A smart contract is just code until it is bound to real rights, obligations, and human-readable terms; trade and finance rest on enforceable promises, not running software.
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In the Ethereum world “Smart Contracts” refer to code. On its own a Smart Contract doesn’t necessarily create a legally binding contract. A Contract is neither code, nor a PDF file nor a printed signed document. A legally enforceable contract describes a (1) relationship between 2 or more parties (2) …
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A large vulnerability has been found in The DAO and someone is at the time of writing funneling all it’s Ether out. A proposal has been made for the various Ethereum implementations to: Create a Soft Fork to freeze funds in any DAO sharing the same code as The DAO. This would stop funds being released while giving the …
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Direct voting does not work well outside small groups that know each other. Think New England town meetings, a group of business partners. The traditional way to get around this in a large group is through representative democracy. Once in a while we vote in a small group of people that can vote between themselves. …
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Balance sheets are useful terms from accounting showing a snapshot of the financial state of a company. Balance sheets consists generally of 3 columns: Assets Liabilities Equity These map directly to the Rights and Obligations I rambled on about a couple of weeks ago. An Asset is a Right and a Liability is an …
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In my previous article I talked about Rights and Obligations and how they apply to blockchains. If you have the right to someone’s obligation there may be a risk that the other party can’t (or won’t) comply. This is called Counter-Party risk. A simple example of counter-party risk is if you lend money to your nephew …
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Rights and Obligations are the 2 most fundamental building blocks of trade and finance. Contracts exist to protect rights and enforce obligations. Trade consists of trading one right or obligation for another. They are also fundamental in understanding how Financial Systems, Blockchains and Smart Contracts work, yet …
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If you haven’t read the first article in this series I recommend you go read it first: Ethereum vs Mossack Fonseca: The IBC and it’s blockchain alternatives Trusts are an ancient contract structure going back to Roman days. A trust is used to separate control from the benefits of an asset. Traditionally a trust …
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Whatever your opinions about the Panama Papers saga. There are both perfectly legitimate and absolutely illegal ways of using the services of an Offshore Trust company like Mossack Fonseca. Ethereum through it’s Smart Contracts can actually replace many of the legitimate ways of using offshore structures, while at the …
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As I discussed in my previous article From Contract to Smart Contract a Smart Contract is not necessarily a contract in it self. If the Smart Contract is designed to be run 100% autonomously you don’t necessarily need what a normal legal contract offers you. But very few things live entirely on the block chain for …
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Smart Contracts as defined by Nick Szabo always fascinated me. I experimented with early versions of this, but Ethereum has finally come up with what looks like the first practical implementation. This is the first in a series of articles about implementing Smart Contracts on Ethereum in the real world. What are Smart …
