An Uncensored Look at Smart Contracts, Part 1: The Gentlest of Introductions
Smart Contracts — they’re the emerging technology almost everyone has heard of by now. Some might say they’re the answer to all the world’s woes. A fantastic shepherd to intersect the herds of business, law, finance, and software and take the world into a golden age of trustless autonomous computing, huzzah!
But not me. Nope! Prepare to have your dreams crushed.
I’m here to tell you that smart contracts are a nuisance that would be more miserable, awful, and frustrating than if the gnarliest of lawyers in your company’s legal department bred with the gnarliest of accountants in your accounting department. That’s right — come at me, lawyers! Come at me, accountants!
Smart contracts, like legal contracts, leverage a lot of language-specific jargon, and are filled to the brim with many potentially delicate parts. Either type of contract can be intimidating for the underprepared. When I try dearly to understand legal and financial contracts, and I promise I do, it typically plays out similar to this clip of when Bernard (of the show Black Books) tried to understand the financial and legal jargon used in his accounts:
Bernard, and I, might put off the task of learning about a seemingly complex subject until the very last minute. Unfortunately, it seems like we’re approaching that final minute. But I’ve got you.
To make things even uglier, smart contracts are are a bit like taking the offspring described previously, and then having it raised by the king troll itself: the software engineer.
The result? Technically speaking: some jerry-rigged, bloated, techno-legal-financial instrument.
Effectively, smart contracts are bits of code that only function when they’re fed cold hard cash. They’re given an instruction set, sometimes akin to a legal contract, and then when they receive a payment to execute those instructions, they — just like your lawyers and accountants today — take your money and run (code, if they’re a smart contract; away, if they’re an accountant/lawyer).
Smart contracts are void of all human decency. They can only ever do what they were programmed to do, regardless of external influence. Throwing fistfuls of cash, or offering seats of power to it, won’t sway it to act in your favor. If you’re looking for a target for such things, look elsewhere — perhaps towards the author of this post.
Smart contracts are predictable (kind of). If you know what a smart contract can do today, then you will necessarily know what it can do tomorrow. Unlike their human counterparts, they can run untainted and without a human operator. Once let lose, they’re unstoppable — whether you like it or not. You can throw a tantrum all you’d like, yet:
But you know what? It’s because of this that smart contracts are absolutely fantastic.
You might be saying, “but wait, now they’re some fantastic concept? You were just whining about them being this ‘miserable, awful, and frustrating nuisance’”. To which, I’d shrug.
They are frustrating, but not because of what they are. No, smart contracts, at their core, are genuinely phenomenal. And, although some argue that the stubborn foundation of a smart contract makes it heartless, it’s actually precisely what makes it the magnificent, tenacious, and the trust-minimized beast we will grow to love. And we will grow to love them, we just need to get a bit more intimate with them first.
Rather, smart contracts are frustrating because they’re nascent. After all, they’re an emerging technology, and like all emerging technologies, they’re hard to reason about. However, they’re not hard because of their nature, they’re hard because it takes a ton of effort to experiment with them. But worry not, like all tech which emerged before it, it too can be conquered in time. If you’d like to take that rabbit hole a little deeper, checkout the next blog post in this series where I’ll share some tips on taking your favorite smart contracts out on the night, so you two can get a little more honest with one another and hopefully share your secrets over a candlelit dinner.
Barriers aside, when leveraged right, smart contracts are a positively disruptive force for business, finance, law, and even climate change. In fact, at Nori, we’re using them to do exactly that. Smart contracts allowed us the superpower to create an immutable ledger of ownership for Carbon Removal Certificates and even prevent certain types of double counting prevalent in existing markets. Couple that with smart contract logic, born of Athena herself, and we might just be able to create a decentralized market that actually withstands collusion and corruption.
Okay, okay, maybe that’s taking it a bit far.
However! At the very least, smart contracts are a tool which can withstand more pressure than its centralized counterpart. Realistically, they are just a subset of tools in a much larger techno-system that enable us to create enforceable rules and experiment with different types of trust. I, for one, predict that tapping into such tools will allow us to exit an era where incentives disproportionately pitted participants to work against one another.
That said, we’re a long ways away from that, and the first step is to start experimenting (obligatory #BUIDL).
Hopefully this series will shine some light on how to do just that — and I’ll do my best to keep it raw and uncensored so that simply following along provides enough insights for you to see all the bits and pieces of this emerging technology.