Comment by ewzimm | Hacker News Reader

Comment by ewzimm | Hacker News Reader

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You're right in general, but if two groups use a common software platform and write the rules of the contract into it, there's less need to build up an enforcement regime.

I'm not sure exactly how you're interpreting contract enforcement leading to violence, so I'll try to explain a little more. Two people make a financial agreement, hire lawyers, and depend on a powerful police force and and penal system to enforce the terms of their contract. This increases the need for armed police, prisons, etc. As more people and institutions are given the right to enact violence to enforce these contracts, people become more desensitized to violence and arrest and more opportunities for abuse present themselves. Abstracting this enforcement into software also distances the enforcement from the culture and removes some of the negative psychological effects on people of carrying out that enforcement.

That's on the smaller scale. On the larger scale, nations feel pressure into increasingly more arms races to keep themselves on an even level. Abstracting enforcement of agreements into software can have the same effect as the introduction of diplomacy into international trade. While it didn't eliminate war, it offered an alternative to straight-out aggression between tribes. Groups that used to stay to themselves and interact with each other only on disputed borders were able to cooperate on a much higher level by establishing representatives inside each others borders.

A smart contract system is a neutral, diplomatic ground for the Internet. Today, the Internet resembles in many ways the world before diplomacy. There is a persistent, escalating cyber-war between nations. People can move in between nations, but there's no real neutral territory that every nation would consider fair. By having a mutually-agreed and verifiably trustworthy software platform to enact contracts, there can be opportunities for new types of deals that are more mutually beneficial.

Will this suddenly eliminate war and hostility? Of course not. Neither did diplomacy. But almost nobody thinks we should go back to a world without any diplomacy, and once we have neutral and fair systems to conduct electronic business, few will want to give it up.

Contracts that are mutually beneficial typically don't need to be enforced because they are not often broken. People who consider themselves equals give each other slack in contracts. The only use case this software fits with is is handling contracts where one party does not trust the other. Typically the more powerful party is at an advantage.

There are two scenarios I see. This software is useful to powerful groups to make contract enforcement cheaper in which case they will essentially force the weaker party into compliance. Or this gives the weaker party an advantage, in which case this software never takes off. Because let's face it, I would never use this with people I like.

    Contracts that are mutually beneficial typically
    don't need to be enforced because they are not
    often broken.

This is a fundamental misunderstanding the purpose of contracts. Contracts are almost by definition mutually beneficial, at least nominally. Otherwise the only reason parties would enter into them is under duress or out of ignorance. And in fact, contracts backed by a legal system are routinely struck down if either of those cases occur.

What you are describing is a situation where neither party has an incentive to defect or default on the contract. And if that is the case then there was no need for a contract in the first place. For example, you and I agree to meet Friday night for dinner. This is a beneficial arrangement for both of us, neither of us need sign anything.

The purpose of contracts is to solve a game-theoretic problem: it is to our mutual benefit to cooperate in some way. But if we cooperate, then one of us can do even better by defecting. For example, it might be mutually beneficial for me to give you $1,000 today, and for you to give me 100 widgets on Thursday. But if I give you $1,000 today, you can do better than the original agreement by keeping the money and the widgets. So the only reason I would ever give you $1,000 is if there was some way to enforce that you give me 100 widgets. That can be by legal means, or technological means. The threat of punishment under a legal system is one traditionally effective way to incentivize you to hold your end of the bargain, and in many ways is at the very heart of what makes modern society work. A technological solution, that avoided law enforcement and judiciary systems, has the potential to be even better because there are obvious negative effects to having a large and over-reaching police force, for example.

TL;DR The enforceability of the contract is the whole point. The only reason you need a contract in the first place is because someone has an incentive to defect.

Thanks. That's exactly it. People might try to counter by saying that specific cases don't work that way, but that's not what game theory predicts. It won't tell you the outcome of a specific instance of a conflict, but it will predict the overall trend when a winning strategy exists. Traditionally, the counter to exploitable strategies was the honor system. You trusted the people you interacted with not to take advantage of you because you believed in their character. While that can work in specific cases, it's not an overall good system for running a large-scale system of social interactions because it invites exploitation. We tend to think of corruption as inevitable, but the degree of corruption in a system is actually somewhat predictable by the incentives for it built into the rules of the system when that system runs at a large scale.

Thanks for some fascinating contributions to this thread.

I see both sides of the debate, and lean toward your side. But I also think both sides are probably wrong to speak as if we will have either one system or the other in the foreseeable future. I think it is more likely that government resources and law enforcement will exist alongside any trustless contract system, acting as a failsafe (or guarantor of exploitation, depending on your POV I suppose). Few contracts would be irreversible, and few holders of contracts would resist reversal, if physical violence from the state were brought to be bear, even if the issue had already been "settled" by software. I believe the reality is that Ethereum-style contracts would increase efficiencies in more routine, less controversial contracts and the state would remain the final recourse in more extreme cases. As some have said, 30 years down the road when machines are more intelligent, all bets are off. But for the foreseeable future, the state isn't going to wither away just yet.

As far as people obfuscating with complex contracts, yes, of course they will do that. But the obvious implication is that a class of techno-jurists will have to arise to help advise users. Again, that's not much different than the current system of clueless folk consulting attorneys, and I imagine both systems would coexist for some time to come.

I definitely agree that smart contracts are going to be implemented as another layer. They'll erode the need for traditional enforcement slowly. And while there's a need for resolution when there's a bad contract, that resolution system doesn't always have to be a person.

Here's a simple theoretical example. People operate under a common, universal law system that defines the most basic rights. The rules of this system are only those which everyone who participates can agree to. For example, everyone agrees not to kill each other. People who do not accept these rules can form alternative societies, but they will not be able to access areas under common law through the use of smart locks and the like which restrict access to public spaces only to those who accept basic terms of behavior.

These rules can be under constant revision because the code that runs the base social platform is publicly audited, and anyone can submit a request to edit it. These revisions can be tested at smaller scales just by running the rules in private spaces. In your home, you can set whatever rules you want, but anyone running software with conflicting preferences will be alerted to the changes when they enter. If your home rules become popular with your friends, they may choose to implement them in their home. If enough people adopt them, the community may choose to implement them in certain spaces, and they can propagate outward.

The basis of this type of system would be mutual consent, and what a person consents to do can be adjusted at any time by their own software. It would be important that a person's personal platform was entirely under their control and only interacted with the outside world through approved protocols. Likely this would require a direct brain connection that could not be hacked because of physical safeguards.

Business could be conducted between communities that operated under entirely different rules through automatic contract negotiation. New ideas could spread from private to public spaces automatically through smart social contracts.

This is just one, very basic example of a society run by smart contracts. There's plenty of ways for these types of systems to be exploited, but that's part of the design process of any system. Particularly difficult is the problem of letting a machine which can be manipulated dictate so much of life.

But people's brains can be hacked already. Look at advertising, religious cults, mob mentality. People have always been vulnerable to manipulation, and we have developed an interconnected financial system where almost anything can be bought, especially power. We can learn from existing flaws as we develop new systems to fix the bugs in our biology and political systems that have made us vulnerable. We will definitely introduce new vulnerabilities. We just have to make sure we have a robust plan for continued development to respond to them.

If you asked Nash what he thought of game theory if he was alive today, he would tell you it have very little to do with how most people interact with each other.

It was said earlier. People get into contracts out of desperation or ignorance. Therefore there are contracts that are not mutually beneficial.

Since the vast majority of the people of this world are desperate or ignorant, ethereum can become a frightening tool.

Imagine this horrific scenario. It is the year 2030. Ethereum contracts can be written where a robot comes and steals your child for slavery automatically if you don't hold your end of the bargain.

Even today people sell themselves to pay off debts. Ethereum would just be another tool creditors can use to enslave people.

Game theory is usually presented as the science of human interaction, but I admit that I have no special knowledge about what Nash might think. I do think that individual interactions are very different from overall trends in the same way that the structure of how two grains of sand interact with each other is different from the structure of a beach as a whole.

I have no doubt that every new technology invites exploitation, and you're right to think about the consequences. That's an essential part of the design process of any technology, especially one that's general useful. That's the reason why we have such complicated software licenses.

But EvilCorp doesn't need smart contracts to send robots to steal your children. It will definitely use them if they're convenient, but they could just as easily go with the traditional human blood on dead trees contract that's ensnared many souls. Smart contracts add very little to their already efficient operation. But the people who can't afford to hire lawyers, bribe the police, and build robot armies will benefit a lot from enforceable contracts that don't require huge resources to enforce for purely digital transactions.

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