The article points out that you can't construct an ordinary loan on chain, because you have no way to enforce paying it back short of tying up the loaned funds tor the duration of the loan. Useful credit fundamentally requires some way of making debtors pay up later. It's possible to construct various speculative financial products entirely on chain, and that's been done, but it's mostly useful for gambling, broadly defined.
Matt Taibbi's recent book The Divide has a chapter on the abuses of our credit collections system. People are getting taken to court of debts they never actually owed in the first place, or already paid off. The lender has sold the loan to someone else, the records are lost, the borrower get "served" at an old address and never actually hears about the case, then loses to a default judgement for not showing up at court...and finds out about it when wages are garnished.
Here's a simple idea I came up with to fix that:
It still uses the courts to enforce payment, but it uses the public blockchain to stop this nonsense about lost records and fraudulent attestations that they exist, while still protecting borrower privacy.
Often fighting these loans is as simple as asking the owner to show proof of the loans in court, at which point they often evaporate, however it can be a long winding road to get there and often people just don't show up in court, or don't know, and get judgements against them that they might not otherwise owe. If the debt status was easily verifiable, it would be better for all sides (other than the bad actors) when it ends up in court.
If the blockchain isn't enforcing payback, then it's just a normal transfer of money from one party to another. There's no smart contract needed.
Can you provide an example of this?
* if it's a one off payment to all recipients, why not just send it manually?
* what happens when you need to add or remove recipients? Compared to just phoning up the bank to amend a standing order.
* what happens if you accidentally pay someone the wrong amount?
* what happens if you lose your wallet and you can't continue paying?
I would rather have a bank handle all of the edge cases and provide the consumer protections I want out of a payments/account system than some random script that I (or someone I have to pay) has to maintain that could be responsible for vast amounts of funds.
I wrote a program to help me do this with my student loans, that does sound useful.
That all said, a blockchain is not really required. Better standards and a trusted third party would do fine.
I would observe, though, that the word "trust" here does not mean universal trust. Two signatories to a contract may agree to trust a given oracle without affecting anyone else on the blockchain, or trust a combination of oracles, or etc. etc. If the trusted service is simply pushing "the price of tea in China" into the blockchain, then the blockchain may still be doing "real work" for your contract which involves other things.
"Decentralization" doesn't mean that every single contract won't ever use a central authority. It means there's no mandated one.
You mean the way people should trust their governments.
"Paul Kagame re-elected president with 99% of vote in Rwanda election"