Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Many Smart Contract Use Cases Are Impossible (2016)

coindesk.com

Post reply on HN
Print view View original

31–40 of 40 posts

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

#31

Post by yebyen »

vasilipupkin wrote: post #27
runeks wrote: post #25

Earlier quoted context omitted.

> it's not needed, but transfers using smart contracts could be more convenient than in other ways. Can you provide an example of this?

ok, so say I need to distribute payments. If I transfer money to a wallet and then a smart contract automatically takes care of sending the right amounts to the right wallets, it could be more convenient than current payment distribution solutions, no?

Say this smart contract is aware of interest rates, and due dates, and minimum payments, ... and it will prioritize payments according to interest rate?

I wrote a program to help me do this with my student loans, that does sound useful.

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

#32

Post by mlloyd »

DennisP wrote: post #20
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 lende…

A lot of the issue with this is that people don't often know their rights. In most of these cases the person being sued can turn the tables and extract penalties from the debt collectors because they violate all sorts of laws that provide statutory penalty. Unfortunately no one reads the law until it affects them and often not even then.

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

#33

Post by max_ »

The writer is lagging way behind bleeding edge blockchain research.

>1. Contacting external services ..Often, the first use case proposed is a smart contract that changes its behavior in response to some external event. For example, an agricultural insurance policy which pays out conditionally based on the quantity of rainfall in a given month.

The imagined process goes something like this: The smart contract waits until the predetermined time, retrieves the weather report from an external service and behaves appropriately based on the data received.

This all sounds simple enough, but it’s also impossible. Why? Because a blockchain is a consensus-based system, meaning that it only works if every node reaches an identical state after processing every transaction and block.

(see https://github.com/ethereum/wiki/wiki/Sharding-FAQ)

>3. Hiding confidential data ..Because even if one smart contract can’t read another’s data, that data is still stored on every single node in the chain. For each blockchain participant, it’s in the memory or disk of a system which that participant completely controls. And there’s nothing to stop them reading the information from their own system, if and when they choose to do so.

(see https://blog.ethereum.org/2017/01/19/update-integrating-zcas...)

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

#34

Post by max_ »

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."

You mean the way people should trust their governments.

"Paul Kagame re-elected president with 99% of vote in Rwanda election" https://www.theguardian.com/world/2017/aug/05/paul-kagame-se...

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

#35

Post by vasilipupkin »

clappski wrote: post #28
vasilipupkin wrote: post #27

Earlier quoted context omitted.

ok, so say I need to distribute payments. If I transfer money to a wallet and then a smart contract automatically takes care of sending the right amounts to the right wallets, it could be more convenient than current payment distribution solutions, no?

I think that's a poor example for the following reasons; * if it's a one off payment to all recipients, why not just send it manually? * what happens when you need to add or remove recipients? Compared to just phoning up the bank to amend a standing order. * what happens if you accidentally pay someone the wrong amount? * what happens if you lose your wallet and you can't continue paying? I would rather have a bank h…

Sure, you can use the bank. Internally, the bank could do this on the chain though and give you all those protections, so you don't even need to do know the details

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

#36

Post by clappski »

vasilipupkin wrote: post #35
clappski wrote: post #28

Earlier quoted context omitted.

I think that's a poor example for the following reasons; * if it's a one off payment to all recipients, why not just send it manually? * what happens when you need to add or remove recipients? Compared to just phoning up the bank to amend a standing order. * what happens if you accidentally pay someone the wrong amount? * what happens if you lose your wallet and you can't continue paying? I would rather have a bank h…

Sure, you can use the bank. Internally, the bank could do this on the chain though and give you all those protections, so you don't even need to do know the details

But why would the bank use the chain, the financial web of trust is already there and doesn't need to use a chain to facilitate internal or external transfers of monies. It would be a huge time sink with no real benefit to the consumer or the shareholders.

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

#37

Post by vasilipupkin »

clappski wrote: post #36
vasilipupkin wrote: post #35

Earlier quoted context omitted.

Sure, you can use the bank. Internally, the bank could do this on the chain though and give you all those protections, so you don't even need to do know the details

But why would the bank use the chain, the financial web of trust is already there and doesn't need to use a chain to facilitate internal or external transfers of monies. It would be a huge time sink with no real benefit to the consumer or the shareholders.

And yet banks are experimenting with blockchains, no?

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

#38

Post by habitue »

lbradstreet wrote: post #16
habitue wrote: post #14

Earlier quoted context omitted.

> 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.

OK, that makes sense. Just using it as a ledger for a blob of text about the loan

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

#39

Post by runeks »

mannykannot wrote: post #30
runeks wrote: post #26

Earlier quoted context omitted.

> I have not figured out how this would solve the problem of on-blockchain debt There really is no problem, unless you have unrealistic expectations as to what a blockchain can do. There’s essentially no difference between lending a company money, with which it purchases machinery, and lending this machinery directly to the company. Believing a blockchain can ensure that when I lend you my car (a form of machinery) I…

I don't know if you have a valid argument in general, but your specific example seems to be a bit off the mark. If I buy a conventional bond issued by a company and hold it until term, and the company does not default, I am owed coupon payments and a return of the principal. I am taking interest-rate, inflation and default risks, but not depreciation. I expect an on-blockchain contract would have to allow for default…

You’re right. Only if we ignore depreciation of capital goods are the two examples equivalent.

But I was trying to convey the fact that money is just a replacement for physical goods, such that if the lender doesn’t purchase something with the lent funds, the loan would be meaningless. And as soon as the lender spends the lent funds, there’s a risk that it won’t be able to recover this cost. In other words, riskless credit makes no sense, since the presence of risk is why there’s a potential return for the lender in the first place.

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

#40

Post by lambdadmitry »

vasilipupkin wrote: post #37
clappski wrote: post #36

Earlier quoted context omitted.

But why would the bank use the chain, the financial web of trust is already there and doesn't need to use a chain to facilitate internal or external transfers of monies. It would be a huge time sink with no real benefit to the consumer or the shareholders.

And yet banks are experimenting with blockchains, no?

They do, it's just that the way they do that has nothing to do with ETH or BTC http://www.r3cev.com/blog/2016/4/4/introducing-r3-corda-a-di...
Post reply on HN