The difficult to resolve problem is enforcing what the contract is trying to measure. It doesn't magically authenticate the state of the real world or objects within it. It can't do things like answer the question: "Did the occupant cause harm or ware beyond normal to a rented unit?" It's very good at enforcing things like regular and timely payment, but can't help resolve things such as "Did the land lord fix plumbing issues when notified?".
It also can't fix things like the biased nature of arbitration (is which relate to the above and in particular relate to the inherent disadvantage of both not knowing and finding it difficult to ascertain the state of the real world at any given time), or the cost involved with performing such observations. Nor can it handle bad actors on the side of renters, either by lack of training/documentation on how to properly use things or direct acts of malice.
Suppose you have someone designated to identify plumbers, call him Bob. Bob has a public key, and if a plumber, call her Alice, comes to him and proves in the usual meatspace ways that she's a licensed plumber, Bob signs the plumber's public key, along with their name and license number and the date, signature good for a year. Maybe Bob works for the government, maybe he doesn't, but in either case he's a trustworthy guy who genuinely only identifies real plumbers and both the landlords and tenants trust him to do that.
Now the contract says that if the tenant identifies a plumbing issue, the landlord will provide a plumber identified by Bob to have a look at it. So the tenant can sign a statement declaring a plumbing issue and if the landlord doesn't get a signature by an identified plumber saying it's resolved within a given time, the landlord is in breach, verifiable with math. But if the plumber comes and signs a statement that there wasn't a plumbing issue, the errant tenant has to pay their fee for showing up, again verifiable with math.
Then the remaining issue is corrupt plumbers. But you can't solve every problem all at once, so you rely on the state to revoke licenses in demonstrated cases of corruption. Or on Bob to stop authorizing them.
Revoke how? Does the state, or anyone else besides Bob, have the authority to unilaterally modify the blockchain? If so, why don't they just use a central database, since you are forced to trust them anyway?
But as the author points out so well (I really like his "Blockchain is not IOT" mantra) once you're dealing with real-world objects, you are relying on an oracle that you must trust.
I did it guys. I'm finally enlightened.
You probably meant something like “democratic republic” or the not-quite-equivalent “representative democracy” instead of bare “republic”.
We're wayyyy off on a tangent here, but the removal of an unpopular leader from office...
International trade has perfectly good mechanisms for dealing with this at present. See: Letters of Credit.
> You may also have jurisdictions (like the US) where the process may be more fair, but it's unreasonably expensive, so if you're transacting with parties with a high probability of getting into disputes, something that can resolve them programmatically without litigation is an advantage.
The easy workaround to this is just to factor in additional costs for doing business...
> You're not a criminal, but you have bad credit or are from a disreputable country etc., so you're treated as one by the government or the rules targeting actual criminals cause companies to not want to do business with you, and you thereby need some alternative way to engage in your legitimate activities.
Probably still illegal to do business with you if the government has outlawed work with specific sanctioned countries, etc. Also, letters of credit.
> Probably still illegal to do business with you if the government has outlawed work with specific sanctioned countries, etc.
The whole point is the cases where it's not.
Many banks and payment processors won't do business with you when your business isn't worth the effort of verifying you. That doesn't mean it's necessarily illegal for the bank, much less the seller of whatever you're buying, to do business with you. But you can't do the perfectly legal transaction if the customer has no way of paying.
So your argument is that blockchain is only useful for international trade with tiny businesses?
> Even for higher margin transactions, higher overhead is no advantage.
Most people consider low corruption, high rule of law countries ideal places for business, with the higher overhead...
That is one use, not the only use. And don't discount the scope of international transactions with individuals.
> Most people consider low corruption, high rule of law countries ideal places for business, with the higher overhead...
When the overhead comes with something worth more than it costs you. Sometimes it doesn't.
This works until you deal with a subject matter that (some) banks don't like or with people that (some) financial institutions don't like. It's entirely possible to be banned from Visa and MasterCard's services and this can sometimes mean that banks simply won't do business with you. Sometimes it's the subject matter you're dealing with that can be banned, eg certain types of (legal) porn.
>Probably still illegal to do business with you if the government has outlawed work with specific sanctioned countries, etc. Also, letters of credit.
He didn't say that the government has outlawed doing business with the country. He said that the government treats people from that country much more harshly. This would mean that businesses wouldn't want to do business with people from that country. Letters of credit don't work if the other country's banks aren't interested in dealing with businesses from your country.
Yeah, but maybe something like bitcoin is a cancer on an imperfect system.
If you asked a tumor, maybe it would say, well, the infrastructure of the body I'm living in sucks! There are all these use cases that the immune system and the circulatory system and so on don't handle!
People wouldn't be so interested in Bitcoin if the existing financial system didn't fail so many people. You don't get the cancer without the defects that cause it.
It shouldn't be possible to deny someone the ability to send or receive money. It sounds like a good idea (down with the bad guys), until you also push for a cashless society, at which point it's equivalent to demanding that they starve to death under a bridge because they have no way to buy food or pay rent. That's how to turn people at the margin into violent criminals.
It should be possible to electronically spend $100 anonymously. It isn't anybody's business what kind of books you want to read, or whether you want to donate to the EFF or your church or Planned Parenthood. Your sex life should be between you and your partner, not you, your partner, Paypal, Mastercard and Bank of America.
The existing system gets things like this wrong, which drives people to alternatives. If you don't like the alternatives, remove the demand for them by satisfying it within the existing system.
can you give a concrete example? this requires a smart contract does it not? what is an example contract (specifically) where this is useful?
Suppose you make a loan to someone in an untrustworthy jurisdiction. The contract says you provide X amount in Bitcoin today and get paid back with interest in five years.
The borrower is a real estate developer who has a separate contract with a local buyer to purchase the property in five years, so they can use the smart contract for the real estate purchase to commit the portion of the purchase price to you equal to the loan principal plus interest.
If the borrower breaches by not building the property then you still get paid and the dispute is between the developer and the buyer over the separate contract, but they're both local which means the local courts would be fair to them (and if they're not it's still not your problem).
Using an escrow service doesn't work because the chronology of the loan requires you to release the money to them to build the property five years before they receive the money to pay you back with.
The blockchain can't fulfill the agreement.
All the blockchain does is memorialize the agreement -- which is what a contract does.
Both parties just need to agree on the "Swiss Bank" 3rd party to escrow the funds (and of course, the contract terms).
Blockchain and smart contracts seemed well suited to this task, initially. But I'd agree with the OP that low value assets (LVA) with sensors are easily spoofed and the cost of electricity isn't worth the time to miners.
High value assets (HVA) are just better served with human escrow brokers.
Will blockchain fix it? doubt it. but a lot of people are trying.
Not exactly. It's anything for which the legal system is not effective.
For example, you can have a perfectly legal contract, but the other party is in a corrupt foreign jurisdiction that would never find in your favor in the event of a breach. Then you can't contract with them because they have no incentive not to breach, without an alternative method of ensuring compliance that doesn't rely on their corrupt government.
You may also have jurisdictions (like the US) where the process may be more fair, but it's unreasonably expensive, so if you're transacting with parties with a high probability of getting into disputes, something that can resolve them programmatically without litigation is an advantage.
Then there are the false positives. You're not a criminal, but you have bad credit or are from a disreputable country etc., so you're treated as one by the government or the rules targeting actual criminals cause companies to not want to do business with you, and you thereby need some alternative way to engage in your legitimate activities.
What you're arguing is that a perfect system of government removes the need for any alternative. But we haven't got a perfect system of government.