I realize that was probably satire or sarcasm or both, but since I've seen people actually seriously take that position I'm going to go ahead and respond as if it was serious.

How do these smart contract deal with the real world? I can see how they can work for things that entirely involve activities that take place on the block chain (e.g., a smart contract that automatically pays a crowd funded project if and only if it meets a threshold for pledges by a deadline, and refunds the donors otherwise).

But suppose our contract is something like I will pay you $X in Ethereum when you deliver to me 125 bales of Surat cotton, guaranteed to be middling fair merchant's Dhollorah [1], delivered at the Liverpool docks from Bombay on the next sailing of the Peerless.

How do we put all of that into a smart contract? Can a smart contract trigger payment only when the cotton arrives? Can it check to make sure it arrived on the ship specified in the contract?

And what happens if it turns out that there are two ships named Peerless, unrelated to each other, one of which is sailing from Bombay to Liverpool in October, and one in December? I only know about the December one, and it is on that one that I'm expecting the cotton. You only know about the October one, and so it is on that one you send the cotton. The cotton arrives before I'm ready to deal with.

Unless dealing with all that can be included in the smart contract, and executed by the smart contract without human intervention, lawyers will still be needed...and they will be needed almost as much as they are now.

PS: my cotton hypothetical is based on a real case: Raffles v Wichelhaus, EWHC Exch J19, (1864) 2 Hurl & C 906. There really were two unrelated ships both having and neither deserving the name Peerless, and both working the India / England trade routes, both scheduled for Bombay to Liverpool, one in October and one in December.

[1] Dhollorah is a very dirty cotton of a longish staple, which when cleared is very white, as if bleached. For for more than you probably ever wanted to know on this and other types of cotton, see the book "Cotton Spinning and Weaving: A Practical and Theoretical Treatise" by Herbert Edward Walmsley, page 71. It's from the late 19th century and is public domain now I believe, and you can find it on Google Books.

>How do these smart contract deal with the real world? I can see how they can work for things that entirely involve activities that take place on the block chain (e.g., a smart contract that automatically pays a crowd funded project if and only if it meets a threshold for pledges by a deadline, and refunds the donors otherwise).

They can't deal with the real world by themselves, but where they have value in agreements involving real world events is that they allow the real world assessments to be debundled from those aspects of the agreement that can be formalized.

So in the cotton shipment example, the smart contract would have three parties assigned as Oracles that determine whether the correct ship arrives at the correct port on its correct trip. The smart contract would dictate that if 2 out of 3 of the Oracles agree that the condition has been met, then the smart contract will transfer the funds. There could also be a failsafe clause in the smart contract, that is controlled by a set of five oracles, who have the power to override the smart contract if the majority deem that an expected event occurred.

So yes you need human intervention, but only for those parts that cannot be automated. This explicit definition of what the human roles are may encourage better contracts, by forcing the counterparties to spend more time reasoning about which aspects of the smart contract are subject to ambiguity.

>So yes you need human intervention, but only for those parts that cannot be automated.

This is tautological and therefore means nothing.

The subtext here is that some parts can be automated, and a smart contract lets you automate those parts.

Didn't you just describe an example where the ambiguity of human language is a problem and a smart contract may actually have a better chance of performing as expected?

Why do you asssume smart contracts can't be ambiguous? A lot of people read the DAO contract, and yet it took a hacker a while to find a small error -- if I recall correctly it was a capitalization error -- that triggered an unexpected exit path.

At some point you have to ask yourself whether we really prefer that code be law, with the quality of code that's so common these days, or whether we actually like being able to specify something to a lawyer -- rather than a computer -- simply because the lawyer will return the contract and ask for clarification if something is ambiguous/unclear.

The human-to-lawyer interface is the best contract interface that exists, the only reason we use computers is because they're so cheap and fast. When we dream of AI we dream of having a computerized lawyer, who can ask clarifying questions and resolve ambiguity before it becomes a problem.

I think the main problem is that it's very hard to preemptively defend against all abuses of a law or contract. It's the whole "letter vs. spirit of the law" divide: https://en.wikipedia.org/wiki/Letter_and_spirit_of_the_law

If tomorrow I sign a contract with my mobile phone carrier and it turns out that through some loophole in the contract they get entitled to the kidneys of my first born daughter then clearly I have a case to go to a tribunal and get it overturned as it's obviously not a reasonable clause.

I think people arguing that "code is law" (which is simply a modern form of "letter-ism") don't really know what they wish for. I guess is many are going to change their minds when those attacks get more and more common and they lose a ton of money because of an unforeseen and obviously unintended flaw in the contract code.

I feel like anything humans can use to communicate to each other could be considered a human language.

More relevantly, creating a synthetic language that's a subset of natural languages will mean that multiple natural concepts will map onto the same synthetic one.

> How do we put all of that into a smart contract? Can a smart contract trigger payment only when the cotton arrives? Can it check to make sure it arrived on the ship specified in the contract?

I've not worked with smart contracts personally, so take it with a grain of salt, but...

This problem seems to be mostly solved by the information available in shipping manifests; the locations of loading and unloading, the consignee (buyer), container ids, description of goods... all there in a publicly available (at cost) record.

The real difficulty has more to do with verifying the quality - I'll admit I'm at a loss to how that's done today and I can't imagine quality assessors are at the port to verify that container #123 contains the shipment of Grade B+ cotton or map that to an API. As well, what happens when you disagree and your own independent assessor says its Grade B-? This seems like something that would remain up to legal debate; probably denoted in the contract but not verified by it such that lawyers and assessors can handle it should problems arise.

Just my two cents.

This comment? This is why I keep coming back to hn. A special interest in cotton.

Have you ever been to some old manor or library with hundreds of weathered ancient leather bound books...I always wonder about their contents... (usually they are under lock and key)...Cotton case law now seems a perfectly reasonable assumption.

Contents may have been unimportant. Apparently books could be ordered by the yard for decorating manor libraries.

> neither deserving the name Peerless

Sir that is a prejudicial statement and I want it stricken from the record.

"It's all there black and white, clear as crystal. [...] You get nothing. You lose. Good day, sir."

You skipped the juiciest part of one of my favorite scenes of that movie. [scared the bejeezus out of me when I was little, I didn't realise for some time it was pure satire and no adult would be expected to understand him].

So I feel obligated to post the full bit (from wikiquote)

>Wonka: [angrily] Wrong, sir! Wrong! Under section 37B of the contract signed by him, it states quite clearly that all offers shall become null and void if - and you can read it for yourself in this photostatic copy - "I, the undersigned, shall forfeit all rights, privileges, and licenses herein and herein contained," et cetera, et cetera... "Fax mentis, incendium gloria cultum," et cetera, et cetera... Memo bis punitor delicatum! It's all there! Black and white, clear as crystal! You stole Fizzy-Lifting Drinks! You bumped into the ceiling, which now has to be washed and sterilized, so you get... NOTHING!!! You lose! GOOD DAY, SIR! [returns to work]

>[scared the bejeezus out of me when I was little, I didn't realise for some time it was pure satire and no adult would be expected to understand him].

Yeah, as a kid, I too thought Wonka was serious. It took viewing it as a much older person to see the satire there.

I thought the most ironic part of applying it to this situation is that, just like in the story, the rules were then changed to suit the whim of the enforcer. Meaning, of course, that the rules never meant anything anyway, except to the disadvantage of one party.

Furthermore, I suggest you do what your parents did, and get a job, sir! The bums lost, Lebowski!

Won't happen. People need to believe that the justice system will hear their pleas and consider factors on-balance, and then proceed in fairness. In real law, there are several potential overrides available to stop egregiously unfair outcomes that would otherwise be legally valid (estoppel, unconscionability, etc.). People will not accept a system that does not have the appearance of fairness (regardless of its actual fairness).

One of the things that cyberpunks fail to grasp is that people don't want a perfectly immutable, fixed system. They want to feel that their sense of justice and moral righteousness can be satisfied. Stuff that drops people off right at "sucks to be you" doesn't really work; there must be some type of recourse available even if it doesn't have a 100% success rate.

Agreed! It really won't happen, and isn't happening, even in Ethereum: when people find the result distasteful enough, they go via political means to rewrite the ownership so it feels right.

Specifically, in the DAO hack, the affected people had enough political influence to get the entire network to undo the ownership transfer that was the result of their own oversights:

https://www.reddit.com/r/ethereumfraud/comments/6bgvqv/faq_w...

If anything, Ethereum is worse because you have to get the entire network to fork (analogous to a revolution or constitutional convention) to fix a mistake, instead of just getting a judge to rule "okay, that's obviously not what anyone meant".

Furthermore, it's far more unequal, where mistakes only get fixed when they affect the most influential users. Seems like a step in the wrong direction.

Not sure why you're being downvoted because you're exactly right. The crypto-anarchists love to say "the code is the law", but the reality is that losing your retirement savings because somebody forgot to mark a method private is a pretty shitty outcome.

For all its warts, a legal system backed by a jury of your peers is still the best way of sorting out the actual intent of a contract when the shit hits the fan.

Ignoring the fact that he was responding to a post that was sarcasm, if we really stop to think about it, how many people are judged by their peers and how many are judged by people who are the furthest from it?

This is a very US-centric perspective: in most common law countries, jury trials have been all but abolished for contractual interpretation cases.

Well then ethereum is not for THOSE people.

It is fine if you don't like those features. But it turns out that a lot of people DO want them.

The people who want to court system can already use the court system. Now we just have more options and choices.

Why do you think that the court system somehow doesn't apply to what happens on ethereum ?

The courts can certainly make an attempt to apply themselves to what happens on ethereum.

But if someone wants to, they can make it extremely for that to happen.

Good luck finding the anonymous contract creator that set up their contract by sending money through Monero.

Also, empirically, your claim that courts will get involved with ethereum smart contracts just isn't true.

It is not true, because gigantic scandals and contract theft have ALREADY happened on ethereum, and the courts haven't been able to do shit.

He's being downvoted because he's replying to obvious sarcasm as if it was serious. You also appear to have taken the joke seriously.

Sarcastic or not, "contract by code" and "lawyers are obsolete" are, in reality, major selling points used by Ethereum evangelists. The OP's post gives an opportunity to discuss this.

I did not assign any assertion or position to the OP, only followed up on his thread about the potential ramifications that ETH backers seriously advocate.

Poe's law: Sufficiently advanced satire is indistinguishable from fanatical confusion.

And many people do promote the "code is law, and nothing else" idea -- at least Ethereum Classic stuck to it!

Except the "code is law" meme is a view that many crypto anarchists actually espouse.

Perhaps they were simply elaborating on the sarcasm on account of the fact that sarcasm does a shit job of justifying or explaining anything.

You're right on the facts, although I don't quite get why you ridicule this idea as a "sense of justice and moral righteousness" with only the "appearance of fairness".

A system of laws devoid of all ambiguity and emotion isn't even possible, let alone desirable, because at some point these contracts have to come into contact reality, and the humans in it. And these humans happen to be, well: human.

I guess there's an ideology at play that would love to change humans to fit within their neatly arranged algorithms. And if that means some grandmother loses her house because she signed the wrong smart contract when buying cat-food, there'd be a lot expressions of sympathy on Twitter, but she really needs to understand that it's just not possible to do anything about, because principles etc etc.

Here and there, some of these people may, very privately, consider it a feature of the system that others less intelligent than them sometimes happen to die on the streets because of that one Saturday morning where they didn't audit all 500k lines of brainfuck in that contract for chinese takeout.

With less snark: the idea of ambiguity or emotions as being something negative is a somewhat naive view of reality, somewhere on the spectrum between Star Trek's ideal of Spock and the social darwinism of Ayn Rand. It's most often seen in the currently popular misunderstanding of how judges should behave, and how journalism supposedly used to work.

For an example that maybe is a bit less inflammatory than anything about journalism, check any recent threat about the Google vs Uber lawsuit: the presiding judge is almost a legend for his diligence in learning the technology in the Oracle vs. Google lawsuit a few years back. Yet people criticise him for a lack of decorum whenever he uses language that doesn't pretend to be a robot following an algorithm: "This judge is clearly biased! The contract clearly only says $50,000, and there's no law that gives him the authority to say those are USD. When the defendant says it means Canadian Dollars, it's he-said-she-said and undecidable"

I don't ridicule the need to have senses of justice and moral righteousness fulfilled. I think they should be accommodated by legal systems. My point is that systems must at least pretend to do so if they want public credibility.

Ethereum, as well as things like IPFS that say "Your content is permanent and irrevocable, don't publish if you don't like that", are non-starters because they overlook this core desire to operate under forgiving systems.

Many unfair or distorted legal regimes exist (including, to some degree, the American one), but they all make overtures toward these principles in some form or another. Ethereum et al must correct this if they want widespread adoption.

> One of the things that cyberpunks fail to grasp is that people don't want a perfectly immutable, fixed system.

Some people do.

Source: I am a person who wants this.

And the inverse also applies. People (groups and individuals) want to be able to throw their power around and leave people they don't like at "sucks to be you". This behavior has been the status quo for millennia.

Eh, dictatorships and oppressive systems still work hard to appear fair and even-handed. That's why they have such elaborate propaganda machines.

Anyone who wants to maintain power in virtually any setting (communal, corporate, governmental) must create an impression of fairness and equity, at least to the extent that a good portion of the people are not willing to risk their [reputations/jobs/lives] to throw off the "oppressors".

It's not an accident that virtually all powerful corporate bosses and politicians are so image-conscious and superficial; it's a matter of survival for powerful people.

Matt Levine has some thoughts [1] on that matter.

[1] https://www.bloomberg.com/view/articles/2016-06-17/blockchai...

That's a good article, and the point about him reading a lot of DFW is hilarious and accurate.

But I think of this issue in slightly different terms that are more simple.

There's a ton of case law about what constitutes a contract that pretty much all countries have. Clearly understanding the contract you are getting into is a prerequisite for the contract being enforceable in most places.

The simple fact is that this is never going to hold up in court when people start suing.

No one gets into a contract with the understanding that they can be robbed, and that's just okay. No rational person would do that. And I think it's a fair case to say that no rational person did clearly understand the contract as presented and agree to it.

The courts are going to to shut this down, in my opinion.

You can't just write into a contract that you might get stolen from or murdered or whatever bad thing and then that bad thing is suddenly okay.

"Okay, this guy didn't read the fine print on that used car loan. Let's go rape his wife and kids now. He said it was okay!"

That's not how it works. Etherium deserves to get hammered for this.

That dude's read a lot of DFW.

There's a little bit more information here [1].

[1] https://www.reddit.com/r/badeconomics/comments/6cnzs8/matt_l...

Excuse my ignorance, but what is DFW?

Not positive, but guessing David Foster Wallace

What makes you say that?

Great article!

Except for that DAO of last summer, in that case the law changed...

Ethereum's original sin

The DAO hit every objection from smart contract skeptics, bang bang bang - legal code doesn't work at all like computer code, immutability means you can't fix mistakes, immutability means you can't deal with changes in circumstance, immutability means you must code with 0 bugs - but even we were surprised when they went "lol immutability guarantee" the second the big boys were in danger of losing money.

It's almost as if software technology can't magically solve problems inherent in the flawed nature of humanity.

That's a strawman of what GP said. Of course technology can't solve humanity's flaws. The point was that smart contracts caused many problems they weren't meant to, which was exemplified by the DAO hack. Smart contracts failed to deliver on their promise and the fallout proved that when it came down to brass tax, nobody with skin in the game would respect a smart contract's execution anyway.

FYI the term is "brass tacks" not "brass tax"

Hold on to your hats boys, we might be getting another hard fork!

Unless you're the lead developers and lost money. Then we'll just hard fork the entire protocol.

In that future, ironically, Gold acquires even more value as a hedge

Not just the code but hopefully the compiler and processors (at large i.e. Intel) have no bugs that causes unintuitive behaviour.

Good thing that isn't the case! WHOOPS that already happened in Solidity didn't it https://medium.com/@muneeb/solar-storm-a-serious-security-ex...

it creates such a bad alternative to the current system it's certain not to come about.

Yeah! Well, uh... except that one time.... mumblemumble

Well, you know, except for the whole "we, the central governors, will hard-fork if we get scared that there's an existential threat to the blockchain" thing.

Odds etherium does another hard fork to fix this bug?

The DAO held nearly 14% of all ethereum in existence, 153,000ETH is less than .2%.

153,000 / 93,405,120[0] = 0.001638025838

[0] https://etherscan.io/stat/supply

And there's more Ethereum now. The DAO was a ~$50 million fraud. This was a ~$30 million fraud. Obviously this is totally different and there's nothing we can do about it and it's just fine. People should have known better than to use parity with this bug in it.

Reminds me of the Winston Churchill story:

“Churchill: "Madam, would you sleep with me for five million pounds?" Socialite: "My goodness, Mr. Churchill... Well, I suppose... we would have to discuss terms, of course... "

Churchill: "Would you sleep with me for five pounds?"

Socialite: "Mr. Churchill, what kind of woman do you think I am?!"

Churchill: "Madam, we've already established that. Now we are haggling about the price.”

We've already established that they will fork. Now we are haggling about the price.

[1] http://www.goodreads.com/quotes/300099-churchill-madam-would...

Considering how powerful, famous and charismatic he was, I think, makes one consider that maybe it was Churchill who was being insulted, not the socialite.

"Would you sleep with me?" "Maybe for a million dollars..."

> People should have known better than to use parity with this bug in it.

Says it all, I think, whether sarcastic or not.