I'm not sure why some technologists have such a fascination with legalism.
I'm not against the idea of digital government and having laws be distributed under a free documentation license with the ability for citizens to discuss and amend laws. A standard version control and issue tracker model sounds much more appropriate, however. Perhaps even just email and diffs, so as to have a barrier to entry.
The main feature of this system is removing the need for enforcement. Think about how much goes into maintaining police, bounty hunters, debt collection services, reposession services, prisons. In many people's opinions, if enforcing a contract is possible through software rather than physical force, software is always preferable. It brings its own issues of course and isn't instantly perfect, but the possibility of a world with much less need for violence to enforce the law is worth pursuing.
The biggest advantage of this is that it can be completely automated. Corporations can be programmed to run themselves and negotiate enforcable contracts with each other without any human intervention. You could have a personal digital assistant which interacts with other digital assistants to manage your finances and investments, and everything can be enforced by software. As long as enough people are running free software, everyone can share mutually beneficial enhancements to the algorithms which govern their behavior.
You might not want this kind of thing today instead of a trained financial advisor, but 30 years from now, it's likely that software will be better able to make financial decisions than any unaugmented human. Even more important would be movement of commodities around the world between people who need them. Instead of relying on profit-motivated markets to distribute goods, we could have optimal algorithms for moving resources where they're most needed, and enforcement of these agreements will not depend on the strength of a nation's military or economic power but rather smart contracts which are perfectly enforcable whether they belong to a first or third-world nation.
None of this comes free, and there are real challenges to overcome. People will try to exploit them for personal profit. Software will have bugs and make bad decisions. Those are some of the growing pains we'll need to work through to get to a more fair, less violent world.
Ethereum, by automating contract enforcement is going to end up being a tool for the powerful against the weak. A tool which brings the cost of lowering contract enforcement will lead to powerful organizations using Contracts more often against the weak.
This is of course possible in standard law too, hiding clauses in impenetrable legalese. However, in standard law (as far as I know), such tricks don't tend to stand up in court as the behaviour is considered "unreasonable".
Ethereum, being self-enforcing, gives no recourse to victims of tricksters. It's all set in stone.
For example, how would one write insurance contracts? Is it possible to write out every single eventuality? No, so the solution is generic language.
There are of course badly worded laws, but it does not mean that everything has to be concretely written out.
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.
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.
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.)
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.
Some extreme examples, you may also combine them:
--
Nation A: Copyright is forever. (Because 1000 years is not enough for Mickey Mouse.)
Nation B: No copyright at all.
Nation C: Only Copyleft software.
--
Nation M: No taxes
Nation N: Basic Income for everyone
--
Nation X: Death squads (but only for "bad" people)
Nation Y: No incarcerations, only voluntary "rehab" camps
Nation Z: No incarcerations, only "voluntary" rehab camps
--
The current solution is that each nation has a territory and tanks. With some simplifications, inside each nation there are clear rules and when there is a conflict between nations the one that has more tanks is right. Perhaps this is not the best method, but a virtual nation world will need a realistic method to solve conflicts.
My father is an intellectual property attorney. Among colorful clients was a very active entrepeneur/inventor.
One year he insisted the future was a digital nation. You see how people drool or get excited even with 1/4-of-the-way-there e-Estonia system? He was talking about this years ago, when I was finishing high school and starting college.
My father even drafted letters to the UN on his behalf pitching the notion of offciail recognition, and he was laughed off completely.
Mark my words, if govts still antagonize their people and an alternative of this form exists, a vocal minority will popularize the notion.
As an American, I cannot wait.
A contract would only be interesting in the example if it was structured as an option: The buyer has promised to pay for the item by 1st April, and in return, you have promised that you won't sell the item to someone else before then.
How would this be handled? How would be example contract react if you set 'WEBSITE_ADMIN' to someone else prior to the purchase? Does the example contract mean that WEBSITE_ADMIN cannot be altered by anyone else? What are the access controls to this storage slot WEBSITE_ADMIN? Does the seller lose write-access to it after the deal completes? Does the buyer gain read access? If not, what's to stop anyone changing this value and breaking the deal?
There are other examples under the Samples menu at etherscripter.com. Also see ethereum.org.
Exactly. That's the problem. There has to be a much larger infrastructure which handles ownership of real-world objects for this to be useful. There are already smart-property domain registrars. MERS [1] and DTC [2] already do that, for mortgages and stocks respectively. But they don't need Etherium.
[1] https://www.mersinc.org/ [2] http://www.dtcc.com/about/businesses-and-subsidiaries/dtc.as...
I think it's more appropriate to say that ethereum is naive
The benefit of etherscript in theory at least is that the wording of the contract is unambiguous, with the caveat that there may still be some areas where ambiguity is unavoidable. Which means that in the case of a website a digital bailiff could enforce the transfer. This is a clear benefit in some sense at least. How many times have you read about a court case and been bewildered about how someone could possibly be arguing over something that should be clear cut.
For contracts like a website domain transfer this sounds at least initially doable. What etherscript will have trouble handling is establishing what actually happened. It will undoubtedly be very good at specifying what the outcome of a sequence of events should be but as soon as it hits the real world the problem of establishing what that sequence of events was will still require some form of investigation and enforcement mechanism composed of people and thus there will still be an unavoidable amount of ambiguity there.
What happens if you want to change the contract? How do you revoke the previous one? I suppose this would have to be done in a manner that involves both parties, some sort of two part signing process.
What if there's a bug in the contract? The contract then becomes ambiguous and you're left with the same problem.
Now, consider the conditional operator in the given example.
"If a transaction occurs.." is the condition. ONLY the conditional of transaction types can be verified by the program because it is inherent in the network. For every other conditional, for example, "if team A wins.." the program has to consult a third-party. These are known as 'oracles' in ethereum lingo.
Now since we are trusting a third-party, why can't we simply use bitcoin and even let the decision script be hosted on the third party?
For the program to be able to take decision on a real-life event, only the occurring of a transaction is the type of event it does not need a third-party for. And trusting is all the problem there is.
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Bitcoin's script not being turing-complete is a feature because it specializes the use-case. Theoretically, if ethereum allows a turing-complete language to be executed, a code could be written to hack the system itself. Ethereum handles this by executing in a virtual environment.
Thus ethereum is essentially a abstraction on bitcoin and introduction of a new currency token (ether) is unnecessary.
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The vision of ethereum is very desirable. Although Ethereum does not make it possible I want such a system to exist. My limited understanding is that for a system to exist, we need an algorithm to be able exchange private keys between two parties without trusting each other.
We need a homomorphic secret sharing but without a dealer. In a Blakley scheme, both parties chose their own planes; we need the intersection of planes, the line, to be our private key and for everyone to be able to know the public key for the same without the private key being known to anyone.
Does anyone know of such an algorithm, because solving this problem will also truly decentralise cryptocurrencies like email.
One reason which springs to mind immediately: the entity running the script always has complete control, whilst we may choose to grant limited control to third parties. For example, we might define a set of separate, potentially independent, verification conditions, and perform some action when 2/3 of those conditions are met. Manipulating such a contract would require collusion by many of those third-parties; and it would also make contracts more robust against technical problems.
Somebody (or some other system) has to be in charge of the input to the Ethereum system to tell it that Person A has died. This seems like a huge single point of failure that doesn't exist with current contracts, if it gets hacked then the money gets transferred irreversibly and that's that.
Trying to build a smart contract with any kind of "real world" dependency like this seems equivalent to using a crypto system with an extra key that the government controls, there's a single point of failure that could compromise the whole system.
I got the impression that the answer you'd get from the Ethereum team is: at the worst case, this is just as bad/good as the current system - i.e. real world effects have to be mediated by an executing authority, same as a real world contract. They would add (and I agree) that smart contracts still have advantages, even in this case.
Don't get me wrong, I'm pretty excited about smart contracts. It just seems like there are a lot of things that we don't think much about currently because our current system is generally pretty forgiving in its fuzziness, but that could have big consequences (and introduce new incentives to act badly) in the world of script-controlled, irreversible contracts.
Oracles will be fine for some use cases. Schelling consensus works for others. There are many ways to get real world information into Ethereum, and many ways to reflect how well real world actors adhere to their commitments.
The reason contracts are messy is because they're a system that has vulnerabilities. Lawyers are just hackers with different tools and training.
So moving to another system, equally complex or dynamic, will not solve anything in the long run.
A system that must support contracts between humans would be dynamic enough to allow for vulnerabilities that will eventually be discovered.
In fact I find it laughable that these guys are trying to replace a legal system with a computer system. When computer systems get hacked all the time.
So pretty much the same as the current legal and financial system.
I think the whole digital currency thing muddies the waters. People, myself included, hear the word currency and think of something we earn and spend, but then you hear about all the other uses of Ethereum and wonder what that has to do with money.
What I've just realised by reading this article is that contracts are what Ethereum is all about, the currency aspect is just one of the many use cases. Laws are another example of a contract. The base class is contracts, everything else is a subclass on top of that.
These explainers I keep reading are not helping.
Can anyone tell me whether this is some giant boondoggle circlejerk, or something that is really going to be used widely and perhaps lead to things changing?
Will a successor of this idea change things? Yes.
Transactions go live on Monday, if I remember correctly.
Many programming courses use bank accounts as examples of race conditions in concurrent systems, eg.
User withdraws £10 from ATM User receives £1000 salary Balance
--------------------------- -------------------------- -------
ATM looks up balance (£100) Bank looks up balance (£100) £100
ATM subtracts £10 from value (£90) Bank adds £1000 to value (£1100) £100
ATM dispenses £10 note Bank sets balance to value (£1100) £1100
ATM sets balance to value (£90) £90
An account is exactly that: an account (log) of what has happened:
Debits Credits
------ -------
ATM withdraws £10 Salary adds £1000
Blockchains are a way to keep such accounts, in a consistent way without giving any one entity control over updates.
For example, the article's Web site ownership system might keep an account with entries like this:
User A transfers example.com to User B
User B sets example.com IP to 123.123.123.123
User A transfers example.com to User B
User B sets example.com IP to 123.123.123.123
User B transfers example.com to User C
To actually use such a value, we can imagine a DNS-like system which resolves names by looking up the latest IP address from the blockchain; in the same way that an ATM displays our current balance by looking at the credits/debits in the account. All of this can also be cached, of course; provided we either trust the cache to provide the right value, or that we don't care enough about the value to verify it ourselves (eg. transactions between third parties which do not affect us).
If that's implemented it can be a great way to codify all sorts of legal docs and laws since a lot of legal stuff requires human interpretation at the time of execution.
> even if you "win", you have the problem of collecting.
A better choice for an initial compile target for EtherScript would simply be English.
I think those same obfuscators will be happy to emigrate to any new linguistic country in which their skills can be put to use, but I think the Etherium folks are fantasizing that they can make contracts non-ambiguous. Good luck trying.
I think the problem comes in that the contracts must eventually have impact in human minds. However you slice it, there's still an interpretation step. Efforts to make those interpretations unambiguous will be opposed.
EDIT: not-so-happy sibling comment: https://news.ycombinator.com/item?id=9987351
But, I'm not sure ambiguity is a bad thing. Or, at least, there is a dose-specific effect. A lot of ambiguity is bad, but so is none. The flexible Goldilocks Zone is the least fragile -- to society that is, not to law.
Nobody actually wants smart contracts, for excellent and obvious reasons. Nerds think they're a good idea because they'll sort out all the annoying grey areas in social human interaction.
Dr. Strangelove is literally about an unstoppable smart contract going wrong.
No business actually wants smart contracts - they always, always want the option of lawyering out of a bad deal. Or stopping it if the government gets pissed off and says it will penalise you to a crisp if you proceed with that smart-arse contract you just put on the blockchain.
No consumer wants smart contracts, for the same reason "no chargebacks" is a loser. You always want a human to be able to fix the problem.
The only use I can think of for smart contracts is for businesses to screw over customers who have no other option, c.f. mandatory arbitration clauses. Note how the standard example of a smart contract is a car that stops working if your payment fails. Or the Internet fails. Unstoppably. Immune to human intercession, circumstances, etc. (Such locked cars already exist, only bought by people who have no other choice.)
With most laws, there is the possibility of breaking them and maybe you have to face the consequences.
With this stuff, you won't be able to use the stuff for what it wasn't designed for. Stronger guarantees. It's like a car that slows down in a construction zone, and is unable to go any faster, instead of cops giving tickets. Like the 90 year old engineer guy behind the Venus project says in his interviews.
That can be useful. Not for everything, but for a whole lot. The current DRM stuff works like this.
It interrogates the intersections between law and contracts as it pertains to the shift from Bitcoin to Ethereum.
Admittedly, it is very stimulating to entertain thoughts in the direction the author takes his description. But in the end it is not a fruitful approach to understand ethereum and other smart contract systems.
Law has an open texture. It is deliberately broad and ambiguous to allow specific real life events to be subsumed under the conditions of a given regulation. Legal provisions do not have to be formulated in a natural language. They can be expressed in pictures or even in (pseudo) programming code. What is important is who (or what) parses and interprets the code. Wet code, i.e. legal provisions, are interpreted by humans. Nothing else can (currently) understand the "actual meaning" of a legal provision. Dry code is the opposite in that it is not interpreted by humans but by machines. Smart contracts - the official (but historically inaccurate) name of those programms that are hosted and executed on the ethereum distributed virtual machine - are written in dry code.
Ethereum is a 'rich and trusted' execution environment for software. 'Rich' because the ethereum virtual machine has access to a whole bunch of data that carries deep meaning to specific individuals and human society in general (or rather might some day). Trusted because the code execution is performed in a way that is extremely reliable. Whatever the competing interests behind the outcome of a specific computation may be, influence over the network may only be gained through computational resources (and at a later point probably stake/ether) which - in the real world - means economic resources. The achilles heel of a network such as ethereum (and bitcoin) is that "the crypto-economy" needs to stay causally disconnected from the other economy, that uses blockchains as a tool to run trusted fiduciary code (currency, insurance, identity, reputation).
"Law vs Code" is a very interesting talk to be had but there is no room for a "doomsday argument". Both are separate but intertwined domains. A fruitful approach to understanding the relationship between code and law may be Luhmann's system theory.
[further reading] https://en.wikipedia.org/wiki/Niklas_Luhmann https://medium.com/@heckerhut/smart-contracts-platforms-and-...
Laws as a general concept are diametric to human nature, and they should be avoided whenever possible, especially in regards to social realms like bartering and contracting and the like.