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Why are smart contracts/DAOs a bad idea? (self.Buttcoin)

AtlasShart が 投稿

I know that smart contracts and decentralized autonomous organizations are poked at here so I get the impression that they're bad ideas.

But why are they bad ideas? I'm not doubting the idea, but my Google-fu doesn't come up with anything in the terms of whatever problems they have.

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[–]x99xSecretary of Statists 10ポイント11ポイント  (1子コメント)

Because the real world is a messy place where not everything is black and white. Things like smart contracts, decentralized ledgers and any other existing systems with bitcoin/blockchain stamped on them are just not needed. Mankind has been able to accurately record documents like contracts and deeds for hundreds of years. No blockchain needed - it literally adds nothing to the process.

Bitcoiners talk about decentralization and using blockchains to replace people they view as unnecessary middle-men. The absurd autonomous organization idea is an extension of that concept. Bitcoiners mistakenly believe that most disputes revolve around inaccurately recorded information and somehow having a secure ledger to record transaction/contract details would solve most problems - as if having an immutable digital copy of a document implies the underlying meaning could never be wrong or disputed. This is laughable.

The interesting question is - what type of person would believe the world could operate in such a static, sterile, impersonal and transactional way? Would this person find it easy to fit into society? Would they have difficulty understanding how the larger world works? Would they get frustrated and latch onto far-fetched ideas like bitcoin which could 'revolutionize the world and end all wars'?

[–]terrorobe 0ポイント1ポイント  (0子コメント)

Thank you, couldn't have written it any better!

I guess there's a bit of a second system effect when it comes to technology in legal aspects of businesses.

For example, in Austria there was a time when digitally delivered invoices were only valid with a digital signature, which was a complete pain in the ass to implement and benefited nobody - and was a complete stretch of requirements compared to their analog equivalents.

You had the situation that a invoice delivered via fax was a-ok, but if you send it over email you're fucked. Took IIRC ~5 years until they wisened up and dropped that requirement.

And I feel smart contracts are in a similar place, for all the reasons you outlined.

[–]tweq 4ポイント5ポイント  (0子コメント)

They're not inherently a bad idea, I just don't think they have many real world uses.

Contracts that are simple enough to be expressed and verified with code are usually not the type of contract that would need to be automated in a cryptographically verified way. But real world contracts are usually much more complicated and rely on subjective judgments.

Real world contracts also rely on information and understanding that simply doesn't exist within a cryptographic system. The only solution are "oracles", external services that provide inputs to the smart contract. But those services don't have any of the touted properties of smart contracts, so it ends up being nothing more than overly complicated escrow.

Smart contracts can be used for simple things like asset ownership (arguably every bitcoin transaction is a smart contract), but in the real world these things are just as well solved with cryptographic signatures and centralized databases, rather than burning a small country worth of energy or building some sort of horrifically inefficient global distributed computing system as cryptocurrencies do.

Of course there's also one major threat with every custom smart contract: if there's a bug, you're permanently screwed.

[–]butterNcois 2ポイント3ポイント  (1子コメント)

Nothing serious has been built with ethereum's smart contracts so far despite of all the praise they've been receiving. I doubt that anything other than trustless ponzi schemes will receive much use.

This boils down to three simple things:

  • Trustlessness doesn't equal adoption for models that haven't had any issues being trust based for centuries

In other words, no smart contract will replace your bank or lawyer, and your they don't need to use them either.

  • Smart Contracts are fucking dumb

You can't put "If band doesn't produce 4 albums, don't pay them" into code.

  • Cryoptocurrency is still hard to understand and use, Ethereum just makes things worse

[–]ForgedIronMadeIt 2ポイント3ポイント  (0子コメント)

You can't put "If band doesn't produce 4 albums, don't pay them" into code.

And heck, even if you could (imagine an API into like, Pandora's databases or something), there is no guarantee of quality or good-faith effort. You can do end-runs around these things that normal people would see through.

[–]TenjouUtena 2ポイント3ポイント  (0子コメント)

Smart Contracts haven't ever solved the 'Oracle' problem. Let's say you and a buddy make a bet on the final NCAA championship game. You could try and put this into a Smart Contract, but what if your buddy says he won when he really lost? Who do you trust to give you this information? It's not like it's on the blockchain anywhere. Even excluding malicious intent, people are going to make mistakes.

Also if you look at the Lightning Network / payment channels stuff, there's still a lot of built in trust in the system.

[–]TobyTheRobot 1ポイント2ポイント  (0子コメント)

Because in almost every contract dispute ever that involves a writing the written terms of the agreement are obvious. It's not enforcement of the literal terms (i.e. the words used) that's troublesome or requires lawyers. It's determining what the actual agreement was (i.e. what the parties intended) and to what extent to which it should be enforced, regardless of what the terms say.

Probably one of the best and most colorful example is the Howard Stern lawsuit. Stern famously signed a huge contract with Sirius Satellite Radio in 2004. It paid him a boatload, but built into the contract were incentives for certain subscriber benchmarks. If Sirius had however-many-million subscribers, Howard gets a bump.

In 2008, Sirius and XM merged. The combined entity therefore had XM's subscribers as well as Sirius's. If those subscribers count, then all of the subscriber benchmarks built into Howard's contract were shattered, and the man's gonna collect hundreds of millions of dollars. But might those be defined as XM subscribers? They didn't sign up for Sirius, after all. Do they count under the contract? How, if at all, can they ever convert from XM subscribers to Sirius subscribers for purposes of Howard's contract?

In any event, it seems clear that the intent of the parties in forming the contract was to incent and reward Howard for bringing in subscribers to Sirius; not to give him a windfall if Sirius issues a bunch of debt and equity and merges with XM. But the terms of the contract say what they say, right? And there's an argument to be made that the splash Howard created made it so Sirius was the "dominant" participant in this merger. What's Ethereum say about this one?

And most contract disputes are like this, even if they're smaller. What constitutes "competent workmanship" in a contract to build an extension to a home? If a contract to deliver goods had a liquidated damages provision for a million dollars if I don't deliver by X date, does it make a difference if the weather made delivery impossible? What if I attempted delivery and you declined it? What if I attempted delivery and the temp who was filling in at the front desk didn't answer the door when my delivery guy knocked? What if he just wasn't fast enough? Still a million dollars? If not, how much do I owe you, and how's it computed? What if I tucked a provision away in the fine print of the contract that you'd never expect to be there that is really harsh to you? Still enforced? What if I covered it up with my palm when I was showing you the signature line? What if it's just worded shitty and it's not clear what anyone meant and both parties say something different?

It's shit like that.

[–]JeanneDOrc 0ポイント1ポイント  (0子コメント)

Because algorithms are not omniscient and certainly not as trustless to do what you intend them to as promised. They are yet another solution in search of a problem.

[–]Septothorpe 0ポイント1ポイント  (0子コメント)

Its like normal contracts, but with bitcoin!! Isn't a good premise to work from when humanity has been using contracts since time immemorial. Its a solution in search of a non-existent problem.