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Comment by jolux | Hacker News Reader

All of the examples of having to trust the government in this article neglect the fact that trusting the government is not just trusting the government, and it’s not just the government storing a deed or giving you a Social Security Number that makes it real. It’s the whole complex web of laws and regulations that created these policies that make them real, and the people (your fellow citizens) who have collectively decided to run society by these rules. Your recourse when somebody runs afoul of these rules is the courts, which you may feel free to criticize, but pretending they don’t exist is just silly.

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Democracy solves the Byzantine agreement problem just fine already. I like the aspects of decentralisation that help you preserve democracy, but beyond that it’s not necessary to replace every single aspect of a functioning democracy with a cryptographic commitment scheme. It would be worse if you did. That vision of society sounds terrible.

(I can’t comment on this without noting that of all the interpretations of the name web3 I’ve seen so far, “a cryptographic commitment scheme” is the least novel idea, and the least to do with “the web” or anything related to it that I have seen. There is simply no way that is what web3 means. The author is describing smart contracts, and if that’s what it is, it is intellectually dishonest to be promoting “web3” as a new idea when smart contracts have been around for years and have had very little impact on society due to fundamental limitations like “not being capable of adjudication by a court, which is actually desirable and basically non-negotiable for 99% of people and corporations alike”. Talk about whether attempting to put better UX in front of them (a much more plausible definition of web3) is capable of remedying the basic flaws. Otherwise talking about it like this is a dishonest attempt to skirt around the debate that’s largely been had already, much like Facebook rebranding itself just as the PR heat got too much.)

> Democracy solves the Byzantine agreement problem just fine already.

That’s nice when you and your counterparty are part of the same democracy, or potentially allied ones. But how do you enforce contracts when your government and their government are at war?

(The governments say “you shouldn’t; they’re the enemy.” Well, screw the governments, I want to make positive-sum trades in the hopes of increasing global GDP and ratcheting us up out of the need for wars over unevenly-distributed scarce resources in the first place.)

All the speculative value of cryptocurrencies is based on their utility in making and fulfilling the terms of contracts, when a government or governments don’t want to — or fundamentally aren’t able to — grant that contract any legal enforceability.

And much of the rest of the value derives from the ability of Proof-of-Work mining to be used to convert local export-controlled assets into exportable digital assets. (The whole reason PoW has stuck around as long as it has is that capital flight in China still needs it for a few years yet.)

If that’s what you want web3 for, I’m actually quite happy for you to record your treachery on a public ledger. There is a reason the government doesn’t want you to do it, and that’s that sanctions are one of the only reasonable deterrents to war that we have. I can’t believe you would advocate for interfering with that on a public forum, in 2021 when western democracies are already struggling to make economic sanctions hurt because the autocrats are all in cahoots. https://www.theatlantic.com/magazine/archive/2021/12/the-aut...

You’re assuming I’m talking about selling things to North Korea, or arms dealing, or something; but in the multilateral case, I’m actually talking about enabling trade in situations where arbitration of otherwise-legal contracts is impractical due to enforcement of contracts requiring ongoing positive relations (e.g. for mutual extradition) which have lapsed, or requiring the crossing of a DMZ — leaving parties on either side in a legal “state of nature”, free to screw one-another over with no consequences.

There were no economic sanctions imposed between East and West Germany; but making a contract with someone on the other side of the wall was still impractical, due to lack of diplomatic relations. Smart contracts solve that problem.

Other angles on this: the regular financial system in the Western world doesn’t let anyone transfer fiat currency to countries like Nigeria “for your protection”, even if you’re literally trying to run payroll for the registered employees of your Nigerian subsidiary company. (In other words, a de-facto trade embargo, but not a legal one, and not one to do with a any war.)

The only good way to do that payroll at this point is to send them crypto.

I updated my comment to clarify. You did say enemy.

But your argument also justifies selling arms to North Korea. After all, it's a positive-sum transaction that increases global GDP?

The flaw is that a transaction isn't positive-sum just because you and your trade partner are both happy. Your transaction may well incur negative externalities that outweigh the total profit enjoyed by you and your partner. For example, the world is much worse off if you sell a button-that-destroys-America to North Korea, even though you and North Korea are both pleased at the arrangement.

I don't want to put activity out of the reach of governments. Governments are the organ by which we decide what is and isn't acceptable behavior. If our governments are behaving unreasonably, the solution is to fix them, not to pursue anarchy.

While I think the stated use case is bizarre and useless, I will note that economic sanctions are almost universally bad, used to hurt the populace of countries like Iran, North Korea, Cuba and others without doing anything to hurt the ruling elites. That said, the problem with such sanctions and trade embargoes is usually the flow of goods, which Bitcoin does less than nothing to solve of course.

I agree, but as we speak Russia has amassed 150k+ troops on the Ukrainian border and Putin is waiting to see whether the West can apply enough sanctions to make the whole effort a net loss before he gives the green light on an invasion.

But why do I have to care about that? Due to the overreach of US policies even companies in countries which don't have sanctions against Russia have to worry about the efficiency and performance of payments going towards Russia. SEPA and ACH may be marginally performant but SWIFT is incredibly expensive, which is the only option you have for international transfers that doesn't depend on an American monopoly of power.

Do you just not care about anybody else in the world? We live in a society.

I am surprised at the political ideas on display in this thread. This isn’t even under the comment in which I described the influence of “techno-libertarian anarcho-capitalism” on the crypto community! If you are not part of a western democracy, of course you do not have to care, but if you are, then you should. (Moreover if you think war is bad, like that other commenter agreed before wondering how to erase the effect of sanction deterrents, you should also care.)

>Do you just not care about anybody else in the world

Sure I do, however I also get to choose who I care about, and it definitely doesn't include people who make policies which are extraterritorially enforced on me.

>If you are not part of a western democracy, of course you do not have to care

What do you do when a "Western" "democracy" enforces their laws on you and all remaining solutions point you to services that are beholden to a "Western" "democracy".

They’re not extraterritorially enforced unless you’re talking about a blockade, so unless you’re a Cuban or Puerto Rican, you can’t complain. Most sanctions are just one nation deciding it prefers to lose your business than to lose its security agreements with its allies. If you find yourself unable to make a cross border deal, it’s because your country was unable to negotiate it with another. I have no intrinsic right to do business with anyone in the world as I see fit. Neither do you. I’m just okay with that because there are bigger goals than my own.

> What do you do when a "Western" "democracy" enforces their laws on you and all remaining solutions point you to services that are beholden to a "Western" "democracy".

Correct the aberrant behavior that caused your nation to get kicked out of the global trade system, or move to a nation that hasn't gone rogue. That's what the sanctions are meant to encourage. Bypassing the sanctions with clever math is just going to get the clever math outlawed; exerting international pressure to keep countries in line is far more important than your coinbase account.

I'm not sure economic sanctions are the solution here. More likely, a positive deal and various security promises for Russia (e.g. no more NATO exercises for a mock invasion of Russia, or simply more commerce) will probably do a lot more to ease tensions. As long as NATO and Russia continue to behave as enemies, Russia will continue to see Ukraine as a necessary buffer at its borders, and seek to make it a vassal state, to the detriment of everyone...

Edit to add: avoid phrases like "the West", it's very "Us and Them", it's much better to be explicit: is this about NATO? The US and its closest allies? The EU?

> before he gives the green light on an invasion

And the reason why the USistan should entangle itself in that mess is ... what exactly?

https://en.m.wikipedia.org/wiki/Budapest_Memorandum_on_Secur...

  The Budapest Memorandum on Security Assurances refers to three identical political agreements signed at the OSCE conference in Budapest, Hungary on 5 December 1994 to provide security assurances by its signatories relating to the accession of Belarus, Kazakhstan and Ukraine to the Treaty on the Non-Proliferation of Nuclear Weapons.

  As a result, between 1994 and 1996, Belarus, Kazakhstan and Ukraine gave up their nuclear weapons. Until then, Ukraine had the world's third-largest nuclear weapons stockpile

If the US convinced Ukraine to give up their nuclear weapons with the promise they would help fend off an invasion, and then proceeds to not help fend off an invasion, what do you think happens the next time the US asks a country to give up their nukes?

Thanks for this, that is a fair point, and I was not aware that these events had taken place.

[EDIT]: Whatever happens to nukes that are "given up on". That's a lot of fissile material.

In the thought experiment of a true anarchy, how do you ultimately enforce the off-chain part of a transaction? If BTC is traded for goods or services, how do you enforce that the goods and services have been sufficiently provided?

Presuming this is a fancy sci-fi kind of anarchy: multi-sig escrow wallet requiring a 2-of-3 quorum of oracle triggers from observation cubesats owned by both parties plus some disinterested third party.

(People are already doing the virtual equivalent for prediction markets: everyone who cares runs their own oracle agent to forward result data from web2 sources into web3. You “just” need computer vision + good optics to bring that paradigm into the physical world.)

So, the only thing required is corrupting/intimidating a single party ? You're just straight up making things easier to be problematic.

And we see this in defi already - taking out a flash loan to rig a thin market that an oracle depends upon is a standard exploit.

If your argument is that decentralized ledger technologies cannot in their current state or perhaps ever entirely replace governments then I guess any reasonable person will just have to give that to you. And I doubt as many "crypto evangelicals" would actually argue with you on this.

Right; distributed smart contracts complement legal systems, like a road network complements a rail network.

Of course, that’s just the simple, “immutable logic” kind of smart contracts. The “updatable policy” kind of smart contracts are really just a way to encode and implement a legal system. (See: the regulation model in security tokens.)

I also think people complement smart contracts. The difficulty of building smart contracts makes me think people and human processes will be the glue that binds many of them together.

In OP article the interfacing with real world is solved by some group voting.

In the real world, when disagreements arise, we have voting + due process + a hierarchy of courts. It could be argued that due process is an essential part of finding justice.

Baking due process into a smart contract is, although extremely interesting, probably impossible.

Great, but take the example in the article. I roll in with my heavies and at gun point force enough of you to vote that the contract was complete even if it wasn't. You can't engineer people away and when you try you've undoubtedly missed something.

But if you were just going to rob them at gunpoint, why did you need the smart contact?

Smart contacts exists so that you don't need the heavies nor the guns, you can just exploit a "bug" in the contract and run off with the cash, preferably without anyone knowing who you even are.

This boils down to the basic problem of a ruleset.

It's nice when everyone abides by the same ruleset. But there will always be individuals that will behave outside of it.

Like, we can all play capitalism and try to outcompete each other, but eventually there's going to be someone that just abandons that ruleset and murders all competitors.

Smart contracts are just a better ruleset, still not enough.

I always roll my eyes when crypto bros roll out the argument that BTC would bring peace because there's an immutable record of who owns what.

I can still just seize the factory, ledger be damned.

Or deploy a military to seize your private keys. Unless you're sole copy is in your own head it's on a hard drive SOMEWHERE

David Friedman's book 'Legal Systems Very Different From Ours' might provide some inspiration:

http://www.daviddfriedman.com/Legal%20Systems/LegalSystemsCo...

You would either need an arbitration service or an oracle for that. Look into Kleros and Chainlink.

My thinking is that if the blockchain has sufficiently high fees and sufficiently high computational cost, then people have an incentive not to try to game it. That includes off-chain.

It leads to the question of what is the real purpose and utility of a distributed blockchain? If the blockchain can willy-nilly be gamed and won't be enforced, why have it?

Zero Knowledge Contingent Payments are one approach. Encoding everything that you might want to buy as an input to a ZKP system is a stretch, obviously. But at least, that's the spirit of this philosophy.

https://bitcoincore.org/en/2016/02/26/zero-knowledge-conting...

> That’s nice when you and your counterparty are part of the same democracy, or potentially allied ones. But how do you enforce contracts when your government and their government are at war?

You should look into actual historical examples here!

You miss something, imagine a world where crypto is finally used to pay for services. How do you enforce that when you give an advance to your house builder so that he can start building and contracting out and paying his own people by the hours, that he wont build you something that eventually crumbles as soon as you open the door?

Who enforces THAT ? Who care about decentralising, we need to centralize violent enforcement or people will just scam each other. The problem in China is this one, not that they're not crypto-dumb dumb enough :s

In that case, you could enforce that some of the paid amount is locked and release over time so as to provide an incentive to build something not totally fucked up.

>The governments say “you shouldn’t; they’re the enemy.” Well, screw the governments, I want to make positive-sum trades in the hopes of increasing global GDP and ratcheting us up out of the need for wars over unevenly-distributed scarce resources in the first place.

That's a real nice justification for war profiteering ya got there. I don't think it'll convince too many people though...

Nothing better than recording your illegal transactions in an immutable blockchain.

> Well, screw the governments, I want to make positive-sum trades

You and what army? And I’m not even being facetious, you’d probably need an army to go against your government and economically aid an enemy like this. And therein lies your answer for who will enforce these contracts: those with the most capability for force.

_But muh hashes_ is not going to help you "enforce" anything as soon as any of this enters the material world.

In the material world, all the problems of e.g. being at war are identical regardless of the medium of your claims.

Can you "enforce" the flow of Ether? Oh yes. Enjoy.

> Democracy solves the Byzantine agreement problem just fine already.

Democracy is just two wolves and a lamb deciding on what's for dinner.

I'd also add that one of the big fallacies/deceits of blockchain is that it does not allow trustless transactions as the article author suggests, it simply shifts the trust. In the author's example of gathering funds to renovate a neighbourhood park, you'd still need to trust that the contract developers hadn't made a unfixable bug or deliberate backdoor, you'd still have to trust your neighbours to not screw up when interacting with the smart contract, you'd still need to trust the blockchain platform because if your funds are lost or stolen transactions are by design irreversable and you have no recourse to the law, etc. In pretty much every case, you would be better off without the additional complexity, risks and points of failure of a blockchain solution.

What this is really about is that the cryptocurrency enthusiasts distrust authority. They would rather put their trust in anonymous developers, shady mining cartels, exchanges which clearly engage in front running and wash trading, cryptocurrency scheme leaders who are convicted fraudsters, etc. If people genuinely want to put their trust in the less trustworthy, even if for no other reason than trying to get rich quickly, then we have a fundamental problem with our society.

> What this is really about is that the cryptocurrency enthusiasts distrust authority.

I really think you hit the nail on the head with this statement. There are often so many hidden assumptions in anything that authorities by definition are bad. I believe the whole blockchain/crypto/web3 movement is more an idealogy than a solution to a problem.

Great example. I would add here a problem that blockchain solution does not solve and I might say it even makes it hard to fix (but I might be wrong as I don't work with blockchain so maybe I am missing something):

This Smart contract about fixing the park is a virtual thing. But if someones does this kind of job then in real life there is usually someone else who will accept and sign that the work was done accordingly with the requirements.

First, I don't understand how this works.

If everybody in the neighborhood needs to accept the work and sign it then I think it will be very difficult to be a contractor. Because you are suddently at the mercy of all residents to accept the work which is a nightmare as everybody could have a small things to change.

Let's say the residents there will delegate the acceptance to one single person. This case gets more interesting. What if the persone they delegate this acceptance is corrupted and will sign and accept the work but after 2 months the work will break. How do the residents recovery the loss? Will they go to the _centralised_ court? Will they go to the _centralised_ state to help them? And here goes the problem: what if the crypto dream gets implemented globally so no central authority. What then?

This is another intractable problem with blockchain and cryptocurrencies, known as "the oracle problem" - in order to do something useful in the real world, it has to interact with the real world in some way. There are various schemes to try to offer solutions for automatable processes, but when human decision-making is involved data still has to come from humans who are "off-chain", i.e. have no direct link with the blockchain or cryptocurrency platform.

True, but there's value in reducing the number of parties you must trust to get something done. It's easy to imagine that, at the margin, there are a subset of collective action problems that will get solved if you can reduce the number of parties that must be trusted. Worrying about the need to sue 3 people has to be better than worrying about the need to sue 6.

If that were the case, then decentralization would be the explicit opposite: instead of trusting a central party you've got N machines owned by M parties involved, most of whom you couldn't take to court if you wanted if a "smart contract" was misinvoked or a blockchain transaction was screwed up. Sure, most chains require attacks to be 51% or more collusion, but if a 51% attack happened, how many third parties did you trust that you probably can't sue? Millions of machines with thousands of owners? That is by far the opposite of "trust as few parties as possible".

But wouldn't you first look up that developers prior work history on the blockchain? I'd just ask what they've deployed in the past and could then easily verify if they are skilled or a bad actor. As for the funds being stolen I think we're just at the beginning of crypto custody services. It's like in the eighteen hundreds saying banks are a bad idea because they get robbed all the time.

“Just ask” and “easily verify” are carrying a lot of water in your comment. Ask who? Verify how? How would someone with no programming experience do it, how long would it take them, and would it be a good use of their time vs. the old-fashioned way?

There are countless cases of anonymous developers spending several years building positive reputations on Hacker News, Reddit, GitHub etc. before disappearing with >$10M USD of other people's cryptocurrency. Whether they set out to perform a long con, or whether the opportunity makes them thieves, is irrelevant - you simply can't trust anonymous people to look after your money.

Also, it's important to realize the core reason why people trust the government with these things. It's because the government has the ability to actually _enforce_ the contracts if required.

I mean, having a deed of owning some property on the blockchain is all cool and dandy. Provided that the polity where the property is located recognizes this. Otherwise you're still trespassing.

The example in the article had a way to enforce contract breaking - the person had to put up collateral until the work was done.

There’s problems with that particular mechanism, but in general if contracts can automatically decrease someone’s money, reputation, access etc, they can do enforcement.

No they can't, how could they? How is actionable events in the real world going to be translated without trust to a smart contract except by assessment by a third party?

So I have to trust the other party they will report in good faith on my delivered work. How is that trust working for Amazon product reviews? Why would be that net of lies any different for smart contracts?

All these schemes always still might need some higher authority in the end e.g. who decides when the work is done? Putting up collateral only ensures that someone has the money, it does not ensure that one actually gets the money. Because defining when "the work" is done, can be really complicated in real life projects. Contracts in real life are complicated. Real life is messy etc.

> who decides when the work is done?

This is part of the smart contract, which has to explicitly define the conditions on which the collateral is confiscated.

Getting real life data reliably into the blockchain is hard, but there are different approaches to solve this.

The “different approaches to solve this” part, if it ever arrives, would be much more revolutionary than the blockchain itself.

Aave has $11 billion deposited on it right now and safety of those funds depend completely on getting accurate price data to trigger liquidations. So you can say that the oracle problem is solved, at least for price data.

Getting data in isn’t the big issue though, and we’ve had market data streams since forever. I’m talking about the example above, where a smart contract would need some way of knowing when to flip the “Bob has satisfactorily finished community refurbishment” flag. This would require an abundance of interoperable data sources for bizzare things. Where do I subscribe to the count(dogshit_pile_in_the_playground) stream, and who or what is publishing to it in a trust-less manner?

Getting all the data in the world into the blockchain and coding smart contracts to infer judgement from it would be too complex and expensive.

A more practical approach is to transfer the funds to Bob once he clicks on the checkbox and have some lock-up period, so that Alice has the opportunity to trigger a dispute if she needs to.

Then the dispute can be resolved by a private court (composed of humans) that both Alice and Bob agreed on beforehand. See: https://kleros.io

Ok, but this isn’t purely a smart contract anymore. You’re describing a typical escrow (running on a blockchain, because ______) with human judges, conceptually identical to what goes on behind the scenes at EBay. What necessitates a blockchain here?

No, it's running completely on smart contracts. You get the regular advantages of running on blockchain: permissionless and trustless access to finance.

You don't have to trust the escrow holder, you don't have to worry about getting banned from Ebay.

> it's running completely on smart contracts

The human judges/arbitrators aren’t, and they’re what’s critical. The contract cannot be sensibly completed without their input.

So you have an escrow system where human judges need to supply critical information. I’m left having to trust the human judges, unsurprisingly. Running this basic escrow code on the blockchain means that I no longer have to trust the kind of basic escrow code that’s used in centralised escrows. My question now is whether the escrow code of centralised providers (if condition then funds.release()) is really so unreliable that I’ll get get tonnes of benefit using blockchain escrows. Whenever there’s controversy over escrows, it comes down to the arbitration, which as you admitted would still be performed by humans.

> Running this basic escrow code on the blockchain means that I no longer have to trust the kind of basic escrow code that’s used in centralised escrows

Yes, it means that you will 100% know that the escrow website is not gambling your money away, that it won't out of the blue ask you to supply more documents when it finally comes the time for you to get paid, it means that the escrow won't get hacked and your PII won't be sold on darknet.

Smart contracts are just a simpler and more transparent way to deal with finance.

> you will 100% know that the escrow website is not gambling your money away

no, you won't

> Smart contracts are just a simpler and more transparent way to deal with finance.

no, they aren't

Cope.

you're replacing trust (to handle with care) with blind faith.

who's the one looking for miracles here?

the only thing you can be "100% sure" is that we're all going to die.

the second one is that cults will try to convince other people that they are the only true cult.

what's the advantage for Bob here?

He can work for Alice or anyone else in the world without having to deal with intermediaries and bureaucracy.

> He can work for Alice or anyone else in the world

what's stopping him now?

> without having to deal with intermediaries and bureaucracy.

you mean laws?

edit: immagine this situation, Bob does the job, the other party never clicks on "done", Bob doesn't get the money, what Bob can do if there's no intermediary and/or bureaucracy protecting him?

Laws are not ideal and are often used to discriminate against certain groups.

> immagine this situation, Bob does the job, the other party never clicks on "done", Bob doesn't get the money, what Bob can do if there's no intermediary and/or bureaucracy protecting him?

As I said, there is a period of funds lock-up. In the worst case, Bob has to wait some time until the smart contract sends him his payment.

> Laws are not ideal and are often used to discriminate against certain groups

and your virtual ideology is better, how?

since nobody can enforce anything.

> As I said, there is a period of funds lock-up. In the worst case, Bob has to wait some time until the smart contract sends him his payment.

What if they payment is never sent and "some time" is forever?

You need laws after all (AKA a solution outside of the chain, or a deus ex machina if you want)

If I was Bob I would not see this thing you're talking about like a great advancement and would continue doing my job like I do it now.

I mean, I get you watched a lot of fiction and wanna feel like living as an outlaw, but even outlaws have laws and follow some of them.

You are trading mid to low trust in your local community for zero trust to some entity you'll never know, who'll never know you, couldn't care less about you and respecting the terms of some virtual contract and pretend we all should do the same.

Do you understand that this is the exact definition of "out of touch"?

Price data is easy. Price data is already visible on the blockchain because a lot of trading happens on the blockchain.

I’d imagine they would, kind of like the levels of arbitrators and courts today.

The article said the neighbours first vote that work is done. Most of the time that could work. But it also mentions the neighbours could collude to steal the collateral. In that case courts could get involved and force money be returned etc.

I’m very far from a legal expert, but smart contracts seem like a potentially useful tool, within the current system. Not as a complete replacement.

> courts could get involved and force the money be returned

So, it's the government enforcing the contract.

EDIT: Just wanted to add that I actually completely agree with your last sentence!

So, let's say I pay you 200 ETH and get an NFT signifying ownership of a flat in downtown Kinshasa. I fly to Kinshasa, find the key as you have described, start living in the flat. A year later as I come home I find that the key has been changed and someone else has moved in. They present a purchase agreement, as well as a deed.

What happens next?

Exactly, the whole web3 blockchain movement seems to assume these contracts are legally binding in real world. For that to happen the same 'untrustworthy' government authority will have to trust the decentralized contracts on internet.

Do we really think everyone has money for collateral? Small businesses and individual people are already struggling with money, where will they get the collateral?

Reminds me of some of the newer blockchains e.g. I think Binance Smart Chain works like this.

They don't use PoW or PoS. Instead they run on centralized servers like traditional databases. Only, they run on 10 or 20 or 50 centralized servers run by different people and processing the same input and cross-checking each other. Anybody who has money on the chain can stake it to vote for one of the servers (so I guess it is PoS really). Although anyone can connect to the chain and process input, the N servers with the highest stake-votes are the ones that actually count. Also the server owner has to put up some crazy collateral (currently in the realm of $500,000 I think, this is determined by market mechanisms, it used to be lower) and if they are caught cheating they lose it, a process called "slashing". Even having your server go down can cause you to lose some collateral. Conversely you earn collateral while it is up (like in PoS).

So it's really a lot like a traditional database cluster with an enforcement mechanism, and that enforcement mechanism makes all the difference unless your attacker has millions of dollars to waste.

> the person had to put up collateral until the work was done

So only the people with money can participate?

My new startup will loan you the non-fungible e-medallion you need to operate as a blockchain cab driver, in exchange for just 30% of your fares.

>but in general if contracts can automatically decrease someone’s money, reputation, access etc, they can do enforcement.

No, they cannot. They can reduce these values, but that by itself doesn't enforce anything in the real world. If the entitiy doesn't care about these values (for example because it was a fake account/identity/whatever) then the only enforcement can come from outside.

That's why the word "force" is in "enforcement". States work because, among other things, they ultimately have a monopoly on the application of force.

I think the sweet spot for some blockchain use cases is where contract enforcement doesn't work well. It's really hard to seek redress for diffuse, low-grade breach. A 10 million people with one dollar in damages are less likely to be made whole than 1 person with 10 million in damages. And contract enforcement often fails in insolvency. Try enforcing a how warranty against a builder that's gone bankrupt.

> Try enforcing a [home] warranty against a builder that's gone bankrupt.

As someone who has been through this exact thing, it sucks, but it is possible in the current court systems. Courts have complicated "Discovery" processes explicitly for this reason: to find out not just the immediate problem (a bankrupt builder or a builder who would be bankrupt by the end of the court case), but the supply lines (what other warranties apply?) and the creditors (where is the bankrupt company's money going?).

A human run court is allowed to state "this bankruptcy looks fishy for this reason, and these people are owed damages, and some of the money that moved on already to these creditors is by rights should be paid for damages to these people". It's definitely not fun to be involved in such court proceedings, and it is and likely always be an inefficient human process, but it is a process as a society we've built to be mostly very trustworthy. A jury of peers to decide if damages are warranted in the first place; a human judge with reasoning to say "this shell company is bankrupt, but these other companies can and should pay, maybe with the money they took from this shell company" or "this shell company is bankrupt but some of this still applies to the warranty insurance product they purchased and the insurance provider needs to pay up even though their client is bankrupt".

It doesn't always work right/decide in your favor, and it is slow and expensive, but "smart contracts" offer no better and often a lot worse processes. A "smart contract" can't route around a shell company/wallet. A "smart contract" likely can't discover that other warranties may have applied or other insurance products existed (and if it can it's in a programming class all its own and likely a one off you can't expect to exist in general or to work if you need to actually rely on it).

succinctly said. all these web3 / crypto folks forget complex laws exist to prevent and remedy situations that can't be simply solved by smart contracts. most of the laws are so complex, we've professionals who specialise in them.

I think there's also a substantial subset of cases that are simple/common/clear enough to have managed through an automated contract, and being able to cut out the cost of depending on the legal system would be game-changing for many people/projects/etc.

So it seems like a good complement, not a replacement.

Yep cause the cost of people who can put together a smart contract without major bugs is peanuts :)

Fair point :) I was admittedly thinking of more DIY scenarios, but it isn't really fair to only consider how it impacts programmers.

OTOH—without knowing many concrete details myself—seems like there would be plenty of room for reuse of contracts? Maybe even something like a storefront where you can grab one that matches your scenario

I think you prob can raise a 10 mil seed round with this idea

As open source successes start to accumulate, the costs will go down. Reuse is incentivized as development on the cryptocurrency as opposed to a perpetually monetized rent extraction by regulators or "professionals."

As open source successes start to accumulate, the costs will go down.

That hasn't happened in any other area of open source. Linux is supported by billion dollar companies with hundreds-of-millions in revenue. Container software is supported by tech giants. Browsers are the same. Web frameworks are either from corporations or they're built by people who are sponsored to build them. Most successful open source projects have revenue streams from outside the project paying people to work on them. I'd even suggest that might be a requirement for a successful project. As the project grows and gains popularity the costs of running it go up massively.

In the case of all of those projects the usefulness and utility of the projects also goes up, so people are able to make money with them that pays for the developers, and that could happen for web3 tech. I'm not suggesting web3 won't go the same way, just that economies of scale don't rrally work for software development. The more popular a software project gets the more it costs to run, forever.

I don't think they are talking about the cost of running an open source project. They are talking about the cost of creating and deploying a robust application. In that sense the cost has absolutely gone down. It's trivial to create a web application today in a way that would have been incredibly costly 20 years ago.

You don't have to pull a Paul Graham and invent a the concept of a web application for the first time. You can piggyback on decades of development and open source software and frameworks and libraries. One developer and create and deploy an application in a weekend that would take a team of engineers months to build 2000.

Yes, this exactly. Billion dollar companies contribute to open source because the model is a net economic driver. I can tap into decades long and billions of dollars of man hours of effort to offer systems admin consultation and earn a living deploying and managing open source software for people, or incorporate that into almost any business, or participate in hackathons that riff on the bleeding edge of ai or security or art. The only barrier to entry is ability and willingness to learn, and things like moocs and YouTube and Khan Academy have expanded the "open source" ethos into almost every real world endeavor.

Crypto is a nascent space that similarly enables people to bypass all the gatekeeping and institutional cruft in finance. It just turns out that a lot of the gatekeeping in finance is structurally important and intentional, so it may be a couple decades before any particular cryptocurrency is comparably robust and secure as well trusted fiat currencies like the usd or euro. A trustless and mature financial system that doesn't have the pitfalls of credit bureaus and arbitrary government policy chaos, that opens up microloans and honest banking for literally anyone, that gives opportunity to invest and trade and participate even at low levels of wealth - those are socially good things, in my view.

But a smart contract is reusable.. (that applies to paper contracts though as well!)

Can you give a practical example?

Countless defi loans provided in minutes.

alternatively, maybe web3 / crypto folks haven't "forgotten" something so obvious as "complex laws and lawyers exist."

The way they talk, it's unclear they ever realised it.

I've come to the acceptance that lawyers are to the legal system as software engineers are to technical systems. You pay people who specialize in knowing the ins and outs of a complex system so you can get on with your life as a citizen, founder, etc.

And people who espouse that we don't need laws or lawyers to run our society are making about as coherent sense as saying we can ship a unicorn entirely on no-code and without engineers. It's in the realm of possibilities, maybe, but it will be a house of cards ready to implode unless this mantra is, at best, sheepishly abandoned half way through the endeavor.

The trouble is that the systems are broken. The level of gatekeeping and lack of informed consent have made the legal system a mess. The lawyers are the ones writing the laws... for the benefit of the lawyers and the people with the highest bids.

In a fair system, sure, but the American financial legal system is bonkers. There's a reason people are looking for alternatives.

Stated like this it comes across like a software rewrite, with all its inherent fallacies: underestimating the effort, misjudging the complexity of the original system and comparing known to unknown outcomes.

That's not to say it's inherently a bad idea, rewrites are sometimes useful but you need to acknowledge those factors.

It also sounds a lot like lawyers arguing that cybersecurity is broken, so you should replace part of your dev team with a new type of contract and some lawyers to enforce it

(I'd say this does't actually happen because lawyers aren't that daft, but then I remember really long EULAs with really silly clauses...)

And the biggest one: anyone that undertakes it should be an expert in the existing system. Otherwise you're just the junior dev coming in and suggesting a rewrite in the language you know best.

People need to stop using software analogies for everything.

It does not work for something like laws. You can't just go and change something the following month because you realized there's an edge case you forgot. All that constant churn will just erode the public's faith in the system.

I think your comment, and the one you responded to, are both correct. If our legal/governing system was able to adapt more quickly and keep up with the pace of modern technological advances, we would all be better off. The challenge is, how?

Lawyers do not write laws. Politician, or at least the writing staff do.

To stick to the analogy I guess:

Lawyers -> Engineers

Policy Writers -> Architects

Politicians -> Executives, Directors, Sales and Marketing

Judges -> QA

Well, lawyers are the plurality of Congresspeople (though their share of Congress has declined over time) https://thepractice.law.harvard.edu/article/declining-domina...

And most (competent) tech leadership were previously technical and are leveraging their expertise also.

The laws are mostly fine. The process of getting justice when someone has broken them is the bigger problem. Unfortunately solving the problem of access to cheap and efficient justice is just not that glamorous. There’s not enough money in it, so let’s start again from scratch right?

Not to mention techno-libertarian anarcho-capitalism is the ideological driving force behind many decentralisation efforts (hello Bitcoin), which is kinda at odds with improving justice. Many people in the space actively wish to be outside the law. Those are the people who started looking for alternatives, everyone else will parrot any old extreme ideology like “get rid of courts” for a sweet well-paying gig.

The solution to a broken system is not to replace it with another equally broken system. It is to replace it with a better one. The argument from people who are skeptical of the entire premise of smart contracts is that it looks to them like a worse not better system.

I am a software engineer. I know full well what it takes to design a well functioning software system. I also know that software tends to ossify processes. Anyone who has ever tried to work against the software of another business knows how straight jacketed that can get. Putting these together my only reasonable conclusion is that smart contracts look like a terrible idea and I would never in a million years trust one.

> There's a reason people are looking for alternatives

But is this true?

some people have always looked for alternatives throughout history, but very few of them have become popular, most of them were a failure and a bunch of them completely destroyed societies, sometimes for centuries.

I might be completely wrong, but in my eyes the crypto-optimism looks like reverse luddism.

Agree, I think Wyomings attempt to fuse the two together is one to watch.

https://frostbrowntodd.com/wyoming-paves-way-for-dao-legal-c...

You view the complexity of American law as a feature, not a bug??

Legacy code (aka the American legal system) is routinely despised by those new to the problem space. Most experienced programmers will know that the (new to them) code isn’t all flaws, despite its initial appearance - there are a myriad of embedded edge cases and branches that at first blush seem like cruft, but in reality are the result of learning from various failure modes.

As with any complex rewrite I suspect we are doomed to rediscover the rationale for the original design. Hopefully it will end up meaningfully better, and not a Digg 3.0.

Governments constantly break the contracts they sign.

Take a look at the Maastricht Treaty and what it says about government debt in the European union. The government broke this treaty that was the basis for the union in the first place.

You say "Your recourse when somebody runs afoul of these rules is the courts". For an individual this is not a practical approach. An individual has no way to get back financial stability and to undo the excessive government debt and inflation.

The individual who held Euros throughout this process now holds way less buying power than someone who kept their assets out of the reach of governments.

Never forgetting the gold standard, that was just scandalous, against their own folk and allies. Not even against enemies, opinion or whatever geopolitical thing... not much margin here for flexible moral. They just do with us whatever they want, and forcing inflation onto the population is just as closed as evil an economy can be against the general interest of the whole population.

This is an ideological position. In reality, economies need money printing, although it comes with its own problems, must be carefully controlled, and since 1971 we have not yet learned the correct way to control it.

Web3.0 is just one big real world example of Chesterson’s Fence in action.

https://wiki.lesswrong.com/wiki/Chesterton%27s_Fence

All of the examples of having to trust the whole complex of laws and regulations and people that you mention neglect the fact that crypto doesn't rid you of them: the technology may be willing, but you're still a citizen bound by them, and your use of crypto can be regulated; just like how the technology of paper currency allows it to be transferred from anyone to anyone, but laws exist that make mugging someone else for their paper notes criminal.

Yes, it seems like we need some kind of crypto police to enforce that people actually do what they say they will do on the blockchain.

>It’s the whole complex web of laws and regulations that created these policies that make them real, and the people (your fellow citizens) who have collectively decided to run society by these rules.

Don't forget the whole violent kidnapping thing your fellow citizens let governments do. The mythology of laws running society is cute but laws are made real by constant threats of violence and caging.

Your comment is a kind of virtue signalling. What is your alternative? To not jail murderers or thieves?

[edit]

Just to check if you're serious or not, would you be happy to move next to a prison and then have all the inmates released?

To someone with a hammer, every problem is a nail. Web3 seems like it's primarily a horde of crypto-maxis running around hitting every damn thing with a smart contract, and see what sticks.

This is, arguably, going to be better than violently caging people, in some circumstances.

I take the GF comment to be maybe virtue-signally, but mostly pointing out that our legacy law system has an awwwwwful lot of people in jail. Maybe that jail-shaped hammer is not as useful as you think it is?

What is the virtue that I am signaling? Is the ability to have objective opinions outside of the socio-cultural mythology a virtue?

To give another perspective on my "the current legal system exclusively works via the use of force" argument, look how effective the legal system is against banks, Google, Facebook, etc where use of forceful caging is not applied.

What virtue am I signalling? Are objective observations about how the world and society functions considered some kind of virtue now?

I was responding to the argument that "courts" and "fellow citizens" make the legal system work, when in fact courts are just proxies for use of force. Use of force makes the legal system work, everything else around it is just the cushy stories about law, order and justice we cooked up for ourselves to collectively agree with.

And this is in stark contrast to how a contract running on the Ethereum VM gets enforced.

I am certainly not suggesting we should implement laws against violence like the murderers you mention on a blockchain. I am talking about laws governing financial transactions, companies, and other economic related activities between nonviolent but nonetheless potentially fraudulent actors.

what other enforcement mechanism do you suggest? The smart contract method call where Alice murders Bob should not validate unless signed by Bob's private key?

Yes, and this will stop people from harming each other. Something something private keys.

Bring on the century of techno utopianism.

If you really want to mock novel technology, at least show some basic understanding first.

It's "something something decentralized proof of trust" ;)

Are you argumenting in good faith that somehow I said that violent crimes should be solved by mathematics?

I said that the legal system works not because of it's complexities or how authoritative the costumes of law enforcement or judges look, but exclusively by the threat of having your liberty taken away from you.

Violent offenders should still be dealt with violence.

But voting? Public policy? Public spending tracking? Economic activity between two private entities? There is no longer need for the threat of a central authority with a monopoly on violence to ensure the proper functioning of those things. Satoshi showed we can have decentralized proof of trust.

Law is like a border after a war: a description of where it was that conflicting forces could not advance without retreating somewhere else that mattered more. It is history, not code: it describes where the last conflict ended.

Which by the way, I mean: I agree with you

'giving you a Social Security Number'

Actually, you or your parents took action to apply for a SSN. No requirement to be American and have the mark. Once you take the mark, it is nearly impossible to undo it.

The government encompasses all of those things, so I think when the author says "trust the government", it implies all of those things.

Right, but the government is not just some unaccountable third party that sits between you and the rest of society. It is meant to embody the society, and, in a democracy, represent its interests effectively.

The government, and all of its institutions, are indeed a third party.

The government is not some representative of the collective will. Thomas Sowell provides his experience at the Department of Labor in 1960 as a poignant demonstration of the fallacy of that notion: https://youtu.be/v6PDpCnMvvw?t=38

Another example would be the latest $1.5 trillion infrastructure bill. It was 1,500 pages long and no legislator read even an appreciable fraction of it. There were provisions in it that the public was discovering a week before it was voted on, like one threatening to classify cryptocurrency nodes as brokers with KYC requirements for any transaction they processed.

Apparently Treasury had worked behind the scenes to get this provision in the bill, to give DeFi the Patriot Act treatment: https://twitter.com/jswihart/status/1422785103386669058?s=20

1500 pages to govern 330 million people. Was there ever a time in history when an individual understood all the laws of a country?

The fact that the provision you mentioned was discovered is an argument FOR this system. The fourth and fifth estates need to play precisely this role, of parsing and communicating the actions of government and business.

Living up to the unfortunate pun, cryptocurrencies make crypto-fascists giddy. No accountability. No transparency. No arbiters of justice. Every segment of society decouples from accountability to any other: individuals hide from governments, governments hide from the press, business hides from government...

What exactly is the argument that you think would make that a worthwhile future to pursue?

One government should not be governing at such a micro-level for 330 million people. It's absurd and in practice becomes totally corrupt and undemocratic.

>>The fact that the provision you mentioned was discovered is an argument FOR this system

Being discovered a week before the vote meant that there was no time for all those affected to study its effects, let alone to negotiate an amendment for it, and furthermore, that it came within a hair's breadth of NOT being discovered.

Other very worrying provisions were only discovered after the law's passing.

>>Living up to the unfortunate pun, cryptocurrencies make crypto-fascists giddy. No accountability. No transparency. No arbiters of justice.

Crypto systems are opt in. The government mandates are violently enforced on those who would prefer to opt out. This sophomoric socialist argument that private enterprise is fascist is totally shallow.

The difficulty of parsing a 1500 page infrastructure bill isn't exactly reduceed by expressing each of its provisions and exceptions in a Turing complete programming language though...

True, but maybe we could run some analysis tools against it.

Agreed

It represents the lowest common denominator of what everyone can agree on. Democracies have problems when that denominator gets really low, but are relatively great when it is high

Yeah. I’m not saying it’s perfect, there may actually be some limited use for blockchain technology, but casting it as an alternative to the modern liberal state beggars belief.

I don't think many people are suggesting that the blockchain can replace all of the functions of the nation-state. I think the most common sentiment among blockchain advocates is actually closer to your views, of it having utiltiy in specific use-cases.

This article is suggesting just that

Yes in theory. In practice, justice is expensive to procure even when you're in the right, and sometimes even then you can lose just by being out-monied.

This leads to a more nuanced view of web3 and smart contracts: a way to acquire law-like order in business dealings at a vastly lower cost. Or put yet another way, if lawyers and the government got their act together and used technology to reduce the cost of their services (and actually passed on those savings) then smart contracts would never have been a thing.

So like, if you don't deliver those shipping containers of hot sauce, I just click the "I was scammed" checkbox on my smart contract dashboard?

Where exactly does the leverage of smart contracts come into play?

The biggest reason libertarianism is a nonstarter is that it outright rejects the state monopoly on violence. Without a lone arbiter, societies fragment due to intragroup competition and violence. As a society fragments, the size of the monolithic projects it can engage in become smaller and smaller.

International trade is already so fragile that a stuck tanker threatens swaths of the entire thing. Now picture how infinitely improbable a system like that is if there's no physical enforcement mechanisms backing contracts up.

I think you hit the nail on the head. In my experience, if both parties are happy payment isn't really a problem anyway. Trouble always comes up when there is disagreement e.g. buyer claims that the hot sauce is not spicy enough and the seller says it's exactly as spicy as ordered. Now what?

You take the issue to a crypto court which controls the escrowed funds.

If the crypto court makes an unfair ruling, you tell everyone to never trust their judgement. Now they’ve lost credibility and nobody will want to escrow funds with them in the future.

Whichever court provides the most consistent fair rulings attains the best reputation and becomes the most utilized.

By contrast, if government courts make an unfair ruling, they’re still going to be in business tomorrow and there’s nobody that can stop their monopoly on broken justice.

Some people might argue that their western country has a fair justice system and that everyone should be glad to be subject to that system.

That argument would be overly generous to even the most fair countries, and completely falls flat in the many countries where corruption is rampant.

When looking at the whole binding arbitration fiasco, it doesn't seem like this system would work out too well for the average person.

It's hard to imagine any system that would solve 100% of disputes accurately, but at least having a free market of reputation-based dispute resolution providers gives you more options and attempts to weed out corrupt justice.

The thing I don't understand about all of the cryptocurrency negativity on HN is nobody's forcing anyone to use decentralized products, but the naysayers seem to insist that everyone needs to continue use existing centralized solutions even if they're not happy with them. What's so bad about letting the nerds LARP amongst themselves even if you don't want to participate?

Binding arbitration is not perfect, but to deem it a failure based on a few melodramatic accounts of it producing unfair outcomes is premature.

It's entirely possible it's the only thing that has prevented anti-discrimination lawyers from hollowing out corporate America with lawsuits

https://richardhanania.substack.com/p/wokeness-as-saddam-sta...

Imagine a court that consistently rules in favour of a richer party. Imagine that the richer party is not THAT interested in doing business with you, so they can tell you to take it or leave it. How do you think it will work?

This sounds awfully naive. I have a very small company that sometimes deals with large corporations. Large corporations already want to push a jurisdiction onto you in their contracts. Usually the jurisdiction of where they are headquartered, which makes sense because they have lawyers that are allowed to work at those courts and know how to deal with that specific jurisdiction. So now you want them to be able to choose some big-corp-friendly-private-crypto-court? Sorry, no thank you. In a world where everyone has exactly the same power this scheme might work, but I would hate to have to negotiate with big clients which crypto court to choose.

Your comment gave me a neat idea that maybe smart contracts could be used for calculating blame and penalties in long supply chains. Vendor A promises to deliver the widget to Shipping Company B on a certain date who promises to deliver it on another date - but only if Vendor A receives the parts from Vendor X - but only if Vendor X receives the raw materials from Vendor Y - etc. That kind of transparency could be really interesting

Next steps would be that they create another decentralized smart legal judiciary system to enforce and handle breach of smart contracts. And a supreme chain with Elon & Chamath on the bench.

Libertarianism != anarchism. It does NOT reject the state's monopoly on violence. It argues it should be used sparingly

https://www.theatlantic.com/politics/archive/2016/06/enforci...

To clarify, from my understanding, in a libertarian society, individuals and groups would be able to hire armed mercenary groups a la private security forces, but with presumably less regulation. That's what I mean by "monopoly on violence", eg only the ruling government has the right to use violence to enforce contracts.

That sounds like anarchism.

Most libertarians want the government to retain a monopoly on violence so that the institution that uses violence is accountable to the public.

I think this is kind of a misconception about how unitary the unitary state really is. Which is especially weird coming from America with its zillion decentralized police forces. The government is not necessarily a single entity that behaves with one purpose, that's what allows concepts like an independent judiciary to exist.

>and the people (your fellow citizens) who have collectively decided

When did this happen?

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