Topic: How do you enforce a smart contract (Read 1441 times)
Get a bunch of your buddies together with their guns, and go enforce it.
It's smart, it will figure out a way on its own. #skynet
When you buy something, you want to check out if the owner is really the owner. Maybe he is a swindler, and is attempting to sell you stolen property.
Wherever the property is registered, the registration could have listed in its paperwork, the corresponding smart property contract that would have to be activated before the sale is possible.
It would be something like a trust, where the trust owns the property. The thing you do when transferring trust property is to simply change the trustees. Many trusts are written so that the trustee can be changed. The new trustee is the one that now controls the property.
If the property is owned by a smart property contract, the new administrator of the contract is the new controller, and essentially the new owner.
Wherever the property is registered, the registration could have listed in its paperwork, the corresponding smart property contract that would have to be activated before the sale is possible.
It would be something like a trust, where the trust owns the property. The thing you do when transferring trust property is to simply change the trustees. Many trusts are written so that the trustee can be changed. The new trustee is the one that now controls the property.
If the property is owned by a smart property contract, the new administrator of the contract is the new controller, and essentially the new owner.
True, but let's say someone enters your house bought via a smart contract... how do you send the police on him, if the smart contract has no recognize by the official authorities?
This is the main problem i see with this.
This is on point. Say you buy a car, or a house or any property. Just because it says so in the blockchain, if someone tries to steal it or damage it... are the authorities forced to assist you? unfortunately i dont think so unless it gets aknowledged by then that the blockchain smart contracts have the same value as a traditional signed contract.
also, google might buy "the blockchain" after all and provide proper contractual enforcement:
http://www.sbs.com.au/news/article/2015/04/17/google-has-patented-ability-control-robot-army
http://google.com/killer-robots.txt
http://www.sbs.com.au/news/article/2015/04/17/google-has-patented-ability-control-robot-army
http://google.com/killer-robots.txt
I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.
The problem here is that 'any governments' don't recognize the bitcoin blockchain, so a contract will be valid only if it is between private parts; but if one of those part wants to 'enforce' the contract I do not think the government will accept it.
Well in many countries you can actually form contracts as you like - at least within the legal boundaries and to certain extents. If courts accept the blockchain as enough of a proof, then the contract may have decent chances of being recognized, I believe...
Here in italy (for example) a person has opened a company and the contribution of assets was all in bitcoin, as you can see here:
- http://www.newsbtc.com/2015/04/12/oraclize-company-bitcoin-incorporation/
So I think in some country the 'bitcoin blockchain' is recognized at 100%
Interesting. It still boils down to how courts rule in case there's as lawsuit or some sort of serious disagreement between two parties engaged in such a contract, I believe!
I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.
The problem here is that 'any governments' don't recognize the bitcoin blockchain, so a contract will be valid only if it is between private parts; but if one of those part wants to 'enforce' the contract I do not think the government will accept it.
Well in many countries you can actually form contracts as you like - at least within the legal boundaries and to certain extents. If courts accept the blockchain as enough of a proof, then the contract may have decent chances of being recognized, I believe...
Here in italy (for example) a person has opened a company and the contribution of assets was all in bitcoin, as you can see here:
- http://www.newsbtc.com/2015/04/12/oraclize-company-bitcoin-incorporation/
So I think in some country the 'bitcoin blockchain' is recognized at 100%
Yes, smart contracts dealing with non-bitcoin things have to somehow be attached to the real world. This attachment point is tricky. If you're thinking about for example representing ownership of a house, or a car, say, you're going to have to get governments to recognize the token as the true notion of ownership. Otherwise a buyer buys a house token for, say, 1000 bitcoins, the seller hands over the token but never signs the deed over; as far as the local gov't is concerned the seller still owns the house and the buyer just got shafted for 1000 btc.
There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.
There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.
None of these issues are really much of a problem, at least in the US. A valid contract needs only two things:
1) Meeting of the minds
2) Consideration
Even verbal agreements are enforceable in US courts (I don't know about elsewhere) so long as they have these two things, so contracts on the blockchain or even off chain are no problem to enforce at all, as long as both parties have assets in the same or cooperating jurisdictions. It will be a pain in the ass for the buyer if the seller defaults, but the buyer will eventually win in court.
Does it complicate things if the buyer buys the token, then sells it to someone else and so on with many trades happening before the latest owner tries to redeem the token for the house?
What if the token has been stolen somewhere along the way?
It might slow down law enforcement or the courts a day or two, because they'll want to make sure they have the right people an property. If you buy a stolen vehicle (for example), you're out the cash and the vehicle when the FBI or State police come to collect it, even if you had no idea the vehicle was stolen.
if you miss that rate of the payment for your car, its engine will stop working in the middle of the highway...
I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.
The problem here is that 'any governments' don't recognize the bitcoin blockchain, so a contract will be valid only if it is between private parts; but if one of those part wants to 'enforce' the contract I do not think the government will accept it.
Well in many countries you can actually form contracts as you like - at least within the legal boundaries and to certain extents. If courts accept the blockchain as enough of a proof, then the contract may have decent chances of being recognized, I believe...
I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.
The problem here is that 'any governments' don't recognize the bitcoin blockchain, so a contract will be valid only if it is between private parts; but if one of those part wants to 'enforce' the contract I do not think the government will accept it.
I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.
In terms of who owns the digital IOU or proof of ownership...
Digital mediators could be a good option for complex contracts. They could have an 'overriding key' for complex situations beyond the original scope of the contract, to execute a contract with varying results or annul it. Part of the contract would include the consent of both parties to have this digital mediator (escrow with legal jurisdiction)
It would be like subscribing to a legal jurisdiction on a contract by contract basis. I think this would make for more efficient and fair courts.
Digital mediators could be a good option for complex contracts. They could have an 'overriding key' for complex situations beyond the original scope of the contract, to execute a contract with varying results or annul it. Part of the contract would include the consent of both parties to have this digital mediator (escrow with legal jurisdiction)
It would be like subscribing to a legal jurisdiction on a contract by contract basis. I think this would make for more efficient and fair courts.
I can only suggest you "Oraclize", this is the site (beta) : https://www.oraclize.it/ . It is based on orisi (http://orisi.org/) and it is not still fully functional, but you can test some 'events' and in the future real autonomous contract (without the possibility of lie of one of the parts).
One big problem with oracles is that by their very nature, they must either be completely trusted or semi-trusted. One of the advantages of smart contracts and the blockchain concept in general is decentralization, immunity to outside attacks, and the lack of a requirement to trust third parties. By using oracles to monitor, verify, and sign claims, you're adding a certain amount of trust into the mix. Sometimes, it might not be a huge issue: e.g. an oracle that monitors the price of a certain asset on a particular exchange and uses publicly verifiable code that both parties in the contract have agreed to beforehand. But not all cases where contracts are required are so clear-cut. Many contracts in the real world rely on data that is sketchy, subjective, or open to interpretation and/or manipulation.
How will smart contracts deal with and enforce such cases?
Yes, smart contracts dealing with non-bitcoin things have to somehow be attached to the real world. This attachment point is tricky. If you're thinking about for example representing ownership of a house, or a car, say, you're going to have to get governments to recognize the token as the true notion of ownership. Otherwise a buyer buys a house token for, say, 1000 bitcoins, the seller hands over the token but never signs the deed over; as far as the local gov't is concerned the seller still owns the house and the buyer just got shafted for 1000 btc.
There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.
There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.
None of these issues are really much of a problem, at least in the US. A valid contract needs only two things:
1) Meeting of the minds
2) Consideration
Even verbal agreements are enforceable in US courts (I don't know about elsewhere) so long as they have these two things, so contracts on the blockchain or even off chain are no problem to enforce at all, as long as both parties have assets in the same or cooperating jurisdictions. It will be a pain in the ass for the buyer if the seller defaults, but the buyer will eventually win in court.
Does it complicate things if the buyer buys the token, then sells it to someone else and so on with many trades happening before the latest owner tries to redeem the token for the house?
What if the token has been stolen somewhere along the way?
When you buy something, you want to check out if the owner is really the owner. Maybe he is a swindler, and is attempting to sell you stolen property.
Wherever the property is registered, the registration could have listed in its paperwork, the corresponding smart property contract that would have to be activated before the sale is possible.
It would be something like a trust, where the trust owns the property. The thing you do when transferring trust property is to simply change the trustees. Many trusts are written so that the trustee can be changed. The new trustee is the one that now controls the property.
If the property is owned by a smart property contract, the new administrator of the contract is the new controller, and essentially the new owner.
Wherever the property is registered, the registration could have listed in its paperwork, the corresponding smart property contract that would have to be activated before the sale is possible.
It would be something like a trust, where the trust owns the property. The thing you do when transferring trust property is to simply change the trustees. Many trusts are written so that the trustee can be changed. The new trustee is the one that now controls the property.
If the property is owned by a smart property contract, the new administrator of the contract is the new controller, and essentially the new owner.
True, but let's say someone enters your house bought via a smart contract... how do you send the police on him, if the smart contract has no recognize by the official authorities?
This is the main problem i see with this.
So it doesn't matter how "smart" the contract is - in the end it all comes down to trusting the issuer. There's no difference to old school "dumb" contracts.
Interesting point.
Regards,
Christopher
Suppose that a bank claims that one bitcoin in a special address represent one million dollars (Of course the bank owns that address).
A bank (or anyone) can claim anything - whether or not people buy into it is up to them. In this example the bank is just a scammer - it did a classic bait and switch. Financial schemes and crimes are the easiest to perpetrate I think, due to information asymmetry in financial markets. This doesn't have anything to do with contracts or enforcement.
So I think it is difficult to use blockchain to guarantee the ownership of anything outside, better focus on bitcoin itself, it is already one of the most liquid form of assets
Possession/control/usage is 9/10 ownership.
DRM does well at controlling physical objects. You could quite easily install a chip that disables any electronic equipment inside cars, computers, phones, etc. that is activated (or de-activated) by sending precise amounts of XBT to pre-arranged addresses.
You can do the same thing with electromagnetic door locks, etc. The technology is here, it's just nobody has deployed it yet. It's a great business opportunity.
Yes, smart contracts dealing with non-bitcoin things have to somehow be attached to the real world. This attachment point is tricky. If you're thinking about for example representing ownership of a house, or a car, say, you're going to have to get governments to recognize the token as the true notion of ownership. Otherwise a buyer buys a house token for, say, 1000 bitcoins, the seller hands over the token but never signs the deed over; as far as the local gov't is concerned the seller still owns the house and the buyer just got shafted for 1000 btc.
There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.
There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.
None of these issues are really much of a problem, at least in the US. A valid contract needs only two things:
1) Meeting of the minds
2) Consideration
Even verbal agreements are enforceable in US courts (I don't know about elsewhere) so long as they have these two things, so contracts on the blockchain or even off chain are no problem to enforce at all, as long as both parties have assets in the same or cooperating jurisdictions. It will be a pain in the ass for the buyer if the seller defaults, but the buyer will eventually win in court.
I can only suggest you "Oraclize", this is the site (beta) : https://www.oraclize.it/ . It is based on orisi (http://orisi.org/) and it is not still fully functional, but you can test some 'events' and in the future real autonomous contract (without the possibility of lie of one of the parts).
...
In your example, the bank could choose to refuse to redeem the coins for dollars but most good banks with a good reputation aren't going to do this. When you get such a coin, you don't really own dollars. You own dollar IOUs. Whether or not the bank will redeem these IOUs for actual dollars is solely up to the bank's decision.
...
In your example, the bank could choose to refuse to redeem the coins for dollars but most good banks with a good reputation aren't going to do this. When you get such a coin, you don't really own dollars. You own dollar IOUs. Whether or not the bank will redeem these IOUs for actual dollars is solely up to the bank's decision.
...
I think the essence is contained in this statement. An IOU is not the same as holding the "real thing". So for most real world things represented as IOUs in the form of smart contracts you will have a counterparty risk.
To enforce an IOU that represents a "real thing" you obviously can't rely on a smart contract alone - you have to do something in the "real world" in case the issuer of the IOU does not adhere to the conditions of the contract.
So it doesn't matter how "smart" the contract is - in the end it all comes down to trusting the issuer. There's no difference to old school "dumb" contracts.
ya.ya.yo!
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