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The possibility of remaking the financial system with the blockchain

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Re: The possibility of remaking the financial system with the blockchain

#71

Post by throwanem »

chrispeel wrote: post #62
libertymcateer wrote: post #12

I do not buy this for a minute and to be fair the headline misrepresents the much more sober tone of the actual article, to the authors' credit. I am not a fan of cryptocurrency in general (that is another argument for another day) so I am just going to focus on one claim regarding law firms: the rise of the smart contract. I do not believe it is a realistic expectation, and here is why: The vast majority of contract…

I think it's best to think "distributed computer program" when you hear "smart contract" in relation to blockchain-based code. The initial decentralized applications that will be built on blockchains will not be trying to emulate legal contracts. They will rather be focusing on things like a decentralized Dropbox, fully decentralized messaging, decentralized social networking, etc... You can make a separate argument…

Except when it doesn't, because it was loaded wrong or configured wrong or the product gets hung up in the coil or the microcontroller has an incorrect model of the hardware's current state or the power is out or what-have-you.

Perhaps this makes the metaphor even more apt than intended, however unintentionally.

Re: The possibility of remaking the financial system with the blockchain

#72

Post by conjectures »

lefstathiou wrote: post #69
libertymcateer wrote: post #12

I do not buy this for a minute and to be fair the headline misrepresents the much more sober tone of the actual article, to the authors' credit. I am not a fan of cryptocurrency in general (that is another argument for another day) so I am just going to focus on one claim regarding law firms: the rise of the smart contract. I do not believe it is a realistic expectation, and here is why: The vast majority of contract…

I see the objective of smart contracts in finance as an augmentation of the human auditing that is already taking place. You don't need 100% of the contract to be smart in my opinion but I'm not an engineer so what do I know. For example let's say you're at JP Morgan and are operating a $10 billion conduit ("warehouse") facility. You have a series of eligibility criteria for every originator contributing loans into t…

> Right now, a banker must process all of the monthly remits for each individual facility and compare them against what was agreed to in the docs.

OK; but what makes blockchain special for automating this as opposed to more generic software?

I'm a bit confused about the blockchain excitement. I can see it has potential for oiling transactions between unfamiliar parties. However, for big banks is it ever the case that the parties don't know each other? They'll have to agree on a common set of protocols to implement a block chain based solution, so what does it buy them over and above a more conventional API?

Re: The possibility of remaking the financial system with the blockchain

#73

Post by nrdwavexe »

I absolutely HATE the people in the financial industry. They are rotten scum. I want teams of civil servants spying on them until kingdom come. The notion that I'm going to let the rotten scum who treat civilization like a casino game operate the financial system is pure stupid.

It is 100% pure stupid. Harvard is full of these types. The absolute WORST of humanity. The absolute WORST. People who have absolutely no respect for anything.

Let me tell you this clearly: we are talking about letting LIFE UNWORTHY OF LIFE run our economy.

NO FUCKING WAY.

no fucking way.

Re: The possibility of remaking the financial system with the blockchain

#74

Post by antonvs »

conjectures wrote: post #72
lefstathiou wrote: post #69

Earlier quoted context omitted.

I see the objective of smart contracts in finance as an augmentation of the human auditing that is already taking place. You don't need 100% of the contract to be smart in my opinion but I'm not an engineer so what do I know. For example let's say you're at JP Morgan and are operating a $10 billion conduit ("warehouse") facility. You have a series of eligibility criteria for every originator contributing loans into t…

> Right now, a banker must process all of the monthly remits for each individual facility and compare them against what was agreed to in the docs. OK; but what makes blockchain special for automating this as opposed to more generic software? I'm a bit confused about the blockchain excitement. I can see it has potential for oiling transactions between unfamiliar parties. However, for big banks is it ever the case that…

It's not only about whether the parties know each other, it's about how they can verify that they're all behaving according to the rules of their contract.

In multi-party scenarios, you often find intermediaries whose primary function is to act as a centralized, trusted exchange for the other parties, performing the job of the banker in the sentence you quoted. One reason this is needed is that without them, there's a lot of room for collusion between parties that deal with each other directly.

These intermediaries do currently use "more generic software", but you still need a company to run and operate that software. Blockchains can replace such companies, or at least replace one of their main reasons for existing.

In many cases, it would be possible to come up with an application-specific approach to securely and verifiably operating multi-party transactions without intermediaries, but that's not done much because it's generally just easier to use the intermediary model. Also, implementing secure decentralized transaction systems is outside of the the core competencies of the companies that need such capabilities.

Blockchains provide a generic, non-application-specific approach to implementing a secure, shared, distributed ledger, so that applications can focus on generating the transactions and not worry about the issues involved with securing a shared ledger.

Re: The possibility of remaking the financial system with the blockchain

#75

Post by antonvs »

andrewla wrote: post #30
libertymcateer wrote: post #12

I do not buy this for a minute and to be fair the headline misrepresents the much more sober tone of the actual article, to the authors' credit. I am not a fan of cryptocurrency in general (that is another argument for another day) so I am just going to focus on one claim regarding law firms: the rise of the smart contract. I do not believe it is a realistic expectation, and here is why: The vast majority of contract…

I am a big fan of cryptocurrency, but completely agree with you about smart contracts. From a legal perspective, as you point out, they are ridiculous, because they can't encode legally "interesting" contracts. Many people seem to think that smart contracts can be used to replace more economic-oriented contacts, like "paying dividends to shareholders". Unfortunately here they are also useless -- the only contracts yo…

> Even the most basic of financial contracts, like "I'll give you $500 now and you give me $50 a month for the next 12 months", can't be effectively encoded

The more interesting and viable use cases are actually more complex contracts. As a simple example consider a syndicated loan, where loan payments are distributed amongst a group. A smart contract could automate that distribution.

There are much more complex examples with multi-directional cashflows between multiple parties, where smart contracts could absolutely take care of the day to day execution of the contract.

There seems to be some confusion over the term "contract" in this context, though. Many people tend to jump to thinking it means "anything that could possibly be written in a legal contract," but the reality is that the subset of things which could be easily automated by smart contracts is enormous, worth trillions of dollars annually, even though there's a much bigger chunk that's not currently automatable.

Re: The possibility of remaking the financial system with the blockchain

#76

Post by sanswork »

another-dave wrote: post #68
sanswork wrote: post #32

Earlier quoted context omitted.

Contracts like that are almost all available as cheap templates. Smart contracts won't even solve these though. How does a smart contract solve the problem of mold in an apartment where the tenant claims it was existing and the landlord claims it was due to tenant misuse?

I'm new to the whole area, so maybe it's my lack of knowledge of what "smart contracts" are meant to be, but is that something they are claiming to solve? I mean, how would a regular contract solve it — it wouldn't, a judge would solve it after you'd taken your landlord to court. Are smart contracts proponents saying that they'll do away with the whole legal system, or just the solicitors' fees/time for drawing up co…

What you are imagining are templates. They are already widespread(see LegalZoom) and almost everyone using contracts uses them for certain things.

Smart contracts are programmatically verifiable. That is why they are flawed for almost everything. They also don't allow discretion, intent, or anything that almost everyone wants to be considered in a contract.

They also wouldn't do away with lawyers fees they would just replace them with lawyers who are also programmers fees since you don't want a novice to code a smart contract since they are locked in so if its not in the contact it doesn't matter.

Smart contract proponents(well a lot of them) believe they will literally replace the whole legal system.

Re: The possibility of remaking the financial system with the blockchain

#77

Post by aburan28 »

elastic_church wrote: post #50
brilliantcode wrote: post #11

Earlier quoted context omitted.

Uber is fucked and AirBNB is facing lot of resistance for making cities unaffordable by incentivizing landlords to rent to short term travellers vs people who are contributing to the local economy who aren't able to move closer to work due to lack of supply. Not exactly what the internet ordered.

and it is going to take a long time for the legislative bodies to catch up to modern realities. thank the internet.

What makes you think that legislative bodies are capable of catching up?
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