Nick Szabo: If banks want benefits of blockchains they must go permissionless

“Szabo said bonds are good example of a financial instrument suited to smart contracts because they could be backed by other assets that exist on the blockchain, if the bond issuer itself fails to make a payment.

“If it is secured by collateral that can be controlled digitally on or from the blockchain, that will be the most trust-minimised and most automated kind of interaction.

“These can be performed predominantly by ‘dry code’ (interpreted by computers rather than lawyers) and thus automated and trust-minimised (vulnerability-minimised) for seamless operations across borders.

“At the other end of the contractual spectrum, there are a wide variety of contracts where performances are inherently human in nature or where humans have tacit knowledge that isn’t readily communicated to software. For example, paying an artist to create a work of art.

“More prosaically, most construction contracts involve quality aspects that probably won’t anytime soon be specified well enough for a robot to be able to judge whether the work has been satisfactorily completed. This kind of thing will long remain the domain of ‘wet code’ — traditional law interpreted by lawyers rather than computers.”

via Ian Allison, IBTimes UK http://ow.ly/FjGL301gSwT

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