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Kindle Notes & Highlights
by
David Gerard
Read between
October 30 - November 11, 2017
The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
As a financial instrument born without regulation, Bitcoin quickly turned into an iterative exploration of precisely why each financial regulation exists. A “trustless” system attracts the sort of people who just can’t be trusted.
Smart contracts work on the wrong level: they run on facts and not on human intent – but legal contracts are a codification of human intent.
The purpose of law is not to achieve philosophical or mathematical truth, but to take a messy reality and achieve workable results that society can live with.
“trustless” system will still involve trusting humans wherever it touches the physical world. You may have a tamperproof system for running contract code, but the inputs have to come from outside this secure space.
as of May 2016, Ethereum contracts averaged 100 obvious bugs (so obvious a machine could spot them) per 1000 lines of code.348 (For comparison, Microsoft code averages 15 obvious bugs per 1000 lines, NASA spacecraft code around 0 per 500,000 lines.)
Selling tokens in The DAO closely resembled trading in unregistered securities – particularly when DAO tokens themselves hit cryptocurrency exchanges – and the SEC had come down on similar schemes in the past. There was no corporate entity, so it would default in most legal systems to being a general partnership, with the investors having unlimited personal liability,
Some seriously debated whether this should even be regarded as a “theft”, saying that code is law and intent doesn’t matter (unlike in real-world contracts operating in a legal system, or indeed in fraud law in general). Others argued that the market integrity of the Ethereum smart contract system required that incompetent contracts, which The DAO certainly was, had to be allowed to fail.
There is currently no commercially available proven technology platform tested for enterprise class volume, security, reliability and regulations yet.
On an invitation-only permissioned blockchain, you don’t have to control a large chunk of the hash power – you just need to compromise a single member.
a “permissioned” blockchain is otherwise known as “the most inefficient possible centrally-administered database cluster.”
