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This is a terrible description of Ethereum and trivializes what it is. The interesting parts of a contract are not the deadline and the transfer of funds. Eve

This is a terrible description of Ethereum and trivializes what it is. The interesting parts of a contract are not the deadline and the transfer of funds. Even an escrow service can provide those functions. The interesting parts of the contract are the conditions of the transfer of funds, and how those are evaluated prior to effectuating the transfer, and how the obligations are enforced after the transfer. What makes Ethereum interesting is that it creates a public, decentralized infrastructure for standardized outsourcing of third-party verifiers for each conditional precursor of a contract, and each subsequent obligation. A contract can specify a set of payments and deadlines, as in OPs example, but it can also specify Boolean inputs from trusted third-party institutions that provide various named state inputs into the contract. For example, you could have an input that is Boolean, which says, "Website transferred from Seller to Buyer: Verified by Verisign: True/False", etc. Those conditions can be part of the verification process. AND even more excitingly, small micro payments can be made part of the contract, to the third-party verifiers, as part of the contract itself. I am kind of sick of people who don't understand what the value of smart contracts is, messing up other people's perception of what it is. I award OP zero points, and may god have mercy on his soul.

detaro 11y ago
Interesting additional context, thank you. If you know a better introduction to the topic, please link&submit it. From what I've seen in other discussions about Ethereum, people are kind of sick of not finding an understandable description about what it actually does except making the world a better place ;)
joosters 11y ago
I agree, I think the website is failing because it doesn't touch on a key topic, one that you mention: How does Ethereum handle non-blockchain items? It's easy to see how a blockchain might handle money payments (using its own money system, that is), but far less clear how you can encode contracts for real-world items. Like the example website, for instance. Just because a blockchain entry states 'x' doesn't give it any legal weight, and certainly doesn't transfer real world possessions or ownership. As you mention, one of the key features is verifiers. Say I am selling a website. We need to ensure that the money transfer happens only once I have control of the site. (and presumably, that the site has been built and is complete). We need a trusted party to check that this is so, and the ethereum contract needs to have this verifier written in to it.
- TheMagicHorsey 11y ago
  To be honest, half the people working as developers on Ethereum itself fail to bring up this point. I don't know if they didn't think about it, or if they just assume everyone is smart enough to think of it themselves.
platz 11y ago
> outsourcing of third-party verifiers Since people using the network will be in control of constructing their own contracts, they will have an incentive to draft the contract in such a way as to make sure they'll have control over this "outside verifier"; it could even be same company which it chooses to be the "verifier". > trusted third-party institutions The defeats the previous attempt at decentralization, by re-centralizing the information the network needs to do it's job. This is what the network hinges on to gain information about the outside world (and remember, companies will have an incentive to build the contract in such a way to control these trusted third-party institutions as mentioned above). (I'm aware of schelling coin/contracts; I'm don't think it will work unless it's made a mandatory part of all contracts for all third-party verifiers. For applications that need data that is publicity verifiable, such as the weather or sports outcomes, it could work, but if the information is not is publicity verifiable, e.g. a transaction amongst private parties, I don't see it. And that's only if you force the use of Schelling coin/contracts, which is usually never the first thing Ethereum folks talk about when pitching this; I'm not sure if there are actually plans to implement that.)
- TheMagicHorsey 11y ago
  Your counterparty will not agree to an arbitrator that is not neutral, so there is market for third-party verifiers who have a reputation for trustworthiness.
  - platz 11y ago
    In some cases yes, but if your counterparty is Facebook (or commercial svc) you don't have any negotiating power. Either you accept their terms or don't use their Service
    - TheMagicHorsey 11y ago
      That problem is orthogonal to the discussion and not absent in real contracts either.
mode80 11y ago
Smart contracts can define AND ENFORCE the transfer of smart property without intervention. The world of smart property today is limited to digital currency. But if you "skate where the puck is going" it's not hard to imagine other digital goods being smart-property-enabled and eventually physical things like cars, door-locks etc. A smart contract CAN incorporate a digital sign-off from third party verifiers. But it's not always necessary nor is it a defining feature. God's mercy notwithstanding.

detaro 11y ago

Interesting additional context, thank you. If you know a better introduction to the topic, please link&submit it. From what I've seen in other discussions about Ethereum, people are kind of sick of not finding an understandable description about what it actually does except making the world a better place ;)

joosters 11y ago

I agree, I think the website is failing because it doesn't touch on a key topic, one that you mention: How does Ethereum handle non-blockchain items? It's easy to see how a blockchain might handle money payments (using its own money system, that is), but far less clear how you can encode contracts for real-world items. Like the example website, for instance. Just because a blockchain entry states 'x' doesn't give it any legal weight, and certainly doesn't transfer real world possessions or ownership. As you mention, one of the key features is verifiers. Say I am selling a website. We need to ensure that the money transfer happens only once I have control of the site. (and presumably, that the site has been built and is complete). We need a trusted party to check that this is so, and the ethereum contract needs to have this verifier written in to it.

TheMagicHorsey 11y ago
To be honest, half the people working as developers on Ethereum itself fail to bring up this point. I don't know if they didn't think about it, or if they just assume everyone is smart enough to think of it themselves.

platz 11y ago

> outsourcing of third-party verifiers Since people using the network will be in control of constructing their own contracts, they will have an incentive to draft the contract in such a way as to make sure they'll have control over this "outside verifier"; it could even be same company which it chooses to be the "verifier". > trusted third-party institutions The defeats the previous attempt at decentralization, by re-centralizing the information the network needs to do it's job. This is what the network hinges on to gain information about the outside world (and remember, companies will have an incentive to build the contract in such a way to control these trusted third-party institutions as mentioned above). (I'm aware of schelling coin/contracts; I'm don't think it will work unless it's made a mandatory part of all contracts for all third-party verifiers. For applications that need data that is publicity verifiable, such as the weather or sports outcomes, it could work, but if the information is not is publicity verifiable, e.g. a transaction amongst private parties, I don't see it. And that's only if you force the use of Schelling coin/contracts, which is usually never the first thing Ethereum folks talk about when pitching this; I'm not sure if there are actually plans to implement that.)

TheMagicHorsey 11y ago
Your counterparty will not agree to an arbitrator that is not neutral, so there is market for third-party verifiers who have a reputation for trustworthiness.
- platz 11y ago
  In some cases yes, but if your counterparty is Facebook (or commercial svc) you don't have any negotiating power. Either you accept their terms or don't use their Service
  - TheMagicHorsey 11y ago
    That problem is orthogonal to the discussion and not absent in real contracts either.

mode80 11y ago

Smart contracts can define AND ENFORCE the transfer of smart property without intervention. The world of smart property today is limited to digital currency. But if you "skate where the puck is going" it's not hard to imagine other digital goods being smart-property-enabled and eventually physical things like cars, door-locks etc. A smart contract CAN incorporate a digital sign-off from third party verifiers. But it's not always necessary nor is it a defining feature. God's mercy notwithstanding.