You are correct, for this smart contract to work you need defined rules around how the money is released should either party falsely claim success or failure, so you need to rely on automation or some third party to validate fulfillment of the contract. So you're back to an oracle problem, how do I know I can trust the validator?
The nice advancement here is that anyone can be that third party! Your smart contract can explicitly identify a third party for multisig, or you can rely on a validator pool of mechanical turks instead of a licensed escrow agent, and accordingly the cost of escrow can decrease.
The nice part is that this is customizable, and built into the very rails that move money. It's a much lower barrier to entry than trying to build something like that for ACH, and that's what excites us about cryptocurrency.
Ethereum is one of the more credible cryptocurrencies and yet, it is slow, throughput is woefully inadequate for scale, expensive to transact, and smart contracts don't really work. When I say "Don't really work" I mean that you can't use them for the things you'd want to use them for - i.e. you can't write an Ethereum smart contract for "If I deliver X hours of contracting work, meeting these specifications, then you will pay me Y amount by Z date automatically." If I'm wrong and you can do stuff like that, please point me to the solidity.
I'm glad you included the line welcoming comments from those who feel this market shouldn't exist, otherwise I wouldn't have written this comment. I hate to be negative regarding a launch - but this feels like adding a product to the Ponzi Scheme Industry. Maybe it's like writing software to help manage slot machines, except your slot machines aren't regulated and you tell people they're investing rather than gambling.
To be clear, that doesn't mean that a simple solution will never be created. Obviously we think it will, but that doesn't mean we're right.
But to address a slightly different part of your framing, our situation actually got more complicated when attempting to go the legal route. We suddenly had additional lawyer, collections, and time costs associated with the process...and we still never managed to collect. That's certainly an area where the current legal system fails (for a lot of people!).
Cryptocurrencies might not be the perfect alternative, but they are an alternative that, in our opinion, is exciting to explore.
The fact that you justify your product with a use case which does not work and can not work is very telling. But I’m sure as a strategy it’s working very well for you.
We are not using that use case of smart contracts as justification for our product, but the excitement for the future of smart contracts and the innovations in the cryptocurrency space encouraged the founders to get involved. They started buying cryptocurrency and found a pain point in tracking and rebalancing all of their holdings using Excel which could take upwards of 30 hours a week. Making an easier solution is the justification for the start of this product
People in Brazil are using a new technology to transfer money between bank accounts faster and in an easier manner, it's a hit and growing very fast. It's not blockchain or ethereum, but a. the team involved cites those techs as their main influence, some of them having prior work/interest in those areas aswell and b. they say they have plans for implementing integration with public cryptocurrencies, smartcontracts, and several of their technologies such as smart contracts. Why, you could ask, wasn't this released to the public before, if it's not groundbreaking tech or even a tech innovation at all and provides so much benefit? "Culture".
On that note, if an outstanding question is "how do we increase the supply (and thus decrease the price) of oracles beyond those who happen to know how to interact with smart contracts," I wonder if something like your Hedgehog tech, paired with standardized smart contract plugins, could make it possible for far more domain experts without crypto experience to enter and advertise themselves in the oracle market. Makes your system a one-stop easy-onboard volatility-reducing shop for the escrow problem you identified, for all participants in that marketplace!
In order to tell people how to get data from point A to point B you suddenly have to be a fiduciary financial adviser! We want to take that duty seriously and help people interact with the cryptocurrency ecosystem as a trusted adviser.
If we can help you customize and interact with smart contracts and plug them into existing regulatory frameworks, then we can unlock a lot of value for everyone.
I was in the e-signature world, and nobody tended to ever care about authentication. Nobody really wanted to pay for it, almost ever.
They smart contracts have 2 of the largest features of escrow: handing control of your money to a third party and not being able to use the money now/bad payment "terms". It mitigates some counterparty risk, as it's harder for the oracle themselves to steal the money.
It's also probably expensive, as oracles have to meditate disputes and take on risk.
So interesting, but unsure what it would be used for.
To your point, though, we are pursuing these licenses in every jurisdiction where required so we can start offering this service. We're also registering as an investment adviser so we can offer financial advice. This takes time and a lot of capital, but we believe the end result will be worth it.
We are currently seeking money transmitter licenses so that we can offer a hosted wallet of our own, where we hold the exchange accounts on the client's behalf, and act as their counterparty for every trade so they don't have to maintain accounts at multiple venues. This version of the application is not yet available.
This is why smart contract is such a bad name. A lot of people have a complete misunderstanding of what a smart contract is. They think it can enforce things like a real-world contract, but "automatically". It's just a decentralized script and without real-world input through an oracle it is of course impossible for the contract to know whether a project is completed. There's nothing smart or automatic about that part.
Fortunately decentralized oracles are an area of focus right now, but it’ll be a slow process since most expansion will require a special integration and potentially expert oracles.
So part of the magic of the smart contract is illustrating intent from the beginning, and making that intent customizable! Oracles are still an unsolved problem, but we absolutely believe that reducing the barrier to entry for becoming or acting as an oracle will result in cost savings as the ecosystem matures.
It's not ideal in terms of funds used, but it improves the trust situation a little bit.
This incentive already exists without Ethereum, and Ethereum doesn't improve the situation in that regard.
You are correct, for this smart contract to work you need defined rules around how the money is released should either party falsely claim success or failure, so you need to rely on automation or some third party to validate fulfillment of the contract. So you're back to an oracle problem, how do I know I can trust the validator?
The nice advancement here is that anyone can be that third party! Your smart contract can explicitly identify a third party for multisig, or you can rely on a validator pool of mechanical turks instead of a licensed escrow agent, and accordingly the cost of escrow can decrease.
The nice part is that this is customizable, and built into the very rails that move money. It's a much lower barrier to entry than trying to build something like that for ACH, and that's what excites us about cryptocurrency.
With DLT it seems trust and predictability is virtually the same thing. "Everybody loses everything" is predictable but not efficient. DLT is a proposal for efficiency.
We need to automatically negotiate contracts or we shift all the cost of fixing it later in courts up front. There will have to be a lot of smart defaults for the contracts to be smart, and very deep integration of tech so that the algorithms can be fed with enough data to negotiate in a very high-dimensional space. That requires infrastructure, but the DeFi culture does not seem to be interested in funding infrastructure.
A smart contract doesn't allow you to do that though, so I'm not sure how much you thought this through, or if you're only writing about your initial impression and dismissing what you learned after (I do think you realize this, as most people do after a few weeks of experience with Ethereum).
Either the smart contract would have automatically transferred money after a period of time, in which case it's basically like paying in advance. Or the smart contract would have received some external information, either from the consulting company, the client, a 3rd-party or a combination thereof, to decide whether the project has been completed or not. At that point, you're back to the problem you had without Ethereum.