One of the topics I wrote about in my essay, A Brief Discussion of Education, was the concept of redefining homeroom. These ideas are in many ways just suggestions. They’re good suggestions, but they shouldn’t be implemented by force. Above all else, school choice should drive changes in the education system, as educational decisions should be bottom up, not top down. And this discussion on homeroom really highlights that idea, especially in terms of education planning.« Continue »
So most people are familiar with “the blockchain” by now. But fewer people are familiar with smart contracts. Bitcoin was the first blockchain based cryptoasset. But the types of transactions that Bitcoin’s system could perform were very limited. Ethereum expanded on this limitation, by allowing full scale programs to be run by the system, with some limitations. There’re many places to learn about the full nature of what smart contracts can and cannot do. But what the addition allowed is for very complicated transactions to be conducted in a distributed and decentralized fashion.
Blockchain technology and smart contracts are in their infancy. So far, they’re mainly being used to create digital tokens that are traded for speculation, or for the funding of business operations via ICOs. But over time, we’ll start to see more technology that can be controlled through smart contracts. And as that happens, smart contracts will become an increasing part of our every day lives.
The DAO Debacle
DAOs or “distributed autonomous organizations” are an interesting use of blockchain and smart contracts. But the basic proof of concept DAO, literally just called The DAO, happened to be a total failure. What happened?
The smart contract that defined the DAO had a bug. Basically, when a transaction was made, the order that the balance was updated was backwards, so before the new balance was updated, a person could ask for the money back, and could do so multiple times. This allowed the attacker to siphon off a lot of money, and that spelled the end of The DAO, and unfortunately, the emergence of a fear of this technology.
But not only is such failure possible with any program, and in fact there was a recent example of a person in China siphoning off a lot of money from ATMs (The Verge), but actual contracts often have loopholes, especially with poorly written ones. Carl Vitullo, in The Future of Bitcoin and Ethereum, suggests that smart contracts aren’t reliable, and with the whole DAO mess, it’s easy to see why. But are actual contracts reliable? If two average people wrote up a contract, odds are any good lawyer would be able to poke a hole in it. Just look at Judge Judy.
The job of a lawyer is to ensure that there are no significant loopholes, or at least do everything possible to limit them. And so, in the future, a lawyer will need to be able to evaluate smart contracts. For this reason, a lawyer is going to be as much programmer as anything else, and while the law will still matter, it will be the proper functioning of the smart contract that will matter the most.
A good smart contract lawyer should have been able to realize that transaction order mattered and that the way in which The DAO was coded would allow for someone to withdraw large sums of money from The DAO. But this also brings up another good point.