockchain. It's a computer program attached to a bank account that is triggered by, e.g., transferring money into the contract's account. The program can do calculations, read and write from memory, as well as transfer money to other accounts and a few other things. From there you can write contracts that do things similar to their paper, real-world counterparts. Say you wanted to set up a one-year rental contract. The landlord would create the contract and you, the tenant, would transfer your security deposit into it. The contract would have logic something like this whenever it is activated: if rent money was just deposited transfer the money to the landlord mark last month as paid else if payment is more than 30 days overdue transfer security deposit to landlord end contract else if one year has elapsed since contract started transfer security deposit to tenant end contract This contract will keep track of whether a tenant is up-to-date on their rent payments. As long as the contract survives, the tenant is allowed to stay in the unit. The idea is that instead of a contract being enforced by the good will of the participants, or a court if that fails, it's enforced by the logic programmed into the contract itself.
- Andrew_Quentin 13y ago
  else if one year has elapsed since contract started transfer security deposit to tenant end contract This ignores the reason for a deposit in the first place. What if the carpets were burned in that year? Some of the deposit needs to be kept by the landlord. How does etherium know the carpet was burned? If the landlord says so, then the landlord may be lying. For simpler operation - if rent not paid - then end contract - that sounds like it adds no benefit. No need for a program to tell you the contract has ended. This is very useful to prove authenticity of a contract and for very simple contracts as well such as a bet. If there can be any sort of dispute about the contract though I don't see how it can be useful again save for authenticity.

by 3rd3 13y ago

a-priori 13y ago

A contract in Ethereum is a basically a software agent that runs on a Bitcoin-like blockchain. It's a computer program attached to a bank account that is triggered by, e.g., transferring money into the contract's account. The program can do calculations, read and write from memory, as well as transfer money to other accounts and a few other things. From there you can write contracts that do things similar to their paper, real-world counterparts. Say you wanted to set up a one-year rental contract. The landlord would create the contract and you, the tenant, would transfer your security deposit into it. The contract would have logic something like this whenever it is activated: if rent money was just deposited transfer the money to the landlord mark last month as paid else if payment is more than 30 days overdue transfer security deposit to landlord end contract else if one year has elapsed since contract started transfer security deposit to tenant end contract This contract will keep track of whether a tenant is up-to-date on their rent payments. As long as the contract survives, the tenant is allowed to stay in the unit. The idea is that instead of a contract being enforced by the good will of the participants, or a court if that fails, it's enforced by the logic programmed into the contract itself.

Andrew_Quentin 13y ago
else if one year has elapsed since contract started transfer security deposit to tenant end contract This ignores the reason for a deposit in the first place. What if the carpets were burned in that year? Some of the deposit needs to be kept by the landlord. How does etherium know the carpet was burned? If the landlord says so, then the landlord may be lying. For simpler operation - if rent not paid - then end contract - that sounds like it adds no benefit. No need for a program to tell you the contract has ended. This is very useful to prove authenticity of a contract and for very simple contracts as well such as a bet. If there can be any sort of dispute about the contract though I don't see how it can be useful again save for authenticity.