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Cheng


Total Posts: 2835
Joined: Feb 2005
 
Posted: 2017-09-15 08:36
I am scratching my head what role network effects play. Take ISDA. As long as enough people agree that ISDA is ok for them and a new (probably better) way costs a bunch of bucks to set up they probably won't go for it. To be precise: everybody waits for everybody else to move first, thus nobody moves. And your smart ISDA is doa.

Unlocking physical locks otoh doesn't require network effects so it might work. But what is the advantage versus some SSH connection to send your smart lock a shell command?

"He's man, he's a kid / Wanna bang with you / Headbanging man" (Grave Digger, Headbanging Man)

eläin


Total Posts: 60
Joined: Jun 2010
 
Posted: 2017-09-15 11:45
@gax

In the past I had to do a lot of mental gymnastics to justify the hype about blockchains and smart contracts. Today, I need less of it.

If you have a private blockchain, then yes, standard database is probably better. I think the whole point of blockchains/smart contracts is to connect value transfer with code. And this is why "blockchains" need to be done through Bitcoin/Ethereum/tokens, and not private blockchains. Once you can transfer value via code, things become easier.

With smart contracts I would start small. Paying your kids 5euros a week with a smart contract is a good start, it happens automatically without you ever having to worry about remembering if you have paid or not.

Second important thing in my opinion is to forget trying to decentralize everything. Yes, blockchains need to be decentralized but I am a strong believer in that the services on top of blockchains should mostly be centralized, as it improves end user experience. For example there is a clear need for Bloomberg like data feed API that you can plug your smart contract into, the data would include anything from weather, sport results.. basically all the data in the world. Now your child can start betting against her friends through self created smart contracts.

When replacing an old system there are times when no matter how much better the new system is, it wont be replaced because someone using the old system will not agree to upgrade. But when creating something new, even marginally better system can be chosen. Some systems will never get upgraded, letters are still sent through mail everyday. But with time, the new system gets more and more adopted.

Moving a legacy business on top of let's say Ethereum, is a huge risk. But if the business started on top of Ethereum and grows from there, the risk that Ethereum "blows up" is inherited already as part of the business in the first place. I am not sure if this makes any sense. For example you would not insure anything larger than the insurer can pay you. Same with smart contracts, start small and go from there.

I think the whole point of this wall of text is to say that many legacy systems will not get upgraded or benefit from blockchains. And the other side of the coin is that the best blockchain use cases will not care about the legacy system. They will work in their own world. Do the users of animated emoji care about postal mail? Do the users of postal mail care about animated emoji?

AndyM


Total Posts: 2319
Joined: Mar 2004
 
Posted: 2017-09-15 13:45
Let's try to pare this down:

Smart contract = small piece of if/then code? Is that fair? In the use case mentioned above, it seems to be a simple standing order to pay your kids some pocket money. How is this supposed to change the world?

Re bitcoin, it seems the consensus is that the value of bitcoin lies in access to the blockchain. I have a couple of qualms about this. Firstly, new blockchains and similar are springing up all the time; many may turn out to be much better and more practical implementations. Secondly, there's an element of circularity, in that bitcoin derives its value from the blockchain, but the only use of the blockchain is to record the ownership and transfer of bitcoins.

I can see the obvious utility: if you're stuck in a country with capital controls or similar, these things have obvious appeal. But you ultimately want fiat (or some other asset) out the other side, so really you're just renting bitcoin (more precisely, renting the blockchain). So the bull case boils down to: surfing the wave as Chinese demand (temporarily) swells. By the time every last yuan is out of China and into Vancouver real estate, you'll be long gone and sipping boat drinks. Fine; it's a thesis. The obvious problem with this is that the bigger bitcoin gets in China, the more likely the authorities are likely to crack down - as we're starting to see already. So bitcoin becomes just another Chinese hot potato thesis, as we have seen from time to time in commodities, Bordeaux etc. All fuelled by a seductive type of Chinese arithmetic "adding an inch of British cotton to the shirt-tail of every Chinaman". If that's what you're playing, fine and well, but it helps to be clear what the thesis is.

I used to be disgusted; now I try to be amused...

eläin


Total Posts: 60
Joined: Jun 2010
 
Posted: 2017-09-15 15:42
Are the odds ever on the persons side who is trying to argue that X is going to change the world before it has happened.. I would say if/then code is pretty fair. Kids pocket money is not going to change the world. I myself just prefer examples of real world examples that I know are happening rather than painting some futuristic scenarios where you have no idea will it actually work. Quick googling finds hundreds of ICOs based on Ethereum that all try to change the world through smart contracts. Will they work.. I do not know and as I have stated before I am very skeptical about most of them.

Bitcoin.. I will go with your renting bitcoin analogy. Well, I think there are more to it than China.

https://coin.dance/volume/localbitcoins/VEF Venezuelan are using it to escape hyper inflation.

https://coin.dance/volume/localbitcoins/RUB Russians are using it to escape sanctions and inflation.

https://coin.dance/volume/localbitcoins/USD Americans are buying drugs online with it.

https://coin.dance/volume/localbitcoins/CNY Chinese P2P volume exploded last time the government intervened with the exchanges. And to my current understanding of the current situation is that the "order book exchanges" are currently made illegal, P2P trading is allowed to continue.

https://anacoinda.github.io/localbitcoins/NGN.html Nigerians are using it to scam people online.

AndyM


Total Posts: 2319
Joined: Mar 2004
 
Posted: 2017-09-15 16:07
Sure; I was using 'China' as shorthand for anyone and everyone who needs to get the hell out of Dodge. But I would guess that China is the big dog here; relatively speaking, I don't expect Venezuelans and Nigerians to move the needle much. As goes China, so goes the market? Anyway, you have the same problem in every country. When it's under the authorities' radar, it's all well and good, but rampant success creates the preconditions for failure.

I used to be disgusted; now I try to be amused...

gax


Total Posts: 13
Joined: Apr 2011
 
Posted: 2017-09-15 16:17
@eläin Thanks, as with all these new technologies, it seems the uses they're put to, rather than the technology itself will determine how influential they become. Outside of the China/3rd world country use cases though, there doesn't currently seem much advantage for your local retailer to jump on the bitcoin bandwagon. When the web first appeared were its benefits obvious?

jslade


Total Posts: 1093
Joined: Feb 2007
 
Posted: 2017-09-15 18:04
The use cases are things that can happen on a network that involve transfer of value. Here's another example:


https://www.coindesk.com/axa-using-ethereums-blockchain-new-flight-insurance-product/

"Learning, n. The kind of ignorance distinguishing the studious."

Kitno


Total Posts: 346
Joined: Mar 2005
 
Posted: 2017-09-15 19:16
This thread seems split into BitCoin, blockchain and smart contracts.

AndyM hits the nail on the head RE: smart contracts. They are glorified if/then statements and however you cut it you need trusted inputs to the network, which is why there has been so little adoption. This is mostly because it is the input that people want to automate rather than the logic - and centralized software systems already address the if/when logic!

BitCoin is a wonderfully elegant implementation of blockchain - albeit with woes.

Most blockchain start-ups (say circa 97%) should be using a centralized DB.

Nice to see AXA has finally found a working usecase - it's been searching for 2.5y without much success.

Salut toi, je vais au Social Club avec des amis ce soir, c'est au 142 rue Montmartre. J'ai mis ta robe préférée. Viens me trouver.

AndyM


Total Posts: 2319
Joined: Mar 2004
 
Posted: 2017-09-15 21:30
I guess use cases are in the eye of the beholder. Take the AXA thing; to some, it may seem like the beginnings of a revolution, to me it reminds me of companies opening storefronts in Second Life. At any rate, none of it seems like anything to get overly excited about either way. I'm sure people are getting well paid to implement, though.

I used to be disgusted; now I try to be amused...

chiral3
Founding Member

Total Posts: 5009
Joined: Mar 2004
 
Posted: 2017-09-15 23:05
Fizzy is interesting. I'd venture to guess it's a bit like autonomous cars. People hear the term "autonomous" and they think getting whisked around on autopilot, not realizing that there is this slow, lazy evolution of cruise control to driver assist, to various stages of quasi-full-autonomous driving.

Nonius is Satoshi Nakamoto. 物の哀れ

chiral3
Founding Member

Total Posts: 5009
Joined: Mar 2004
 
Posted: 2017-09-15 23:12
If that gets legs it would mean there are whole markets that targets "dyads" that aren't mediated by the legal system or are excluded in contracts. Basically any exchange where some feels wronged by the belief that there was an agreement in place.

Nonius is Satoshi Nakamoto. 物の哀れ

Kitno


Total Posts: 346
Joined: Mar 2005
 
Posted: 2017-09-15 23:51
Smart contracts are just necessarily rigid programmatic interpretations of legal contracts. You can't negate the legal system.

Much as I dislike lawyers they do have value - there are degrees of latitude in contract law, for example, in English law: "best efforts", "all reasonable efforts" and "reasonable efforts". These are length of string issues and can't be quantified at which point we need to get to a 'native' smart contract world where quantification works but there will always be exception (if not more so in smart contracts) than our present world, which is where the courts step in. That last step is what we are trying to avoid...
Then I come back to trusted inputs for a blockchain system. I could begin about governance too... All systems need an arbiter and redress system.

Does anyone recall the DAO hack in 2016 and the 'central bank' stepping in?

The gist of my post is agreement your penultimate post chiral3, while I generally disagree with you last post.

Salut toi, je vais au Social Club avec des amis ce soir, c'est au 142 rue Montmartre. J'ai mis ta robe préférée. Viens me trouver.

EspressoLover


Total Posts: 240
Joined: Jan 2015
 
Posted: 2017-09-16 06:46
@rowdy

Thanks for the detailed response. Enjoyed the paper, learned from new things. I think at this point, most of out disagreements have to do with facts on the ground, rather than general principles. To help crystallize the boundaries between our opinions I've tried to lay out very concrete beliefs at the end of every point.

2a) @patrick's response had a pretty good explanation about how these things work.

Well, I was just trying to construct a conservative lower-bound. Assuming that BTC futures become much more liquid than the baseline scenario, that gives way more futures liquidity to push around the spot. You could easily see 10%+ returns.

But even if not, 2.7% is a pretty juicy return considering the minimal market risk. (My uninformed understanding of BTC lending is that it comes with substantial risk of wipeout, especially when the rates are 100%+). You're talking about maybe 30 minutes of pre-settlement price risk while you build up your futures position. And if you're a market maker or directional trader with an already large position going into settlement, virtually no incremental risk. Assuming monthly expiry, you're making 37% return, with maybe 5% drawdowns, and only showing up to the office twelve days a year. I don't think they'll be any shortage of enthusiasts.

This type of manipulation acts as a persistent tax on the non-manipulating derivative investors (who on net are getting shitty settelements). But the real risk to market stability is when things go pear-shaped. Normally if the spot market makes a big move, the futures market acts as a dampener. Arbitrageurs can buy the spot and hedge by selling futures until the two come back into line. But that relationship breaks immediately prior to settlement. Plus all the extreme gamma hedges, assuming options settle at the same time. Markets tend to become very jump-y, particularly when futures markets are much more liquid. It's really easy for this type of situation to trigger a cascade of margin calls and stop losses.

Empirical prediction: Conditional on US listed Bitcoin futures that trade over 100 million notional ADV. The correlation between [pre-settlement return] and [post-settlement return] will be less than -0.1. Here [pre-settlement return] means the percentage returns from [spot price 15 minutes prior to start of expiry settlement procedure] to [settlement price]. [post-settlement return] means the percentage return from [settlement price] to [spot price 15 minutes after end of settlement procedure]. Sample size will be however many points are needed to reject either null hypothesis of less than -0.1 OR greater than -0.1 with a t-stat of p<0.05

3) That makes sense about Zcash. Didn't realize that it sucks so bad. Definitely changed my mind, Monero all the way.

> I just got from your comment that you thought Monero / Zcash somehow didn't provide any incremental anonymity or privacy relative to BTC.

Didn't mean to convey this. Definitely agree that Monero is certainly more anonymous BTC. Especially when you take into account the chance of making a mistake (forgetting to mix, connecting to wallet over clearnet, etc.). If I had to do something I wanted to hide from the authorities, I definitely would use Monero. But then again I also wouldn't be breaching credit bureau databases or sending sheets of acid through the mail.

Which gets to the more relevant point: will the existence of Monero crowd out BTC's usage by criminals. A lot of the BTC suits seem to be relying on this prediction. It would clean up the BTC ecosystem, which in turn would make regulators ease up, improve public images, make straight-laced investors comfortable, etc. But I just don't see it happening. Monero will definitely take some black market share, but BTC will be king of the underworld for a long time.

Even though BTC has cryptographic risks that Monero doesn't, these risks are orders of magnitude less than the OPSEC risks that even well-run criminal operations take. For every drug dealer caught by blockchain analysis there's a thousand caught by the postal inspector. Switching cryptocurrencies is just not a priority. Plus there are path dependencies, that lock in BTC because it was there first. A lot of DNM users only deal with BTC, technically illiterate ransomware victims won't be able to deal with a tertiary altcoin, hackers will continue to prefer the exchange's bitcoin wallets because they're more valuable, etc.

Then on top of all this, criminals are not just evaluating cryptos as a medium of exchange, but also as a store of value. The most effective laundering scheme is just to sit on your coins until the statute of limitations expires. Most criminals aren't pulling all their profits out in real-time. Most of it just quietly accrues in untouched wallets. Ross Ulbricht had virtually nothing in fiat assets. BTC is a much more established asset than XMR, and hence safer for long-run savings.

Empirical Predictions: One year from today, of the top four most active DNMs, at least three will accept BTC. Of the top ten most active DNM vendors across these markets, at least seven will still accept BTC. Of the four largest ransomware attacks over the next year, at least two will accept BTC.

5) [out of order, I know] Everything I know about law enforcement I learned from watching The Wire. First LE pretty much has the resources to solve any particular crime, but falls well short of the ability to solve every crime. Second, criminals may be dumb and impulsive, but prosecutors and police chiefs are Machiavellian, ambitious and image-conciounse. Given the choice between easy busts that put drugs and money on the table for the Six O'clock News, OR slow-boil, hard-slog investigations that might turn up empty, but could make a meaningful impact; they will choose the former nearly 100% of the time. When it comes to skirting the law, security by obscurity is absolutely a valid approach.

Blockchain analysis may lead to a small percentage more arrests on the margin. But it's highly unlikely to hurt any of the largest or most sophisticated criminals. It certainly won't be effective enough to shut down a significant percentage of BTC black market activity. The War on Bitcoin Laundering will be no more effective than the War on Drugs. You're right that blockchain analysis combined with careful detective work certainly could lead to some serious busts. But that won't happen, following up on some statistical clustering analysis is too long, too expensive and too uncertain for career-focused US Attorneys. Bureaucrats don't have grit. The original Silk Road investigation took more than two years, even after Ross Ulbricht posted his real name on WordPress.

Watching the money works in fiat-space, because (outside cash) the only way to move money is to get a bank to sign off on it. Banks require intense capital commitment, are notoriously difficult to start, number very few relative to end-users, can be arbitrarily seized by the authorities, and require extensive legal presence. In crypto world the atomic entity is the wallet. Wallets require virtually zero capital, are trivially easy to create, number far more than end-users, cannot be seized unless the private keys are captured, and require no legal presence or documentation.

Laundering through the banking system is tough, because corrupting a bank is very difficult. This leads to a virtuous circle where very few banks are corrupt, so policing the few bad ones is easy. Also the state can make arbitrary, onerous demands on banks, like KYC/AML. Corrupting wallets is trivially easy. Arbitrarily long chains, cycle and shell games of wallets can be made with little effort and no legal risk. Transfers are completely undocumented. If wallet A is two hops away from AlphaBay, is it laundering money, or does it belong to a coffee shop that a drug dealer regularly shops at? A dirty wallet can transfer small random amounts to thousands of random clean wallets to muddy the waters. Security by obscurity is a very effective approach with wallets, whereas it just doesn't work with banks.

Empirical prediction: Take the four highest-profile bitcoin-related hacks in recent news: WannaCry, Bitthumb, Nayana, and Equifax. No more than two will have major arrests within one years time. No more than one will be discovered due to an investigative chain starting with blockchain analysis.

4) Maybe it's possible that mixer's will prove to be the Achilles heel of black market bitcoin activity. But I doubt it. There's zero indication that any major mixer has been compromised, either internally or externally. I say that because there's still zero arrests related to mixers. Criminals aren't worried about the hypothetical possibility of getting snagged by their mixer, because they take larger tangible risks all the time.

You are absolutely right, Helix could be a silent honeypot, or may be keeping storing detailed logs to plea bargain with later. But so far it hasn't failed yet. Even if it did, the effective risk for a random user is de minims. Security by obscurity. Worse case, maybe we see two dozen low-hanging arrests out of thousands of users, but that's it. The DOJ ain't the Cheka. All they care about is money and drugs on the table, grabbing some headlines and moving one step closer to GS-1.

Criminals may be dumb, but they are Darwinian. No one's making AlphaBay's mistakes again, because AlphaBay's admin is now in Federal Pound-Me-in-the-Ass prison. If one mixer gets compromised, people will layer multiple mixers. If most of the trusted mixers get compromised, the black market will move to something trustless like CoinJoin. If a CoinJoin backdoor is discovered, some new implementation will patch that. Hackers can innovate much faster than LE can catch up. Yes, some criminals will go to jail in the learning process, but unless you sweep a major percentage of the criminals all at once, it won't disrupt existing use patterns. Citation: 100 years of history from the plain old analog War on Drugs.

Regarding volume capacity, the major mixers have more than enough for anyone's need. You don't need to launder your entire revenue, just your living expenses. BTC makes a fine retirement nest egg. A Helix user can process 21 BTC an hour. That's more than enough to allow a dozen person crew to live on $1 million a month. Even if Helix is compromised, that traffic and mixing capacity, will move to whatever the new Schelling point is.

Empirical predictions: Within one year time, Helix will still be operational with no publicly known compromises or associated arrests. If Helix is compromised, no more than 25 user arrests will directly result from it. The largest mixer (trusted or trustless) will have capacity of at least $250,000 per month per user. At least one major bitcoin mixer will exist with no publicly known compromises or associated arrests.

rowdyroddypiper
NP Wrestling Champion

Total Posts: 1178
Joined: Apr 2004
 
Posted: 2017-09-16 10:41
@patrick - thank you for the run-down on the mechanics, I was missing that you could monetize your trade on either instrument (spot vs. derivatives). Thanks for clearing it up.

@jslade - interesting that you stacked slock.it right after the DAO hack, coincidence?

@andym - I really don't like the term smart contracts, for the reasons you've stated and more. They are maybe at best functions, and perhaps the functions can be combined to do something useful, but I have yet to see it. The below link is from one of the "leading companies" in the smart contract/ethereum space and oh my god where do you even begin to plumb the depths of stupidity here. The good part starts exactly an hour in.

http://etherinthenews.com/video/introduction-to-ethereum-and-smart-contracts/

@chiral3 - nice to see you.

@espresso - thanks for your detailed responses. It's been a nice process. I appreciate your empirical predictions. I'm short of time at the moment but wanted to clear up two things: If your knowledge of LE tools and tactics comes from the Wire I appreciate the honesty, but this is not how sophisticated investigations run. CTF/AML provisions are real as hell and anything that touches money and how it moves has vast resources to monitor and trace. As you've said they can't stop every crime, but the idea is to make the game of law enforcement duck, duck, goose high stakes enough to keep the punters out. The real bad guys are more important to isolate and track, as black bagging them is not an option in a lot of cases.

two - which AlphaBays admin is in federal custody? The one I know of is probably cremated but hung himself with a towel at the NSB detention center on Vibvhadi-Rangsit rd.

Revolution to the mean

jslade


Total Posts: 1093
Joined: Feb 2007
 
Posted: 2017-09-16 21:17
There is no implied commentary between slockit and the DAO. slockit is a stupid proof of concept project. The DAO wasn't though, which is why the SEC commented on it. You guys are thinking about smart contracts wrong; the DAO was a cryptographically enforced joint stock company; accounting, voting on decisions, etc: all happen on blockchain. The law can say whatever it wants (in fact, the SEC said this is a terrible illegal thing to do); the code would run with or without them. Exchanging its assets for dollars, which largely would have been other DAOs or other kinds of smart contract, such as ERC20s, is extremely difficult without cooperation from KYCed dollar exchanges. However, imagine you live in, say, Venezuela. You can form a joint stock company without any need for enforcement by your local government. This is pretty interesting.

There are actually other DAO type tokens out there which function properly. And of course, other non-DAO token sales provide an alternative to dealing with venture capitalists.

I also think blockchain based order books, however impractical, are interesting and significantly more sophisticated than an if/then statement. I've already linked to one example of this; there are actually several.

"Smart contracts" is a stupid name, and the developers of such are generally smurfs, but the idea contained in them is a distributed (albeit slow) computer with cryptographic proof of state. Is it a game changing technology? I dunno, but it's more than an if/then statement, which is one of the reasons why people are shitting their pants over it.

"Learning, n. The kind of ignorance distinguishing the studious."

katastrofa


Total Posts: 361
Joined: Jul 2008
 
Posted: 2017-09-16 22:03
"Form a joint stock company without any need for enforcement by your local government."

It's called a mafia.

jslade


Total Posts: 1093
Joined: Feb 2007
 
Posted: 2017-09-16 22:29
Yeah, but the arguments are less interesting and you don't have to give anyone cement overshoes.

"Learning, n. The kind of ignorance distinguishing the studious."

EspressoLover


Total Posts: 240
Joined: Jan 2015
 
Posted: 2017-09-17 03:32
@rowdy

You are right about AlphaBay, I was wrong. Tried to hard to shoehorn in an Office Space reference.

Makes sense. You could easily prove right. Not really sure how much I disagree with you anymore. My last retort is that I think the BTC ecosystem is an entirely different beast than the traditional banking system. I think the AML/CTF investigators are going to find themselves not equipped for their new roles. Outside the NSA (who don't really give a shit about anything besides terrorism and maybe El Chapo level drug lords), I don't really think any Federal agency is technically competent enough. But this is just ungrounded speculation, so we'll see what happens...

#smartcontracts

Whether they're practical is another question. A lot of it sounds like science fiction, and maybe it is. But the possibilities are cool to think about.

Polycentric law

A smart contract may still have to defer to some authority, but the participants at least can freely choose their authority. With fiat-law you're bound to a pre-determined jurisdiction. In principle you can use arbitration clause, but the fiat-law judge always has final say and can override it.

For example many fiat authorities refuse to enforce contracts betting on sports. If we wanted to bet, we could find a trusted crypto-authority who will honestly enforce those contracts. It's possible that that entity could be corrupted, in which case he would lose clients, and other crypto-authorities would take market share. Legal corruptions is deterred because the loss of a trusted franchise hurts more than than the gains from defecting on a single iteration of a repeated game.

Self-consistent law

You can have a single crypto-judgement projected onto multiple contracts. The crypto-authority can still be corrupted, but it has to be consistent across every subscribed contract. Fiat-law can arbitrarily make unconstrained judgements. Say the authority is biased towards Alice and Dave. Alice correctly bets Bob that the Patriots will win the Super Bowl. Carol bets Dave the same thing. Fiat-law can just declare that Alice's contract is enforceable, but trump up some BS reason that Carol's is not. The crypto-authority can of course lie and declare that the Patriots didn't win. But in this case they can't simultaneously screw Bob and Carol.

If you're talking about multiple contract crypto-law can constrain the results to a single hyper-plane. Fiat-law can pick any point in the space of all outcomes. That constraint may substantially lessen the returns to corruption, and deter bad behavior.

Digital assets

Obviously if you're talking about real-assets, you can't override fiat law. But there's a lot of purely digital assets where smart contracts can execute without needing any external authority whatsoever. One example would be if DNS moves to the blockchain. You could hold a binding auction for a given domain name, which would automatically enforce its rules and transfer.

Another example might be a software company. They could take a crypto-loan that's collateralized by their own code. They might hand their creditors an encrypted copy of their git repos. If the loan isn't paid back under certain terms, then the smart-contract might release the private keys to the creditors. Who then in turn, would have access to source code.

Even with real assets, you can denote crypto-title with colored coins. If the broader crypto-economy agrees on that scheme, it starts to exert real influence. Maybe a real estate developer shirks his crypto-liabilities. In that case he may still hold fiat-title, but lose crypto-title to the property. By doing so he basically would lock the property out of access to the crypto financial system. Can't borrow against it in the crypto-markets, can't lease it to tenants who use smart contracts, can't sell it to DAOs, etc. If a substantial portion of the economy becomes crypto-denominated, then crypto-title starts to represent a very serious proportion of the value of even real assets.

Cheng


Total Posts: 2835
Joined: Feb 2005
 
Posted: 2017-09-19 13:24
Here's another example:

https://www.coindesk.com/axa-using-ethereums-blockchain-new-flight-insurance-product/


Sorry to say that but that sounds like another we-need-to-put-it-on-a-blockchain-because-everybody-does example. If you don't trust AXA and need a smart contract to ensure you are getting paid why buy insurance from them in the first place?

"He's man, he's a kid / Wanna bang with you / Headbanging man" (Grave Digger, Headbanging Man)

JTDerp


Total Posts: 42
Joined: Nov 2013
 
Posted: 2017-09-22 03:43
So far as 'smart contracts' are concerned with Blockchain, couldn't such things have been facilitated through older encryption processes, like PGP?

The clouded mind seeks; the emptied mind finds.

jslade


Total Posts: 1093
Joined: Feb 2007
 
Posted: 2017-09-22 07:48
"So far as 'smart contracts' are concerned with Blockchain, couldn't such things have been facilitated through older encryption processes, like PGP? "

Smart contracts are effectively agreeing on the state of a distributed virtual machine, just like standard bitcoin type blockchains agree on the state of a distributed ledger. PGP type things, you have to trust something. Smart contracts, you rely on the blockchain assessment of state.
Distributed VMs are a waste in that almost all the operations you do are actually state machines, but they still manage to more or less work, and the engineering competence of contemporary civilization is low enough, asking people to write something that forbids for loops is probably too much to ask.

"Learning, n. The kind of ignorance distinguishing the studious."

Cheng


Total Posts: 2835
Joined: Feb 2005
 
Posted: 2017-09-22 08:39
PGP type things, you have to trust something

I think you lost me. You have to trust the algorithm, ok, but the same argument holds for blockchains where you have to trust the hash function. What else belongs to "something"?

"He's man, he's a kid / Wanna bang with you / Headbanging man" (Grave Digger, Headbanging Man)

rftx713


Total Posts: 95
Joined: May 2016
 
Posted: 2017-09-22 09:07
JRDerp,

Was having a fun conversation about (sort of) this the other day. The basic question was: what does this technology do that existing ones can't? Particularly if you don't need it to be all 3 from the beginning and at the same time: decentralized, irreversible, and trustless.

(FWIW, the only answers we were able to come up with were: maybe black market / capital controls. And maybe using hype of a technology to push through political/social changes where the first best choice was resisted. For example, this might be the case in trade finance, where there would be better technological choices but a lot of parties are heavily resistant to change and actually like the paper-heavy processes.)


polysena


Total Posts: 1045
Joined: Nov 2007
 
Posted: 2017-09-22 14:33
smart contracts for trade finance might or might not be that much of an improvement... it is not that crystal clear or?...

Свобода - это то, что у меня внутри. (Ленинград и Кипелов - "Свобода") Кому то очень больно, а кому то заебись (Серебряная свадьба)

rftx713


Total Posts: 95
Joined: May 2016
 
Posted: 2017-09-22 16:43
Bringing more technology into the process would be an improvement.

In many cases, to issue an LC you look at your most recent trades, figure out which need to be financed, go into Microsoft Word, open the template for the applicable counterparty, type in the trade details, print it out, get it signed, scan it, send it to your bank, they print it out, sign it, scan it, and send it back to you. You then send it to the c/p and log the details of the L/C somewhere tied to the trade.

I'm not sure you need a decentralized, trustless, irreversible database to make this process better. But if people are resistant to change because they like the current process for whatever reason, maybe the hype can help push them to consider using more technology in the process.
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