That's infamously known as the "Oracle Problem".
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.
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.
But you're right, it is reinventing traditional finance, that is kind of the point, except nobody controls it.
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.