Create a lending system without requiring collateral from the borrower using this for risk mitigation on the lending side and you will conquer the world.
A truly decentralised P2P Insurance
11–20 of 50 posts
Re: A truly decentralised P2P Insurance
#12How can Ethereum-based insurance products ever be competitive? For an insurance smart contract to work, all the money must be tied up in the contract (otherwise, there would be no way to guarantee that you could be paid out). But in the real world, insurers don't just leave their money sitting uselessly in a pot, they put it to work, investing it. So the smart-contract based insurance is always going to be less effic…
That isn't necessarily true. You could buy "shares" in a contract. The contract then uses share capital to underwrite many insurance claims, and you're paid a monthly interest for owning the share capital.
I.e. the money then wouldn't be sitting idly, it could be used again and again to underwrite more contracts, up to the risk limit.
Re: A truly decentralised P2P Insurance
#13How can Ethereum-based insurance products ever be competitive? For an insurance smart contract to work, all the money must be tied up in the contract (otherwise, there would be no way to guarantee that you could be paid out). But in the real world, insurers don't just leave their money sitting uselessly in a pot, they put it to work, investing it. So the smart-contract based insurance is always going to be less effic…
That isn't necessarily true. You could buy "shares" in a contract. The contract then uses share capital to underwrite many insurance claims, and you're paid a monthly interest for owning the share capital. I.e. the money then wouldn't be sitting idly, it could be used again and again to underwrite more contracts, up to the risk limit.
It's still less efficient than 'real world' insurance, which also pays out, but does not need the money to be locked away.
Re: A truly decentralised P2P Insurance
#14How is e.g. the flight delay insurance decentralized? According to [1] it uses a traditional API to fetch the delay data, which very much sounds like a trusted 3rd party. [1]: http://medium.com/@skarpischek/youll-love-to-be-late-for-dev...
It's worse than that ...
You have to use a third party which fetches the data for you ... So at least 1 third party but likely 2 third parties.
The way it basically works is that someone has a proxy contract to which they can post information to send to other contracts. Your contract trusts this contract to receive information, and therefore implicitly trusts the source to accurately query the information from elsewhere and send it to you.
However, this can be commoditised (e.g oraclize.it), and you could use a quorum of many different proxy contracts.
The trouble is that ethereum operations and transactions (especially involving storage) are expensive, and that there are much cheaper ways of achieving distribution and/or trust for many use cases.
Re: A truly decentralised P2P Insurance
#15How is e.g. the flight delay insurance decentralized? According to [1] it uses a traditional API to fetch the delay data, which very much sounds like a trusted 3rd party. [1]: http://medium.com/@skarpischek/youll-love-to-be-late-for-dev...
I looked into this before. I just don't get it. There is definitely a trusted 3rd party in play which to me breaks the consensus model of having something decentralised. Maybe you can have many trusted 3rd parties and they all agree I don't know. But then insurance is a lot trickier than just paying out automatically when your flight is delayed. How do you even know the person took the flight. Maybe that doesn't matter. But lots of other questions probably do e.g. If we have a major event which delays worldwide flights would that bankrupt the insurance scheme. What capital must the decentralised insurance hold to be liquid. Who can recapitalise it if there's a black swan event. I am not against these decentralised models I just know there are a multitude of very difficult questions which insurance companies have already answered. P2P, decentralised and smart contracts can't be the answer alone?
Re: A truly decentralised P2P Insurance
#16Earlier quoted context omitted.
That isn't necessarily true. You could buy "shares" in a contract. The contract then uses share capital to underwrite many insurance claims, and you're paid a monthly interest for owning the share capital. I.e. the money then wouldn't be sitting idly, it could be used again and again to underwrite more contracts, up to the risk limit.
It's still less efficient than 'real world' insurance, which also pays out, but does not need the money to be locked away.
I don't see why Ethereum-based insurance contracts necessarily lock money.
For example, the contract could give another address the authority to take risks with some percentage of the deposits, or pretty much any other arbitrarily complicated setup.
Re: A truly decentralised P2P Insurance
#17How does a system like this detect and cope with insurance fraud?
Re: A truly decentralised P2P Insurance
#18Earlier quoted context omitted.
It's still less efficient than 'real world' insurance, which also pays out, but does not need the money to be locked away.
I don't see why Ethereum-based insurance contracts necessarily lock money. For example, the contract could give another address the authority to take risks with some percentage of the deposits, or pretty much any other arbitrarily complicated setup.
If the money isn't available (i.e. locked up in some way by the contact), then the contract cannot guarantee to pay out, making its promises worthless.
If you have to rely on a human being to decide to pay out, then the smart contract part of the deal is pointless.
Re: A truly decentralised P2P Insurance
#19How can Ethereum-based insurance products ever be competitive? For an insurance smart contract to work, all the money must be tied up in the contract (otherwise, there would be no way to guarantee that you could be paid out). But in the real world, insurers don't just leave their money sitting uselessly in a pot, they put it to work, investing it. So the smart-contract based insurance is always going to be less effic…
That isn't necessarily true. You could buy "shares" in a contract. The contract then uses share capital to underwrite many insurance claims, and you're paid a monthly interest for owning the share capital. I.e. the money then wouldn't be sitting idly, it could be used again and again to underwrite more contracts, up to the risk limit.
What happens if there's a catastrophic event that results in everyone claiming at once?
Here in the UK there are quantitative requirements that state insurance companies have to have enough capital meet all their obligations over the next 12 months with a probability of 99.5%. How would you even come close to that if you're sharing capital between contracts?
Re: A truly decentralised P2P Insurance
#20Create a lending system without requiring collateral from the borrower using this for risk mitigation on the lending side and you will conquer the world.
can you elaborate? wouldn't "this" be collateral since funds are tied up in a smart contract?