Blockchain Company’s Smart Contracts Were Dumb

“There isn’t much reason to think that a court, in a regular human jurisdiction, staffed by regular human judges, would see the world the way the DAO’s disclaimers do. Just slapping a disclaimer on the DAO’s website saying that no advertisements or expectations can “supercede or modify the express terms of The DAO’s code set forth on the blockchain” doesn’t make it so. If Goldman Sachs had slapped a disclaimer on its contracts with the LIA saying that it had entered into the contracts at arm’s length and after taking appropriate advice, and that nothing said or understood outside of the contracts could supercede or modify the express terms of the contracts, that wouldn’t stop a court from hearing the LIA’s case. It might help Goldman’s argument, but the court is interested in the facts in the world, not just what is said in the contracts. If the DAOers find their hacker, or “hacker,” and bring him to court, I am not sure many courts would be too sympathetic to an argument that his hack was just part of the system. (Any more than the FERC was sympathetic to JPMorgan’s argument that its electricity trades were just part of the system.) And while cryptocurrency/blockchain/smart-contract fundamentalists have a tendency to think that they can place themselves outside of national legal systems just by saying that things happen “on the blockchain,” the national legal systems have a tendency to disagree.

The most fascinating thing about the DAO hack may be the way it exposes these tensions. To true believers in smart contracts, there is no problem here. The system is fine; the failures — writing bad code and not anticipating this attack — were trivial, mere human error.Next time, write better smart contracts and you’ll be fine. To those true believers, changing the code after the fact — even to conform it to almost-everyone’s reasonable expectations about how the DAO would work — would be a betrayal of the smart-contract ideal.”

via Bloomberg View


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