In more traditional software engineering language, it means “you can run stored procedures on an incredibly slow and limited distributed database.”
Also those stored procedures are immutable, written in a language with more holes than Swiss cheese, and you have to use a scammy cryptocurrency to pay for the privilege of running these unsafe programs. The adherents call this “web 3.0” in some kind of ironic joke because it’s nothing like the web.
You're probably referencing this fuck up: https://en.wikipedia.org/wiki/The_DAO_(organization)
The huge advantage of smart contracts is that they are supposed to be trustless - you don't need to necessarily trust your business partners because contract is set in stone ... code and will be executed exactly as agreed beforehand.
In reality, you move your trust in your understanding of the code. But then when 18 000+ (probably highly technical) people investing $50 million don't spot the bug in the code, then it calls the whole "trustless" concept into question.
It's not even the first time that the 'Compound' smart contract has been 'hacked', but that doesn't stop fools from putting more money into it again.
All these fuck ups are called 'hacks', but actually the code is working exactly as intended, it's just that there are so many ways to write smart contracts incorrectly that it's more than likely they all have hidden bugs, just waiting to be exploited.
-- nobody ever (except Ethereum ideologists)
https://en.wikipedia.org/wiki/2010_flash_crash
Oh Oops...
Enron alone was responsible for ~$74bn of loss.
Just because crypto currency is a smaller market than traditional finance doesn't mean it's more honest. I'd imagine the % of fraudulent transactions in ethereum is worryingly high.
The critical difference is that the smart contract lets you peek under the covers. If the contract allows for its owners to do things to your tokens, that will be plainly visible in the code, regardless of what the owner says. The owners can lie about it, but the lie can be seen by all and sundry. The creators of the token mathematically cannot do anything the contract doesn't allow them to do.
A sucker is born every day, this has little to do with the underlying tech though.
But be sure, in doing so, to compare them as a share of total transactions made through smart contracts vs. the total involving 'bankers, brokers, company execs, etc.'
It seems like there would be a reasonable argument that taking value from a contract as defined by code (even if not the intention of the programmer) is not theft.
But would be very interesting to see how a court interprets this.