What I'd greatly appreciate is a walk through of a plausible real world use case. I find it hard to concentrate on the technology itself until I understand the application.
Crowdfunding (ICOs) is a use case.
DNS (ENS) is a use case.
Organisational Transparency (Aragon) is a use case.
Prediction Markets(Augur) are a use case.
Electricity Markets (Grid+) are a use case.
International payment card with zero fees (TenX) is a use case.
I can go on for a while longer, there are hundreds of use cases but the question is: what would be a use case for you?
They all sound great. So what I'd love to see is a well written blog post describing how Ethereum would be put to work to achieve one of those goals and to give me an understanding of its superiority within the domain.
I'm not demanding it and I'm not being snarky at all. It's just that's the level I'm at - without that kind of entry point I struggle to assess it.
Some of the use cases can be fairly simple (thus easier to see the value).
1. Me and You start a company together. We would like to split things 50/50. We setup an address such that when values are paid to it, half goes to you, half goes to me. Effectively we've created an "LLC with an Operating Agreement", but we aren't relying on political legal system / country to enforce. Enforcement is automatic and done by the network.
2. You want to setup a Trust for your kids. You create a contract that holds 10 Bitcoin / Etherum / etc. On the date Jan 1, 2035 the value of that address will be forwarded to your child's address. Again, we created a "Non-Revokable Trust" that is network enforced. No need for probate, courts, trustees, etc.
> Me and You start a company together. We would like to split things 50/50. We setup an address such that when values are paid to it, half goes to you, half goes to me.
What is the real world use case for that, though? That seems like a contract that makes sense as long as you and I trust each other, which rather negates the purpose of a contract.
Some immediate issues that strike me:
* There's nothing to stop either of us offering the services of the company outside of that contract;
* There's no way to ensure that one of us isn't freeloading;
* If my wallet gets stolen you'll be paying half the earnings of the company to the hacker until the contract is somehow voided;
* Which raises the question of how can this contract get voided? Do either of us get to void it whenever we feel like it? What if I've lost my key? Do we potentially just have to live with the money being paid into hacked / unusable accounts forever?
So all you've really saved is the bother of dividing a number by two and doing bank transfers, in return for which you've gained significant operational burdens.
1- 50% of what? Revenue into the company or dividens/salary etc out of the company? if it's the latter, then, how do we make sure that you don't spend $500.000 for trash bins for the office? Do we have to make sure every decision goes through the network? (i.e. who is the authority to decide what is reasonable and what is blatant fraud if things go sour AND is it even possible to make sure that nothing possibly can go sour[I don't think so.]. So, fraud is possible, and in the case of fraud, -say; the network retroactively decides that something really constitutes a fraud, hence is a crime- who is the enforcer of the punishment[which is most likely to be physical: like prison sentence]?)
2- How do you make sure that your child doesn't sell it in 2025 and buys a Lambo? (which is a problem you don't have with regular Trusts AFAIK)
Parent gives you an answer that is scoped to "divide incoming by half and send the halves to given addresses" and you criticizing that the answer doesn't cover all scopes you can come up with?
Him: "This baker makes bread rolls". you: "What about dark bread? What about non-bread items? What's his broker?"
The only thing seckimjohn showed is that contracts, paper or "smart", are only as good as they're written. Since contracts such as _red gave, "we are friends, this is our company, we share the EBT equally", exist right now, it's a perfectly realistic use case for a smart contract. Hell, I'd even do that for a small project.
Smart contracts being fixed and errors being exploitable is a valid criticism but it's not the be-all-end-all argument for them to have no real world applications.
In the trust fund example, you cant stop the recipient trading their key or wallet early, as you have no way to verify the human holding it.
Unless you keep that access with some legal guardian. In which case your security still sits in the legal system, as it would if you just used a trust fund. So whats the point?
Again in the company example, it only works if you both observe that the coins mean shares in company. Which you can only really enforce with a legal agreement, but again, why not just have a legal agreement that says you split your share?
They completely breakdown at the physical barrier. Darknet markets only work because the seller doesnt control the market and has a deposit. But apart from that they can transact anonymously, that part has nothing to do with blockchain.
how do you prove to the bank the non-existence of a clause that would void the trust if this is done(and noticed)?
the main point I tried to make above was this: in normal life there is the "human factor"; like, if you look at a situation, you can reasonably comment on whether it's a positive situation from an actor's perspective; whether the actors were engaging in fraudulent activity etc. In digital-only world, there is no such thing as "probable cause", "reasonable doubt" etc.
which makes the application of smart contracts to real life intractable(IMHO borderline impossible for complex situations for the near future[~10 years?]).
The earliest smart contracts will likely involve things that are relatively easy to verify, e.g. a bet that the price of ETH will be above X at Y date and time.
Ensuring that accurate, real-world data gets entered into the blockchain to enable broadly useful smart contracts is going to be an interesting area to monitor over the next few years.
Augur attempts to align people's incentives to accurately report on real world events, like political events (aka Oracles). Axa pays out on delayed flights with a new flight insurance product[1], from data gathered from public flight information, which triggers an automated payout.
"a bet that the price of ETH will be above X at Y date and time"
Not so fast. Who says 'what the price of ETH' is? There is no such thing as 'the price of ETH' - there are simply buyers and sellers each willing to sell and buy at different amounts.
You'd have to agree on a mechanism to agree on what that price even is.
And what about odd fluxuations? Market cheaters - i.e. getting a hold of a vast quantity of ETH just to jolt markets for a few hundred milliseconds just to jigger some contract?
As far as 'paying out on delayed flights' - that's a very cool idea, but I can't imagine why on earth it would be in ETH on a distributed ledger.
> There are so many things that go into contracts that cannot be articulated in 'code' that this all hardly makes sense.
I think this is actually something I've been trying to articulate for a while now anytime smart contracts come up.
Legal contracts only specify the criteria and conditions surrounding a contract. Smart contracts must describe that PLUS all the very specific instructions on how to validate those criteria/conditions which adds a massive amount of complexity into the contract (and more potential for loopholes).
Well I'm entirely new to this and pretty blockchain sceptical but I don't think SeckimJohn showed why neither work, did he?
As I understand it each concern requires some kind of function/method which addresses it within the smart contract, right? So the real problem is that once you publish the contract you better make sure you haven't forgotten something important...
Basically both examples in order to work would need legal enforcement or guardianship outside of Ethereum.
Which they both need to work today anyway. So whats the point?
Until ether contracts can hold people to their word, are recognised by the judicial system (which wouldn't be able to effect it without some weird judge API), or is able to enforce some kind of judiciary process itsefl (SKYNET WARNING), they'll always break down at the physical barrier.
He didn't show that neither work, but the examples he did give were trivially bypassed and didn't seem "real world" at all.
For instance, I can't think of any corporate structures that splits income in half. Usually the money is run through the company and costs etc. are taken out first. So this isn't a real world example?
They sell the proof of identity or authentication information that is used to associate a person with an Ethereum account to someone else, out of band. Ethereum only knows the address to send to, and has no idea who or what is behind it at the time.
If the beneficiary dies before 2035, their heirs will collect, for instance. It is pretty simple to do a TVM calculation to determine the current value of a future benefit, and without all that legal-system stuff that is being bypassed through use of smart contracts, the intent of the trust creator can be more easily bypassed.
" the child would not have a way of selling that Ethereum before 2035"
In 'no legal land' it would be easy enough to sell a bunch of 'locked until 2035' etherium - wrapped in another ether contract like a future or something. Much the same way lottery winners who get an annuity instead of a lump sum can then sell that annuity for a lump sum.
As DennisP said, yes there are mechanisms to ensure date is agreed upon.
Your question of "consensus" brings up other interesting points. I think an increasingly valuable service in a new smart-contract world will be to have an "Outcomes As A Service" arbiter. This would be a trusted 3rd party that publishes real-world outcomes in a method that can be accessed reliably via smart contracts.
Who will win the football game between Dallas and New Orleans on Nov 22, 2019? Who is winner of 2020 Presidential Election? etc....Essentially a service that you can tell them you want to track some real-world event and publish outcome for use in smart-contracts. Obviously this 3rd party would need to be transparent, have an open appeal process, be neutral and earning income not tied to outcome, etc.
What happens to gaming laws (and cities like Las Vegas), in a world where sports betting can be done with no middle-man needed?
The nodes don't all separately query the source. Instead, someone queries the source and sends a transaction to the network, with the data and the source's signature. The transaction gets incorporated into a block, updates the state, and now everybody has the same data.
Yes, every block includes a timestamp so everyone is forced to agree, and nodes won't forward a block if the time is too inaccurate. Miners have some leeway to manipulate time a bit, so you wouldn't want to use the block's timestamp as a random seed for a lottery, but just using it as a coarse deadline works fine.
Interesting. So in the case of 1, I guess I could have a function in the contract called something like sellUserXStakeTo(userId Y), that would let me transfer my 50% ownership to another user Y. And that method would be secured to only accept being called by me, or by another contract written by me.
Then if a user Y did come along and wanted to buy my stake, we'd agree a price P, then I would write a second contract that said: If user Y pays user X amount P, then call sellUserXStakeTo(Y). Then, once I'd published it, user Y would verify it, then pay the money, secure in the knowledge that I could not alter or back out of the deal.
I have to confess I don't like that article. I admit part of that is merely aesthetic...but principally it doesn't allow me to grapple with examples that are rooted in the now.
To give you an example of what I mean: when Bluetooth was in its early days everybody kept repeating this stuff about your Fridge being able to talk to your Toaster. They wrote imaginative articles about Toasters that told Breadbins they had just toasted the last two slices of bread or whatever. This didn't help me at all to understand a perfectly good technology. It was, frankly, distracting BS. If someone had said you could have headphones without wires (and perhaps they did) I would have gone: Ah hah! Now that may show you the hard limits of my technological imagination...but to me that's the kind of the thing that sells a new technology.
I think simple examples of things we currently need to do, with practical examples of how we can do them a different way is what helps me to understand things.
yes but any of that stuff can be accomplished with conventional databases and software stacks. What specific problem with respect to implementing any of the above is blockchain solving that conventional stacks can't?
You could argue that ICO-style crowdfunding is the only one of these problems that's currently not solvable in any other way, purely because it's impossible to get other people to invest obscene amounts of money into dubious projects if you don't have the ability to easily give them "tokens" of some kind in return that they can hope for to increase in value, regardless of whether the tokens are useful for their advertised purpose or not.
This "problem" (which is kind of an euphemism, you could just call it "scamming") is not solvable without having a blockchain as a neutral entity that secures the tokens in question. Just giving people the same essentially-worthless "fantasy tokens" stored in a conventional database that you promise to maintain will not cut it, as people won't give you hundreds of millions in this case, but will readily do so once your tokens are on a blockchain.
This is what I'm waiting for someone to explain. It's the same with blockchain, though. It's all a very neat concept, but it doesn't solve anything real-world except to power Bitcoin.
Smart contracts just sound like... normal contracts. Like the ones that have been around in some form or another for millennia. Most contracts are just "if X then Y" but using legal lingo instead of code.
The difficult part about something like a prediction market is that it's hard to get an authoritative source for the result. How can you prevent a fake result being sent out, for example?
I completely understand that. I answered more or less the same question on Reddit yesterday and I hope it can bring some value here too:
In the same way that Bitcoin allows people to send money to each other without having to trust the other person, you can do computation without having to trust a centralized party to do that computation. And it doesn't have to be "computing" in the way you might think about it; it can be tracking, storing and securing information (generally a hash of that information) with some logic around it (who can append, payments, vote on things, etc.).
I wrote a blog post about some potential use cases. Most of which are realized only with smart contracts. Some are pretty "out there," but in the end it up to the innovators of the world to decide what we can or cannot do with this.
Having recently gone through the prolonged pain of probating a will, I think smart contracts could be used to enforce wills without the need for probate. But of course, that opens up its own can of worms, like the need for potential heirs to maintain a digital identity for possibly decades. What happens if someone cuts all digital ties and effectively becomes a hermit? At least with ordinary probate, you can simply visit them in person and hand them some papers to read and sign.
My mom works for Mercedes and she's been telling me (She's really tech-y) they really wanna use Blockchain/Smart contracts to help validate someone before they purchase a car. Essentially before you buy a car, you need to verify you have the credit, cash, etc.. whatnot. She says that Diamler/Mercedes think they could make this a lot smoother with smart contracts and what not.
I know that one of the major power companies in Germany works on chargers for electric cars based on Ethereum; send x ether to the smart contact and the charging station will let you charge your car accordingly.
What bit of that needs a smart contract? Seems perfectly do-able without one, and you still need the same levels of trust even when there's a smart contract in there.
The smart contract is the tool to make sure* that transferred Ether results in power being transferred. Of course we could just use a blockchain like Bitcoin and define "send x BTC to wallet y and I promise you will get your power" - but in that case, the blockchain can just guarantee the value transfer, not the subsequent actions being undertaken.
* since this involves interaction with the outside world, I don't know a way at this point that 100% guarantees that your get your power. Curious how they tackle this.
Ethereum cannot guarantee that power will be transferred. It's just numbers in a blockchain. Users still have to trust that the electricity provider will give them power. The blockchain has just added complexity with no benefits here.
This seems like a perfect use-case for payment channels, e.x. Lightning Network:
Car continuously delivers micropayments to charger while charger continuously delivers power to car, if one stops the other also stops. If the power is cut off prematurely the car only loses maybe a couple cents worth of power.
(Payment channels are built using smart contracts, but they’re simple enough that Bitcoin’s more limited smart contracts can do it)
That happens today: when I pump gas into my car, the price on the display goes up. When it hits the limit, the gas flow stops. No blockchain is required.
The difference is there is no counterparty risk. Not with the gas station, not with Visa.
Admittedly that’s not a big problem with gas pumps (at least where I live, though card skimming is definitely a thing) but you can easily imagine other use-cases. For example your computer could automatically pay an untrusted WiFi hotspot per MB (and automatically pay the VPN you use to secure said untrusted WiFi hotspot)
Zero counterparty risk digital microtransactions have never been possible until now. I’m pretty sure it will eventually be cryptocurrency’s killer application.
There's still counterparty risk: I could start paying the wifi hotspot but there is no guarantee that it will let me use what I've paid for. At any point, the next microtransaction could fail because the counterparty decides to steal my cash.
My point is if you can make the microtransactions arbitrarily small you can make the counterparty risk negligible.
If I’m sending 1 cent micropayments continuously as long as the services are being delivered (e.x. 1 cent per 1 MB WiFi, 0.1 kWh electricity, or 0.5 oz gasoline, etc) then the most that can be stolen is 1 cent, so why would they bother?
I think the idea of Ethereum is that all infrastructure is there, so with a very thin layer (a smart contract) you get everything else (distributed computing, payments, crypto, even storage) for free.
