Ok, I understand that it's a description in code of "if X happens, then state becomes Y". Like a contract but in code. But, someone has to input that X has happened. So is it not trivially manipulated by that person?
They get more sophisticated e.g. automatic market makers. But same idea just swapping.
Voting is also possible e.g. release funds if there is a quorom. Who to release them to could be hard coded or part of the vote.
For external info from the real world e.g. "who got elected" you need an oracle. I.e. you trust someone not to lie and not to get hacked. You can fix the "someone" to a specific address but you still need to trust them.
I think you get that, but I don't see another way to create a high performance trustless network.
You are somewhat correct that contracts take external inputs in some cases, but note that this isn't a given. For example you could have a contract that has the behavior "if someone deposits X scoin at escrow address A, send them Y gcoin from escrow address Y". That someone can only deposit scoins and get gcoins in exchange. They can't just take all the escrow account balances. So there are inputs, but they are subject to some sort of validation and contract logic that limits their power. Blockchain people call this an "on-chain event".
So short answer is: no smart contracts can't be trivially manipulated by someone, including their owner. But not being able to do that depends on there not being any bugs or back doors in the contract code.
If you are asking about a contract that has some bearing on an event in meat-space, such as someone buying a house, or depositing a bar of gold in a room somewhere, then that depends on someone telling the contract it happened. Blockchain people call this an "off-chain event". This is the "oracle problem" that you'll see mentioned in other replies. Anything off-chain is generally regarded by blockchain folks as sketchy, but sometimes unavoidable. E.g. betting markets need some way to be told that the event being bet on happened or didn't happen. The blockchain has no way to know if it snowed in Central London on December 25.
Note that some contracts act as proxy to other contract and can be made to point to another code through a state change, if this is the case then you need to trust whoever can change the state to point to another contract. Such contract sometime have a timelock so that if such a change occurs, there's a delay before it is actually activated, which gives time to users to withdraw their funds if they do not trust the update.
If you are talking about Oracle contracts, if it's an oracle involving offchain data, then there will always be some trust involved, which is usually managed by having the offchain actors share the responsibility and staking some money with the risk to get slashed if they turn into bad actors. But again, offchain data oracles will always require some level of trust that would have to deal with in non-blockchain apps too.
Maybe. Some smart contracts have calls to other contracts that can be changed.[1] This turns out to have significant legal consequences.
[1] https://news.bloomberglaw.com/us-law-week/smart-contracts-ru...
if outside data is needed, then it needs something called an oracle, which delivers real-world and/or even other blockchain data to it.
you can learn more about oracle here: https://chain.link/education/blockchain-oracles
So we are already successfully using blockchain for decades just not as... currency provider.
Forward secure sealing (used in logging) also have similar idea
What makes it different than database logging is that the consensus method is distributed and decentralized, and anyone can participate.
Or a Merkle tree
Normal contracts that involve money operations would have safeguards that disallow the owner to touch balance that is not theirs. But there's billion of creative attack vectors to bypass that, either by that person X, or any 3rd party
It's more akin to a compiled executable that optionally has state. The caller pays to make changes to the state. It's up to the programmer who wrote the smart contract to make it so that unwanted changes aren't performed (eg. simple if-elses to check that the caller is in a hardcoded list or ask another smart contract to validate).
Each external from outside the blockchain into the program's functions are atomic., so user wallet initials func1 which calls func2 which calls func3, no matter which smart contract func2 and func3 are in, the whole call stack is 1 atomic operation.
A token is basically a smart contract that has an associate array with the owners as the keys and the values as the balance: [alice: 1, bob: 20].
And then you can imagine how the rest like transfers, swaps etc works.
And then it's kind of a "contract" because of the atomic nature. Since X transfers $1 to Y and Y transfers 1 cat to X for it is 1 atomic transaction.
Blockchain can't handle external state.
Smart contracts abstract it a bit by having a trusted third party or an automated pricing mechanism, but both are fragile.
No real world contract can replicate that - you have to go to court to enforce a breach of contract and it isn't certain you will succeed. Even if you succeed the other party can refuse to comply, and then you need to try to enforce, which also may or may not work.
Not really. Smart contracts ensure that if all the conditions IN THE CHAIN ITSELF are met, the contract will be fulfilled.
"The product you paid got delivered" is not on chain. It can't be verified without trusted party putting that info in the chain. Sure, it can be made into multiple entities confirming if needed but it is still dependent on "some people" rather than "true state of reality.
> No real world contract can replicate that - you have to go to court to enforce a breach of contract and it isn't certain you will succeed.
The oracle can lie and be unreliable too. It would be great system if you mangaged a video game where the currency system can see the objective state of the world, but ethereum can't, needs oracle(s).
In both cases you basically rely on reputation of oracle, or escrow company in case of old money transaction, to have high degree of safety.
But you're right, it is reinventing traditional finance, that is kind of the point, except nobody controls it.
https://en.wikipedia.org/wiki/The_DAO
It's all a toy for rug pulls and speculation. "AI" attacking the blockchain is hilarious. I wish the blockchain could also attack "AI".
except that they cost a fraction of a cent to create instead of several thousand dollars in lawyer fees for the initial revision, and can be tested in infinite scenarios for free
to your theoretical reservation, the trust similarity continues, as the constraints around the X are also codified. The person that triggers it can only send sanitized information, isn't necessarily an administrator, admins/trustees can be relinquished for it to be completely orphaned, and so on