> Democracy solves the Byzantine agreement problem just fine already.

That’s nice when you and your counterparty are part of the same democracy, or potentially allied ones. But how do you enforce contracts when your government and their government are at war?

(The governments say “you shouldn’t; they’re the enemy.” Well, screw the governments, I want to make positive-sum trades in the hopes of increasing global GDP and ratcheting us up out of the need for wars over unevenly-distributed scarce resources in the first place.)

All the speculative value of cryptocurrencies is based on their utility in making and fulfilling the terms of contracts, when a government or governments don’t want to — or fundamentally aren’t able to — grant that contract any legal enforceability.

And much of the rest of the value derives from the ability of Proof-of-Work mining to be used to convert local export-controlled assets into exportable digital assets. (The whole reason PoW has stuck around as long as it has is that capital flight in China still needs it for a few years yet.)

In the thought experiment of a true anarchy, how do you ultimately enforce the off-chain part of a transaction? If BTC is traded for goods or services, how do you enforce that the goods and services have been sufficiently provided?

In OP article the interfacing with real world is solved by some group voting.

In the real world, when disagreements arise, we have voting + due process + a hierarchy of courts. It could be argued that due process is an essential part of finding justice.

Baking due process into a smart contract is, although extremely interesting, probably impossible.

Great, but take the example in the article. I roll in with my heavies and at gun point force enough of you to vote that the contract was complete even if it wasn't. You can't engineer people away and when you try you've undoubtedly missed something.

But if you were just going to rob them at gunpoint, why did you need the smart contact?

Smart contacts exists so that you don't need the heavies nor the guns, you can just exploit a "bug" in the contract and run off with the cash, preferably without anyone knowing who you even are.

This boils down to the basic problem of a ruleset.

It's nice when everyone abides by the same ruleset. But there will always be individuals that will behave outside of it.

Like, we can all play capitalism and try to outcompete each other, but eventually there's going to be someone that just abandons that ruleset and murders all competitors.

Smart contracts are just a better ruleset, still not enough.

I always roll my eyes when crypto bros roll out the argument that BTC would bring peace because there's an immutable record of who owns what.

I can still just seize the factory, ledger be damned.

Or deploy a military to seize your private keys. Unless you're sole copy is in your own head it's on a hard drive SOMEWHERE

David Friedman's book 'Legal Systems Very Different From Ours' might provide some inspiration:

http://www.daviddfriedman.com/Legal%20Systems/LegalSystemsCo...

If your argument is that decentralized ledger technologies cannot in their current state or perhaps ever entirely replace governments then I guess any reasonable person will just have to give that to you. And I doubt as many "crypto evangelicals" would actually argue with you on this.

Right; distributed smart contracts complement legal systems, like a road network complements a rail network.

Of course, that’s just the simple, “immutable logic” kind of smart contracts. The “updatable policy” kind of smart contracts are really just a way to encode and implement a legal system. (See: the regulation model in security tokens.)

I also think people complement smart contracts. The difficulty of building smart contracts makes me think people and human processes will be the glue that binds many of them together.

Presuming this is a fancy sci-fi kind of anarchy: multi-sig escrow wallet requiring a 2-of-3 quorum of oracle triggers from observation cubesats owned by both parties plus some disinterested third party.

(People are already doing the virtual equivalent for prediction markets: everyone who cares runs their own oracle agent to forward result data from web2 sources into web3. You “just” need computer vision + good optics to bring that paradigm into the physical world.)

So, the only thing required is corrupting/intimidating a single party ? You're just straight up making things easier to be problematic.

And we see this in defi already - taking out a flash loan to rig a thin market that an oracle depends upon is a standard exploit.

Zero Knowledge Contingent Payments are one approach. Encoding everything that you might want to buy as an input to a ZKP system is a stretch, obviously. But at least, that's the spirit of this philosophy.

https://bitcoincore.org/en/2016/02/26/zero-knowledge-conting...

My thinking is that if the blockchain has sufficiently high fees and sufficiently high computational cost, then people have an incentive not to try to game it. That includes off-chain.

It leads to the question of what is the real purpose and utility of a distributed blockchain? If the blockchain can willy-nilly be gamed and won't be enforced, why have it?

You would either need an arbitration service or an oracle for that. Look into Kleros and Chainlink.

If that’s what you want web3 for, I’m actually quite happy for you to record your treachery on a public ledger. There is a reason the government doesn’t want you to do it, and that’s that sanctions are one of the only reasonable deterrents to war that we have. I can’t believe you would advocate for interfering with that on a public forum, in 2021 when western democracies are already struggling to make economic sanctions hurt because the autocrats are all in cahoots. https://www.theatlantic.com/magazine/archive/2021/12/the-aut...

You’re assuming I’m talking about selling things to North Korea, or arms dealing, or something; but in the multilateral case, I’m actually talking about enabling trade in situations where arbitration of otherwise-legal contracts is impractical due to enforcement of contracts requiring ongoing positive relations (e.g. for mutual extradition) which have lapsed, or requiring the crossing of a DMZ — leaving parties on either side in a legal “state of nature”, free to screw one-another over with no consequences.

There were no economic sanctions imposed between East and West Germany; but making a contract with someone on the other side of the wall was still impractical, due to lack of diplomatic relations. Smart contracts solve that problem.

Other angles on this: the regular financial system in the Western world doesn’t let anyone transfer fiat currency to countries like Nigeria “for your protection”, even if you’re literally trying to run payroll for the registered employees of your Nigerian subsidiary company. (In other words, a de-facto trade embargo, but not a legal one, and not one to do with a any war.)

The only good way to do that payroll at this point is to send them crypto.

But your argument also justifies selling arms to North Korea. After all, it's a positive-sum transaction that increases global GDP?

The flaw is that a transaction isn't positive-sum just because you and your trade partner are both happy. Your transaction may well incur negative externalities that outweigh the total profit enjoyed by you and your partner. For example, the world is much worse off if you sell a button-that-destroys-America to North Korea, even though you and North Korea are both pleased at the arrangement.

I don't want to put activity out of the reach of governments. Governments are the organ by which we decide what is and isn't acceptable behavior. If our governments are behaving unreasonably, the solution is to fix them, not to pursue anarchy.

I updated my comment to clarify. You did say enemy.

While I think the stated use case is bizarre and useless, I will note that economic sanctions are almost universally bad, used to hurt the populace of countries like Iran, North Korea, Cuba and others without doing anything to hurt the ruling elites. That said, the problem with such sanctions and trade embargoes is usually the flow of goods, which Bitcoin does less than nothing to solve of course.

I agree, but as we speak Russia has amassed 150k+ troops on the Ukrainian border and Putin is waiting to see whether the West can apply enough sanctions to make the whole effort a net loss before he gives the green light on an invasion.

I'm not sure economic sanctions are the solution here. More likely, a positive deal and various security promises for Russia (e.g. no more NATO exercises for a mock invasion of Russia, or simply more commerce) will probably do a lot more to ease tensions. As long as NATO and Russia continue to behave as enemies, Russia will continue to see Ukraine as a necessary buffer at its borders, and seek to make it a vassal state, to the detriment of everyone...

Edit to add: avoid phrases like "the West", it's very "Us and Them", it's much better to be explicit: is this about NATO? The US and its closest allies? The EU?

But why do I have to care about that? Due to the overreach of US policies even companies in countries which don't have sanctions against Russia have to worry about the efficiency and performance of payments going towards Russia. SEPA and ACH may be marginally performant but SWIFT is incredibly expensive, which is the only option you have for international transfers that doesn't depend on an American monopoly of power.

Do you just not care about anybody else in the world? We live in a society.

I am surprised at the political ideas on display in this thread. This isn’t even under the comment in which I described the influence of “techno-libertarian anarcho-capitalism” on the crypto community! If you are not part of a western democracy, of course you do not have to care, but if you are, then you should. (Moreover if you think war is bad, like that other commenter agreed before wondering how to erase the effect of sanction deterrents, you should also care.)

>Do you just not care about anybody else in the world

Sure I do, however I also get to choose who I care about, and it definitely doesn't include people who make policies which are extraterritorially enforced on me.

>If you are not part of a western democracy, of course you do not have to care

What do you do when a "Western" "democracy" enforces their laws on you and all remaining solutions point you to services that are beholden to a "Western" "democracy".

They’re not extraterritorially enforced unless you’re talking about a blockade, so unless you’re a Cuban or Puerto Rican, you can’t complain. Most sanctions are just one nation deciding it prefers to lose your business than to lose its security agreements with its allies. If you find yourself unable to make a cross border deal, it’s because your country was unable to negotiate it with another. I have no intrinsic right to do business with anyone in the world as I see fit. Neither do you. I’m just okay with that because there are bigger goals than my own.

> What do you do when a "Western" "democracy" enforces their laws on you and all remaining solutions point you to services that are beholden to a "Western" "democracy".

Correct the aberrant behavior that caused your nation to get kicked out of the global trade system, or move to a nation that hasn't gone rogue. That's what the sanctions are meant to encourage. Bypassing the sanctions with clever math is just going to get the clever math outlawed; exerting international pressure to keep countries in line is far more important than your coinbase account.

> before he gives the green light on an invasion

And the reason why the USistan should entangle itself in that mess is ... what exactly?

https://en.m.wikipedia.org/wiki/Budapest_Memorandum_on_Secur...

  The Budapest Memorandum on Security Assurances refers to three identical political agreements signed at the OSCE conference in Budapest, Hungary on 5 December 1994 to provide security assurances by its signatories relating to the accession of Belarus, Kazakhstan and Ukraine to the Treaty on the Non-Proliferation of Nuclear Weapons.

  As a result, between 1994 and 1996, Belarus, Kazakhstan and Ukraine gave up their nuclear weapons. Until then, Ukraine had the world's third-largest nuclear weapons stockpile

If the US convinced Ukraine to give up their nuclear weapons with the promise they would help fend off an invasion, and then proceeds to not help fend off an invasion, what do you think happens the next time the US asks a country to give up their nukes?

Thanks for this, that is a fair point, and I was not aware that these events had taken place.

[EDIT]: Whatever happens to nukes that are "given up on". That's a lot of fissile material.

>The governments say “you shouldn’t; they’re the enemy.” Well, screw the governments, I want to make positive-sum trades in the hopes of increasing global GDP and ratcheting us up out of the need for wars over unevenly-distributed scarce resources in the first place.

That's a real nice justification for war profiteering ya got there. I don't think it'll convince too many people though...

Nothing better than recording your illegal transactions in an immutable blockchain.

You miss something, imagine a world where crypto is finally used to pay for services. How do you enforce that when you give an advance to your house builder so that he can start building and contracting out and paying his own people by the hours, that he wont build you something that eventually crumbles as soon as you open the door?

Who enforces THAT ? Who care about decentralising, we need to centralize violent enforcement or people will just scam each other. The problem in China is this one, not that they're not crypto-dumb dumb enough :s

In that case, you could enforce that some of the paid amount is locked and release over time so as to provide an incentive to build something not totally fucked up.

> Well, screw the governments, I want to make positive-sum trades

You and what army? And I’m not even being facetious, you’d probably need an army to go against your government and economically aid an enemy like this. And therein lies your answer for who will enforce these contracts: those with the most capability for force.

_But muh hashes_ is not going to help you "enforce" anything as soon as any of this enters the material world.

In the material world, all the problems of e.g. being at war are identical regardless of the medium of your claims.

Can you "enforce" the flow of Ether? Oh yes. Enjoy.

> That’s nice when you and your counterparty are part of the same democracy, or potentially allied ones. But how do you enforce contracts when your government and their government are at war?

You should look into actual historical examples here!

> Democracy solves the Byzantine agreement problem just fine already.

Democracy is just two wolves and a lamb deciding on what's for dinner.