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Many Smart Contract Use Cases Are Impossible (2016)

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Re: Many Smart Contract Use Cases Are Impossible (2016)

#11

Post by sriku »

sriku wrote: post #9

This article is dated Apr 2016. "Oracles" seem to be the way now to inject external data. Oraclize[1] can apparently be provably kept trustable. Anyone with deeper knowledge of this? [1] http://www.oraclize.it/

To summarize what oracles appear to do, they capitalize on information served via https and the verified status of the certificates used by sites, to have an independent party (the "notary") declare that the information was indeed produced by the party. So the signed statement is of the form -

   Entity E verified by certificate C said statement S on date D
You can also get, for example, the TLSNotary [1] to sign a secure page's contents for you without sending over the contents to the service.

To me, this seems to form enough of a trust network to enable injecting external world data into blockchains, with certificate authorities as the linchpins.

Appreciate if any security folks here can take this apart and explain/validate/trash in detail.

[1] https://tlsnotary.org/pagesigner.html

Re: Many Smart Contract Use Cases Are Impossible (2016)

#13

Post by raghavtoshniwal »

Even for things that smart contracts are capable of doing, the cost of doing them on a decentralised blockchain is often prohibitively expensive. For instace the Oraclize service, that does get external data into the contract, costs around $0.02, per API call. Which isn't much on its own, but they add up when compared to the number of API calls an average 'centralized' application makes.

I've often found that for quite a few applications, the cost of executing the contract on a blockchain outweigh the benefits of decentralisation.

Re: Many Smart Contract Use Cases Are Impossible (2016)

#14

Post by habitue »

lbradstreet wrote: post #10
Animats wrote: post #3

This article outlines the basic problem. If you want smart contracts that do anything off chain, there have to be connections to trusted services that provide information and take actions. If you have trusted services available, you may not need a blockchain. The article points out that you can't construct an ordinary loan on chain, because you have no way to enforce paying it back short of tying up the loaned funds…

I'm not a huge proponent on smart contracts, and I agree that it's a big problem enforcing payback, but that's no worse than regular loans. At least the ownership/transfership and payback of loans could be tracked, which is a far cry from the current method of debt ownership. It's extremely common for spreadsheets full of loans to be passed from owner to owner with no real ownership trail, accounting, etc, which I fi…

> but that's no worse than regular loans

If the blockchain isn't enforcing payback, then it's just a normal transfer of money from one party to another. There's no smart contract needed.

Re: Many Smart Contract Use Cases Are Impossible (2016)

#15

Post by sjy »

lbradstreet wrote: post #10
Animats wrote: post #3

This article outlines the basic problem. If you want smart contracts that do anything off chain, there have to be connections to trusted services that provide information and take actions. If you have trusted services available, you may not need a blockchain. The article points out that you can't construct an ordinary loan on chain, because you have no way to enforce paying it back short of tying up the loaned funds…

I'm not a huge proponent on smart contracts, and I agree that it's a big problem enforcing payback, but that's no worse than regular loans. At least the ownership/transfership and payback of loans could be tracked, which is a far cry from the current method of debt ownership. It's extremely common for spreadsheets full of loans to be passed from owner to owner with no real ownership trail, accounting, etc, which I fi…

But a loan documented on the blockchain is just as assignable as one documented on paper, and a lender has no more incentive to agree to a clause prohibiting off-chain assignment than a clause prohibiting assignment without the borrower's knowledge or consent.

Re: Many Smart Contract Use Cases Are Impossible (2016)

#16

Post by lbradstreet »

habitue wrote: post #14
lbradstreet wrote: post #10

Earlier quoted context omitted.

I'm not a huge proponent on smart contracts, and I agree that it's a big problem enforcing payback, but that's no worse than regular loans. At least the ownership/transfership and payback of loans could be tracked, which is a far cry from the current method of debt ownership. It's extremely common for spreadsheets full of loans to be passed from owner to owner with no real ownership trail, accounting, etc, which I fi…

> but that's no worse than regular loans If the blockchain isn't enforcing payback, then it's just a normal transfer of money from one party to another. There's no smart contract needed.

You still need to be able to transfer the loan from party to party, and allow parties to prove ownership of the loan. That's not a complex contract obviously, but it's important.

Re: Many Smart Contract Use Cases Are Impossible (2016)

#17

Post by lbradstreet »

sjy wrote: post #15
lbradstreet wrote: post #10

Earlier quoted context omitted.

I'm not a huge proponent on smart contracts, and I agree that it's a big problem enforcing payback, but that's no worse than regular loans. At least the ownership/transfership and payback of loans could be tracked, which is a far cry from the current method of debt ownership. It's extremely common for spreadsheets full of loans to be passed from owner to owner with no real ownership trail, accounting, etc, which I fi…

But a loan documented on the blockchain is just as assignable as one documented on paper, and a lender has no more incentive to agree to a clause prohibiting off-chain assignment than a clause prohibiting assignment without the borrower's knowledge or consent.

On the face of it, the lender has no more incentive, but having an unforgeable trail of ownership and payment may improve the value of the loan as it passes from hand to hand.

That all said, a blockchain is not really required. Better standards and a trusted third party would do fine.

Re: Many Smart Contract Use Cases Are Impossible (2016)

#18

Post by [deleted] »

sjy wrote: post #15
lbradstreet wrote: post #10

Earlier quoted context omitted.

I'm not a huge proponent on smart contracts, and I agree that it's a big problem enforcing payback, but that's no worse than regular loans. At least the ownership/transfership and payback of loans could be tracked, which is a far cry from the current method of debt ownership. It's extremely common for spreadsheets full of loans to be passed from owner to owner with no real ownership trail, accounting, etc, which I fi…

But a loan documented on the blockchain is just as assignable as one documented on paper, and a lender has no more incentive to agree to a clause prohibiting off-chain assignment than a clause prohibiting assignment without the borrower's knowledge or consent.

[deleted]

Re: Many Smart Contract Use Cases Are Impossible (2016)

#19

Post by ballenf »

lbradstreet wrote: post #10
Animats wrote: post #3

This article outlines the basic problem. If you want smart contracts that do anything off chain, there have to be connections to trusted services that provide information and take actions. If you have trusted services available, you may not need a blockchain. The article points out that you can't construct an ordinary loan on chain, because you have no way to enforce paying it back short of tying up the loaned funds…

I'm not a huge proponent on smart contracts, and I agree that it's a big problem enforcing payback, but that's no worse than regular loans. At least the ownership/transfership and payback of loans could be tracked, which is a far cry from the current method of debt ownership. It's extremely common for spreadsheets full of loans to be passed from owner to owner with no real ownership trail, accounting, etc, which I fi…

Provenance is one of the 3 cases he recognizes in the opening section. Isn't the problem you describe provenance? His loan discussion focuses moreso on them being zero risk. Risk in loans is a feature, otherwise there's no point to paying interest and thus no point to the transaction.

Re: Many Smart Contract Use Cases Are Impossible (2016)

#20

Post by DennisP »

Animats wrote: post #3

This article outlines the basic problem. If you want smart contracts that do anything off chain, there have to be connections to trusted services that provide information and take actions. If you have trusted services available, you may not need a blockchain. The article points out that you can't construct an ordinary loan on chain, because you have no way to enforce paying it back short of tying up the loaned funds…

"If you have trusted services available, you may not need a blockchain" assuming you can actually trust those services. In the U.S., among people in lower economic strata, this is not actually the case.

Matt Taibbi's recent book The Divide has a chapter on the abuses of our credit collections system. People are getting taken to court of debts they never actually owed in the first place, or already paid off. The lender has sold the loan to someone else, the records are lost, the borrower get "served" at an old address and never actually hears about the case, then loses to a default judgement for not showing up at court...and finds out about it when wages are garnished.

Here's a simple idea I came up with to fix that:

http://www.blunderingcode.com/ethereum-credit-cards/

It still uses the courts to enforce payment, but it uses the public blockchain to stop this nonsense about lost records and fraudulent attestations that they exist, while still protecting borrower privacy.

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