
Nobel Prize-winning economist joins blockchain startup to fix smart contracts - kushti
https://www.forbes.com/sites/michaeldelcastillo/2018/08/01/nobel-prize-winner-joins-blockchain-startup-to-fix-smart-contracts/#5c70dc517cc7
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root_axis
Smart contracts are DOA, it's not an economic issue, it's a technical one; the
rules of the smart contract can only be enforced on the blockchain, any
concerns outside of that must necessarily fall back on the traditional legal
system for enforcement thus eliminating any utility the smart contract intends
to provide.

edit: I'm not saying there is no value in systems of arbitration outside the
traditional legal system, I'm saying that a blockchain is super wasteful and
expensive relative to a centralized system that can accomplish the same
guarantees because they share the same legal underpinning, i.e. the courts.
There is no legal difference between a smart contract and word document.

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eldavido
I wouldn't write this off so quickly.

The analog is Visa. What would ordinarily be a huge lawsuit is settled by a
private commercial arbitration process--namely, a chargeback--in case of
dispute.

Courts are tremendously expensive and burdensome. There is real economic value
created when someone figures out how to move what would otherwise have to go
to court, to a separate arbitration process that's perceived as "fair" by
everyone involved. I'm not saying that's the right solution for everyone or
everything, only that courts should be a last, not first, resort, in case of
dispute.

~~~
CPLX
Right so it's done by people, following a set of policies, all of which
ultimately are subordinate to written laws. So like what's the alternative
you're suggesting?

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darawk
Smart contracts enable this mechanism to be pre-agreed upon and have the
authority automatically and securely deferred to the pre-arranged arbiter.
This improves transparency, reduces transaction costs, and starts the process
of commoditizing oracles/arbitration.

~~~
CPLX
So instead of a lawyer or arbitrator we get another kind of arbitrator, or an
"oracle" which is at root is a human making decisions and putting them into a
digital system of some sort.

Both of which, like every other extant thing, are subject to review by the
courts if their actions make people sufficiently unhappy.

And, though now it's confusing, opaque, and unreliable, this system will be
cheaper and more transparent because...

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darawk
Because it limits the scope of the arbiters responsibilities and capabilities,
and precisely specifies their purpose.

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yodon
Those benefits you're describing are the result of a writing a contract, not
of embodying the contract in a digital construct [edited for clarity]

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darawk
Sure. What is your point?

EDIT: I guess i'll respond to your edit with another edit. I understand your
point, that you can say the same things using a traditional contract, but they
don't have the same force. For example, the smart contract can automate and
execute the disbursal of funds based on the attestation of some pre-defined
oracle. While it's true that this oracle is not decentralized, it is now
isolated and scoped. It's role is proscribed to solely this - attestation, and
everything else is actuated around that oracle, in a secure and trustless way.
I believe that the ability to circumscribe and scope responsibilities in a
computational way has valuable benefits, insofar as it commoditizes and
modularizes the processes involved. I think of it like a shipping container.
Shipping containers commoditize and modularize shipping. Smart contracts
commoditize and modularize adjudication.

~~~
cultus
So what does the smart contract bring that the regular written contract
doesn't?

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darawk
All of my responses in this thread have thus far been enumerating them.

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cultus
As yodon explained, those benefits are handled just as well by ordinary
contracts. I've still never got a straight answer from anyone about what smart
contracts _actually_ bring to the table.

~~~
darawk
See my edited response to yodon. I'll also add, that they free up innovation
in a valuable way. Take Augur, for example. If you're not familiar, Augur is a
decentralized prediction market. In order for a non-crypto startup to create
something like a prediction market, they'd need to develop serious banking
relationships with banks. The banks could simply refuse to work with them,
charge them exorbitant fees, and otherwise encumber the process.

However, since Augur is built on the Ethereum network, they didn't need to ask
anyone's permission, and they don't ever need to have custody of anyone's
funds. This is an example of 'permissionless innovation', to use the buzzword
of the day. Permissionless innovation is understood to be one of the most
important drivers of economic dynamism, and right now any sort of application
that touches the financial sector is heavily burdened by the fact that our
financial system is predicated on trust. Smart contracts solve that problem.
This is a very subtle point, but it is extremely significant, in my opinion.

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puranjay
Eli5: How do smart contracts change anything when their enforcement has to be
performed by legacy systems?

In my country, drafting contracts is hardly a problem. But if someone breaches
your contract, good luck trying to get the law to act on it quickly enough

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darawk
For one, there are certain classes of contract that can be enforced entirely
on-chain. Specifically, those having to do with crypto-assets themselves and,
possibly, any asset ownership represented by the crypto-tokens.

For two, smart contracts are code, and as such have to be more formally
specified than a traditional english-language contract. This has benefits and
also drawbacks, but for certain applications it may be useful.

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kornish
As a senior advisor.

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bob_theslob646
Exactly! Does not mean s __*. The old "will you please be an advisor, we will
give you some equity" routine.

Hard to not take it with a grain of salt especially with the click bait title.

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darawk
The title doesn't seem like click bait to me. He's being paid to actually work
on the problem. He's not just some nebulous advisor - he will be consulting on
the architecture of particular contracts. The title seems pretty appropriate.

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al_ramich
pretty strange career choice although if his intentions are to impact the way
smart contracts shape up in the future it could be a good move. His intentions
will certainly be tested by VC intentions to make money for the investors.

~~~
WisNorCan
From a career perspective, I think this fits into the classic “make lots of
money before the bubble bursts, by lending my name to a company and doing
little work”

~~~
al_ramich
brand influence for a little compensation

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badloginagain
Im highly suspicious of any blockchain startups given the cryptocurrency
environment we live in. If this guy was part of the discussion for one of the
main cryptocurrencies about governance, I'd be more excited.

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sharemywin
it would be interesting if contracts(legal ones) had version control.

Here's a base contract 1.0.0 and you can fork it and add/subtract sections,
change wording etc.

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tarwater11
There is no Nobel Prize in Economics.

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duckerude
He won the Nobel Memorial Prize in Economic Sciences, which (as far as I can
tell) was established later than the other prizes but is managed together with
them with the same foundation and ceremony and so on.

Is the distinction between it and other Nobel prizes useful here?

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neilwilson
Yes. It is funded by the Swedish Central Bank.

Would you trust a Nobel prize in computing funded by Google?

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hoonose
Yes. The closest thing to the Nobel Prize in computing is the Turing Award,
which is indeed funded by Google.

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dsr_
Although it is not Google who decides on who wins, and the Award would still
be reputationally valuable if there were no money attached to it.

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frostyj
Ok just tell me which coin is that and where do I buy it :)

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sgift
> Hart says he doesn’t own any cryptocurrencies and is worried that “bitcoin
> might be a bubble.”

Probably not a good idea.

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_pRwn_
There is _no_ Nobel Prize in Economics. There's only the "Nobel Memorial Prize
in Economic Sciences" which was established in 1968 by a donation from
Sweden's central bank.

~~~
lazerpants
And commonly referred to as the Nobel Prize in Economics.

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sgift
Usually by people who want to give it credibility it doesn't deserve. There's
probably a reason no science felt the need to name their price almost like an
existing in the hope of being associated with it.

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gamblor956
It's referred to as a Nobel Prize by the Nobel Foundation itself, which also
selects the winners...

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sgift
The foundation adopted it. Which is kind of my point.

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gamblor956
No, there was no "X" prize that was adopted by the Nobel Foundation. They were
offered a donation to fund the prize in the area of Economics, and they did.
The prize itself has always been run by the Nobel Foundation.

It may not have been one of the _original_ Nobel Prizes, but everyone who
matters, including the prize-issuing organization itself, considers it to be
one of the _current_ Nobel Prizes. This is no different from, say, the
Olympics--would you not consider snowboarding, boxing, weightlifting,
wrestling, or volleyball (to name some of the most popular current events) to
be Olympic events simply because they were not part of the first games in
1896? Conversely, should croquet and tug-of-war be considered Olympic sports
even though they haven't been part of the games for over a century?

