Building a financial system without some level of flexibility and human judgment seems like an awful idea. Forgive the lengthy story, but this tale courtesy of Matt Levine is perfect for this [1]:
> The California electric grid operator built a set of rules for generating, distributing and paying for electricity. Those rules were dumb and bad. If you read them carefully and greedily, you could get paid silly amounts of money for generating electricity, not because the electricity was worth that much but because you found a way to exploit the rules. JPMorgan read the rules carefully and greedily, and exploited the rules. It did this openly and honestly, in ways that were ridiculous but explicitly allowed by the rules. The Federal Energy Regulatory Commission fined it $410 million for doing this, and JPMorgan meekly paid up. What JPMorgan did was explicitly allowed by the rules, but that doesn't mean that it was allowed. Just because rules are dumb and you are smart, that doesn't always mean that you get to take advantage of them...
> The U.S. legal system has built up a pleasantly redundant system of safeguards so that investors usually get more or less what they expect. If you invest in a U.S. public company, you are in a sense signing up for a certificate of incorporation and bylaws, which are written in lawyerly language. But you also get a prospectus that explains the terms of your investment in relatively (relatively!) plain English. Also the terms of that investment -- how you vote, what duties the company owes you, what rights you have, etc. -- tend to be constrained by federal securities law, state law, stock exchange listing requirements, underwriter due diligence, public policy, custom and tradition. Even if you invest in a company whose bylaws say that the board of directors can sacrifice you to a demon on the first full moon of a leap year, it's unlikely that that term would be enforced. There is only so much leeway to depart from the standard terms.
> If you invest your Ether in a smart contract, you'd better be sure that the contract says (and does) what you think it says (and does). The contract is the thing itself, and the only thing that counts; explanations and expectations might be helpful but carry no weight. It is a world of bright lines and sharp edges; you can see why it would appeal to libertarians and techno-utopians, but it might be a bit unforgiving for a wider range of investors.
> The California electric grid operator built a set of rules for generating, distributing and paying for electricity. Those rules were dumb and bad. If you read them carefully and greedily, you could get paid silly amounts of money for generating electricity, not because the electricity was worth that much but because you found a way to exploit the rules. JPMorgan read the rules carefully and greedily, and exploited the rules. It did this openly and honestly, in ways that were ridiculous but explicitly allowed by the rules. The Federal Energy Regulatory Commission fined it $410 million for doing this, and JPMorgan meekly paid up. What JPMorgan did was explicitly allowed by the rules, but that doesn't mean that it was allowed. Just because rules are dumb and you are smart, that doesn't always mean that you get to take advantage of them...
> The U.S. legal system has built up a pleasantly redundant system of safeguards so that investors usually get more or less what they expect. If you invest in a U.S. public company, you are in a sense signing up for a certificate of incorporation and bylaws, which are written in lawyerly language. But you also get a prospectus that explains the terms of your investment in relatively (relatively!) plain English. Also the terms of that investment -- how you vote, what duties the company owes you, what rights you have, etc. -- tend to be constrained by federal securities law, state law, stock exchange listing requirements, underwriter due diligence, public policy, custom and tradition. Even if you invest in a company whose bylaws say that the board of directors can sacrifice you to a demon on the first full moon of a leap year, it's unlikely that that term would be enforced. There is only so much leeway to depart from the standard terms.
> If you invest your Ether in a smart contract, you'd better be sure that the contract says (and does) what you think it says (and does). The contract is the thing itself, and the only thing that counts; explanations and expectations might be helpful but carry no weight. It is a world of bright lines and sharp edges; you can see why it would appeal to libertarians and techno-utopians, but it might be a bit unforgiving for a wider range of investors.
[1]: https://www.bloomberg.com/view/articles/2016-06-17/blockchai...