Cointelegraph: What are Smart Contracts about?
Susanne Tarkowski: Smart contracts are applications ‘living on’ the Blockchain, and therefore can’t be censored. Simple, immutable and autonomous applications, basically. As Primavera de Filippi eloquently phrased it during her talk at OuiShare Paris 2016 “Smart Contracts are neither smart nor contracts…”. But ironically, smart contracts are however ideally suited to be… well… contracts!
In essence, your contract, whether it’s a marriage contract or a freelance gig contract, becomes a self-executing application. The contract goes from being a static agreement to a living application. That’s tremendously exciting.
What really turned me onto it was reading the “Lex Cryptographia” blog post by Justin Ranvier back in 2013, that’s when I realized the Blockchain, and smart contract technology more specifically, could be used to replace the government in its core function: security and dispute resolution. That is why we are building Pangea, an Ethereum smart contract powered peer-to-peer jurisdiction, based on the Secure Scuttlebutt communication protocol.
Cointelegraph: How exactly do Smart Contracts add value to businesses?
I believe in the near future, two to three years, smart contracts will diminish costs of legal advice, notarization and dispute resolution by 99 percent at the very minimum for businesses who choose to adopt it, although it might slightly increase the cost of coders and code vetting services.
Cointelegraph: Have Smart Contracts in the commercial realm been proven yet?
Susanne Tarkowski: Yes, for tasks like escrow accounts, gambling, predictions, etc.
At Bitnation, we have used it for our own organizational structure – a DAO like contract called Decentralized Borderless Voluntary Nation (DBVN) – and we haven’t had any problems to date. Although we haven’t done very much with it up to now either, so it might be a bit early to tell. By the way, we would really like more people to vet our code, please reach out to me if you’re interested in doing that. Johan Nygren have created a patch for the ‘recursive call’ vulnerability which you can read about here https://github.com/Bit-Nation/BITNATION-Constitution/pull/9
It would indeed be very useful to collect a GitHub repo with proven successfully executed contracts, and rate their usability the same way we rate our AirBnB hosts or Uber Drivers, collecting qualitative as well as quantitative user feedback.
Cointelegraph: So when should companies employ Blockchain-enabled Smart Contracts rather than existing technology?
I can’t really see why any contract should not be a smart contract. From employment contracts to contractor contracts, to client contracts, delivery contracts, etc. You name it.
Cointelegraph: Would you say Smart Contracts have come to stay?
Susanne Tarkowski: Without a doubt.
Cointelegraph: What advice would you give to business leaders & owners concerning the use of Smart Contract?
Susanne Tarkowski: It is a super exciting technology that will no doubt change the world, but please tread carefully. We’re in the very early stages of it, and the whole scene is still largely experimental. I would encourage people to play around with it, to understand how it works, and to build on it, but treat it for what it is: an emerging and unstable technology in the early alpha phase.
As much as I’m excited by Ethereum and Rootstock, I’m also looking forward to non-Turing smart contract technologies. I think in about five years time we’ll have experienced enough trial and error to establish basic best practices for smart contracts.
Further on, our thinking around what smart contracts are and how we interact with them will naturally evolve with time. Take the ‘code is law’ mantra for instance – championed by- and then brutally discredited by the DAO in a very painful community-wide learning experience. While ‘code is law’ might be a wet dream for people like us in the software space, the average user will find it terrifying — and rightly so.
Why would we want code to be law? Humanity is brilliant, thanks to all its imperfections. With our many shades and errors, also comes freedom, creativity, exploration and ultimately – innovation. Rather than eliminating human errors, I would like to harness the errors, turn them into new ideas and solutions.
With Pangea, our vision is that while code is extremely important, it is _not_ law, at least as long as we’re still humans, as opposed to AIs. The stated _intent_ governs the contract, like it typically does in Common Law jurisdictions, for instance, and _intent_ need flexible interpretation. Instead of eliminating human judgment, we’re using smart contracts to empower human thoughts, interactions, and of course – arbitration.
The law can be codified, people can code their own laws, but ultimately, code alone does not fulfill the criteria of being _a legal code_, nor a jurisdiction.