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2 hours ago, fToRrEeEsSt said:

Ok so what does the word recognise mean?

It's a great question and I should have explained that better. Recognition is an important consideration in western legal systems but differs from the garden-variety meaning of "recognise" in one important aspect: if a legal system does not "recognise" a thing, it simply does not exist at law as that thing it claims to be (although it might be recognised as some other thing at law). In the case of smart "contracts", courts would probably not recognise them as contracts per se but might recognise them as software which produces a specific outcome (transaction, mathematical calculation, text output, machine instruction etc). That's not where we want to end up if smart "contracts" want to be smart, real and enforceable contracts on their own.

That lack of recognition at law means that if you took the code representing a smart "contract" to court seeking enforcement of its intended results, the court will still ask you: "can you show me the contract that you both agreed to?" It won't help that you have the source code where the instructions can be understood in human readable form. The court will recognise the words and the meaning and perhaps even the intent of the software but will not recognise it as a contract. The court will need to look outside the code to identify the agreement that is allegedly embodied in that code.

[By the way, there is a whole field of research regarding recognition at law, particularly as it relates to recognition of "enemies" and "enemy states" in this world of asymmetric warfare and separatist movements but that's for another day - if any of you are brave enough and not against reading works by those who were involved in the Third Reich, see Theory of the Partisan by Carl Schmitt. It is extraordinarily brilliant despite the compromised nature of its author. Or if you want the literary version of the same complex question, see the short story Benito Cereno by Herman Melville.]

On to the other questions - they're all important:

4 hours ago, fToRrEeEsSt said:

So Ripple aren't responsible for creating a legal framework for each and every contract? 

Luckily for them, no. The system of laws will need to be created by nation states or an international body (like the WTO) and will probably include the basic criteria the code needs to satisfy to be treated as a proper contract, enforceable in a court. Or, you can ignore those criteria and be left with a piece of software running a bunch of instructions which you hope produces the outcome you want with your only protection being fixing the code by consensus (like the hard fork required by Ethereum after The DAO).

4 hours ago, fToRrEeEsSt said:

Is it that the service they're providing is that a contract can be put on their block chain securely

For this one, I have to go back to the Codius white paper which states that:

Quote

Smart oracles combine the idea of an oracle, which provides information about the real world, with a sandboxed code execution environment....

The Codius implementation uses Google’s Native Client to sandbox untrusted code, which enables developers to write contracts in any programming language. It uses deterministic compilation, hashes and signed keys to securely identify contracts and modules.

Interestingly, the white paper opens with the definition of "contract" but is unable to satisfy the criteria being (for US readers) mutual assent, consideration, capacity, and legality. For that, we still need a boring, long-winded document that describes each party's rights and obligations. That's OK but it just means that the smart "contract" has a limited role until broader legal recognition occurs.

4 hours ago, fToRrEeEsSt said:

Does your electronic signature example relates in so much that Ripple are merely providing the capability to store the smart contract securely rather than creating the smart contract itself?

I used the electronic signature example not from the point of view of how the technologies are related because smart contracts are more than storage of legal documents on a blockchain. I only meant it from the point of view of how the real world, legal frameworks and culture shift are likely to develop. i.e. slowly but surely.

To give you one example - in Australia, electronic signatures are permissible only under certain conditions but are prohibited for any document/contract that needs to be witnessed. You would think it would be easy to solve that simple problem, but no. Given the current difficulties law makers have with something as basic as an electronic signature, it could take some time for them to digest the requirements of a whole contract that resides entirely within software and unintelligible cryptographic hashes.

That said, there are still opportunities today to monetise this. It won't be easy and will fortunately open up as the law catches up.

5 hours ago, fToRrEeEsSt said:

Dare I ask what the Zerpningites were discussing?

A few of us were still trying to work out where you were and what happened, not realising that you were right beside us!

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@Pablo I don't have time to go through your response with a switched on brain just now.  I have a quick question about the upcoming SEC securities May 7th doodah.  If XRP and ETH are considered securities, in the long run can that be considered a good thing given we want regulation as quickly as possible to clean up the crypto space and labelling XRP as something other than a crypto currency kind of gives it more weight in the real world?

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Posted (edited)

@Pablo interestingly enough the project I’m working on now consists of incomplete data and building rules on said data.We are attempting to run drivers license validation via OCR technology for every country in the world and build a platform, or rather a point-of entry operating system for venues base on it.

First we’re starting with a narrower scope: North American identification. Even yet, we don’t have all the data from each drivers license and multiple samples of each in order to do validation without false positives.

The way we’re trying to resolve this issue is as follows:

1) We build a backend system that can catch every single piece of data and organize it.

2) With said data we learn all the possible pivots and combinations the fields can take on

3) we use (2) to improve (1)

In order to do this we need to have an initial advanced understanding of how everything works otherwise we cannot do (1).

I think you definitely have your work cut out for you @Pablo. I definitely foresee most of your success in developing this area will be in splitting this problem up into smaller parts before coming up with a universal solution. 

Best of luck!

Note: I think this really boils down to a language problem. You will be surprised how much AI, linguistics, and OCR could help you in cataloging this field.

Edited by Atomic1221

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On 5/3/2018 at 1:53 AM, Pablo said:

There aren't many lawyers who are sufficiently qualified to develop software themselves so there needs to be much more interaction between those 2 groups and it definitely hasn't occurred yet based on the current literature.

Thanks for all the work you've done on this @Pablo  I don't wander into the technical threads often, but am fascinated by the prospects of Codius. I think this aspect of blockchain may lag for the very reason above. And because common business people will not be able to translate the code and will have to depend on "smart lawyers", which are sure to be very expensive. Imagine a duel major in law and blockchain code...

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Posted (edited)
On 5/5/2018 at 7:37 PM, Pablo said:

It's a great question and I should have explained that better. Recognition is an important consideration in western legal systems but differs from the garden-variety meaning of "recognise" in one important aspect: if a legal system does not "recognise" a thing, it simply does not exist at law as that thing it claims to be (although it might be recognised as some other thing at law). In the case of smart "contracts", courts would probably not recognise them as contracts per se but might recognise them as software which produces a specific outcome (transaction, mathematical calculation, text output, machine instruction etc). That's not where we want to end up if smart "contracts" want to be smart, real and enforceable contracts on their own.

That lack of recognition at law means that if you took the code representing a smart "contract" to court seeking enforcement of its intended results, the court will still ask you: "can you show me the contract that you both agreed to?" It won't help that you have the source code where the instructions can be understood in human readable form. The court will recognise the words and the meaning and perhaps even the intent of the software but will not recognise it as a contract. The court will need to look outside the code to identify the agreement that is allegedly embodied in that code.

[By the way, there is a whole field of research regarding recognition at law, particularly as it relates to recognition of "enemies" and "enemy states" in this world of asymmetric warfare and separatist movements but that's for another day - if any of you are brave enough and not against reading works by those who were involved in the Third Reich, see Theory of the Partisan by Carl Schmitt. It is extraordinarily brilliant despite the compromised nature of its author. Or if you want the literary version of the same complex question, see the short story Benito Cereno by Herman Melville.]

How are those smart "contracts" actually implemented? Are there any examples?

In real life a contract also cannot be changed. It either can be fulfilled or cancelled and replaced by a new contract. If there are any obscurities both parties have to negotiate and perhaps go to court.

Edited by tar

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On 5/5/2018 at 11:37 AM, Pablo said:

In the case of smart "contracts", courts would probably not recognise them as contracts per se but might recognise them as software which produces a specific outcome (transaction, mathematical calculation, text output, machine instruction etc). That's not where we want to end up if smart "contracts" want to be smart, real and enforceable contracts on their own.

I am a professional artist, and have been thinking about how Ripple’s ILP, XRP and Codius could impact my career. Stock imagery is estimated to be a $14 billion/year industry where much of it goes to the stock agencies rather than the individual artists. Going through the process of legally copyrighting is cumbersome, and getting paid from all the intellectual theft is virtually impossible. I read about Kodak’s coin idea: "in theory, people who want to buy the rights to images will happily go through the added step of converting their dollars or euros, for instance, to buy KODAKCoin, which they can then spend to license images and creative content from photographers. Photographers will apparently embrace the idea of getting paid in KODAKCoin, which they can then convert into their currency of choice.” Kodak would crawl the web in search of images being used without permission. https://www.fool.com/investing/2018/01/10/everything-you-need-to-know-about-kodaks-kodakcoin.aspx

The first thought I had was that XRP could do a better job in the transaction aspect of this. The second thought is that if I understand the idea behind Codius correctly then copyright data, ownership and micro-payment information could be programmed into everyone of my images. Even the image size could be recorded. That is; a high-resolution image would demand a higher payment because it could actually create a press quality print and the print count could be recorded on the ledger, so that I could be paid per print. Maybe it could even be programmed to not let it print until payment is made? The benefit of this is that I could actually put high-resolution images of my work online without fear of them being pirated. Then someone could purchase the right to digitally identified and numbered print and have it printed locally to them. Low resolution images, such as those found on Pinterest or the web in general, would demand smaller payments upon internet use or download. These payments could be instantaneously sent to me in the currency of my choice, facilitated of course on Ripples ILP with XRP. I wonder also how it could affect images used and shared on platforms like Facebook, Google, Youtube? Could it be that users actually get paid more directly for their own content? This could effect all types of artists . . . musicians, writers, film makers, etc.

Am I understanding the potential of this technology correctly? Codius is both legal and technological, correct?

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On 5/5/2018 at 6:37 PM, Pablo said:

if a legal system does not "recognise" a thing, it simply does not exist at law

 

On 5/5/2018 at 6:37 PM, Pablo said:

The court will recognise the words and the meaning and perhaps even the intent of the software but will not recognise it as a contract. The court will need to look outside the code to identify the agreement that is allegedly embodied in that code.

 

On 5/5/2018 at 6:37 PM, Pablo said:

Interestingly, the white paper opens with the definition of "contract" but is unable to satisfy the criteria being (for US readers) mutual assent, consideration, capacity, and legality. For that, we still need a boring, long-winded document that describes each party's rights and obligations. That's OK but it just means that the smart "contract" has a limited role until broader legal recognition occurs.

Awesome Pablo thanks for the answers. 

So once the world's law recognises the mutual assent, consideration, capacity and legality of a smart contract, they will be enforceable in a court of law but for that to happen there needs to be something like a cut and pasted terms and conditions type section for each contract, or each type of contract?  Surely that wouldn't be too difficult to agree on for each contract type or does the issue lie with the world of law understanding block chain technology before any smart contract content can even be considered?

I have a feeling those books you mentioned will go way over my head like a 6 year old reading books on quantum mechanics lol.

On 5/5/2018 at 6:37 PM, Pablo said:

A few of us were still trying to work out where you were and what happened, not realising that you were right beside us!

I will always be stood beside Zerpers.

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Posted (edited)
2 hours ago, fToRrEeEsSt said:

So once the world's law recognises the mutual assent, consideration, capacity and legality of a smart contract, they will be enforceable in a court of law but for that to happen there needs to be something like a cut and pasted terms and conditions type section for each contract, or each type of contract? 

The point of smart “contracts” is to be able to have the code stand alone as a recognised and enforceable agreement between parties without the need for human-readable versions or human intervention. Therefore including an extract of each human-readable form of the contract clause won’t be necessary or definitive in the end-state for a smart “contract” ecosystem. However where we are today in terms of understanding and development will require some type of compromise situation and what you propose could be one solution. But it’s a solution that comes with its own problem which boils down to this: if I have 2 versions of the same clause, which contract is the real contract? :) 

The reason why smart “contracts” will have to be able to stand up on their own is that the code is already enforcing a party’s rights and obligations in the absence of any court. That, in any case, is the ultimate aim. Keep in mind that this aim has, at its heart, a political imperative being the ursurping of power that is currently held exclusively by the State. I remind everyone of this because it’s an important consideration if we want to predict how the State and its organs are likely to recognise, and respond to, smart “contracts” and vice versa.

 

Edited by Pablo

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On 5/10/2018 at 5:42 AM, VanGogh said:

The first thought I had was that XRP could do a better job in the transaction aspect of this. The second thought is that if I understand the idea behind Codius correctly then copyright data, ownership and micro-payment information could be programmed into everyone of my images.

One of the use cases paraded for smart contracts has been exactly that - to simplify and automate licensing and royalty arrangements so that artists have direct control over their intellectual property. There's a chicken and egg problem because it will require artists to be weened off the current arrangements and onto new modes of value transfer. That's the Internet of Value and that is still many years away.

The way I see it developing is that a new generation of emerging artists will start loading their work onto blockchains and DAOs to control distribution and facilitate payment until we reach a tipping point where the quantity and quality of intellectual property and emerging artists on DLT is so overwhelming that it pulls the whole market towards a DLT driven marketplace. Records -> CDs -> streaming -> DAOs.

It sounds great for artists but we have to keep in mind that the rest of the world will have moved on too. We can't lose sight of the political reality: these arrangements could allow artists to reap royalties without disclosing this to tax authorities and also allow artists who offend public morals (or even commit heinous crime) to sell their works in complete anonymity in order to support themselves. Privacy, after all, is a key objective of the Cypherpunk movement.

But where does this leave the State vis-à-vis supporting itself financially, protecting legitimate copyright owners and maintaining order? Take your pick. One dystopian possibility will see a reliance on even more draconian surveillance and intrusion and increasing economic paternalism (State sanctioned incomes or State controlled rationing of essential resources). Or we go in the complete other direction and see the emergence of Kantian world order where nation-states and borders dissolve and we become citizens of the World with a single global currency. Perhaps XRP.

While that might be an interesting bit of science fiction, for now we have Spotify, Apple Music and Amazon barely hitting their straps so we might not see this shift for another generation or two. Phew!

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On 5/10/2018 at 1:48 PM, tar said:

How are those smart "contracts" actually implemented? Are there any examples?

In real life a contract also cannot be changed. It either can be fulfilled or cancelled and replaced by a new contract. If there are any obscurities both parties have to negotiate and perhaps go to court.

There have been forms of algorithmic contracts operating for many years already - one only needs to look at high frequency trading to see this is practice today. The contracts involved in HFT have not been tested in court, nor do the parties question their validity. There is no human intervention in their execution. This relies on the general assent to the validity of these contracts by all participants and the risks involved. On the Solidity platform, there are about a million live examples of smart contracts doing a range of things although there are a significant number of Ponzi schemes and scams. It’s certainly the Wild West.

In real life it is true that one cannot unilaterally change a contract. It requires consent of the other party/ies. In my experience those changes occur all the time and don’t always result in a change to the contract. If the new arrangement is acceptable, the world simply moves on and the new arrangement becomes a custom - an invisible overlay on the contract which can even have stronger forces than the written agreement from which they stem. If you don’t believe me, just look at marriages around the world. :) 

The other thing that happens with a contract is the concept of “shading” where performance is merely perfunctory insead of consummate due to some grievance or perception that the benefits of the contract are not being realised. The aggrieved party still complies with the contract, but only just. These situations never end up in court because there is no breach and because you cannot contract for consummate performance. Shading actually allows contracts to be efficient (believe it or not). 

The example of “obscurities” is even more interesting because in the world of smart contracts there are no obscurities - just pure code that either executes or does not. That’s a basic requirement of Turing-complete software languages which all the major smart contract languages rely on, including Codius. You need to trust that this lack of obscurity (which would normally provide both parties some contract relief) works in your favour in a smart “contract”. If it doesn’t, you could be in a lot of trouble - AKA The DAO. 

The point I’m trying to make here is that there is a built-in flexibility and incompleteness with real contracts that stems from the reality of human interactions and these factors are essential, if unspoken, elements that allow contracts, and in fact any agreement between humans, to work. There is no such flexibility or incompleteness with smart “contracts” which are immutable, irreversible and (for now) Turing-complete and which are “operated” by software that does not allow for, or even understand shading (yet ;)). Which brings me back to my OP regarding the theoretical and regulatory challenges to be overcome in this space.

 

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On 5/11/2018 at 10:34 AM, Pablo said:

One of the use cases paraded for smart contracts has been exactly that - to simplify and automate licensing and royalty arrangements so that artists have direct control over their intellectual property. There's a chicken and egg problem because it will require artists to be weened off the current arrangements and onto new modes of value transfer. That's the Internet of Value and that is still many years away.

The way I see it developing is that a new generation of emerging artists will start loading their work onto blockchains and DAOs to control distribution and facilitate payment until we reach a tipping point where the quantity and quality of intellectual property and emerging artists on DLT is so overwhelming that it pulls the whole market towards a DLT driven marketplace. Records -> CDs -> streaming -> DAOs.

It sounds great for artists but we have to keep in mind that the rest of the world will have moved on too. We can't lose sight of the political reality: these arrangements could allow artists to reap royalties without disclosing this to tax authorities and also allow artists who offend public morals (or even commit heinous crime) to sell their works in complete anonymity in order to support themselves. Privacy, after all, is a key objective of the Cypherpunk movement.

But where does this leave the State vis-à-vis supporting itself financially, protecting legitimate copyright owners and maintaining order? Take your pick. One dystopian possibility will see a reliance on even more draconian surveillance and intrusion and increasing economic paternalism (State sanctioned incomes or State controlled rationing of essential resources). Or we go in the complete other direction and see the emergence of Kantian world order where nation-states and borders dissolve and we become citizens of the World with a single global currency. Perhaps XRP.

While that might be an interesting bit of science fiction, for now we have Spotify, Apple Music and Amazon barely hitting their straps so we might not see this shift for another generation or two. Phew!

Pablo, thank you so much for taking the time to respond. I wrote a more thought out reply but for some reason it disappeared when I submitted it. I've learned a lot by reading your threads about smart contracts. Thank you again!

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On 5/12/2018 at 1:47 AM, Pablo said:

There have been forms of algorithmic contracts operating for many years already - one only needs to look at high frequency trading to see this is practice today. The contracts involved in HFT have not been tested in court, nor do the parties question their validity. There is no human intervention in their execution. This relies on the general assent to the validity of these contracts by all participants and the risks involved. On the Solidity platform, there are about a million live examples of smart contracts doing a range of things although there are a significant number of Ponzi schemes and scams. It’s certainly the Wild West.

In real life it is true that one cannot unilaterally change a contract. It requires consent of the other party/ies. In my experience those changes occur all the time and don’t always result in a change to the contract. If the new arrangement is acceptable, the world simply moves on and the new arrangement becomes a custom - an invisible overlay on the contract which can even have stronger forces than the written agreement from which they stem. If you don’t believe me, just look at marriages around the world. :) 

The other thing that happens with a contract is the concept of “shading” where performance is merely perfunctory insead of consummate due to some grievance or perception that the benefits of the contract are not being realised. The aggrieved party still complies with the contract, but only just. These situations never end up in court because there is no breach and because you cannot contract for consummate performance. Shading actually allows contracts to be efficient (believe it or not). 

The example of “obscurities” is even more interesting because in the world of smart contracts there are no obscurities - just pure code that either executes or does not. That’s a basic requirement of Turing-complete software languages which all the major smart contract languages rely on, including Codius. You need to trust that this lack of obscurity (which would normally provide both parties some contract relief) works in your favour in a smart “contract”. If it doesn’t, you could be in a lot of trouble - AKA The DAO. 

The point I’m trying to make here is that there is a built-in flexibility and incompleteness with real contracts that stems from the reality of human interactions and these factors are essential, if unspoken, elements that allow contracts, and in fact any agreement between humans, to work. There is no such flexibility or incompleteness with smart “contracts” which are immutable, irreversible and (for now) Turing-complete and which are “operated” by software that does not allow for, or even understand shading (yet ;)). Which brings me back to my OP regarding the theoretical and regulatory challenges to be overcome in this space.

 

I don't know if I just cannot grasp what is meant by those "contracts". It looks more like pre-defined steps within a process instead of a contract.

For my understanding a contract contains obligations for both parties. The most common contract is the buying contract (and not the marriage which is rather different from country to country). Therefore, the gumball machine is used as reference for an introduction to "smart contracts" I found some days ago. The process is clear: you put a coin into it and get a gumball. Pretty easy. There is no need for other parties to be involved. Assume, the owner of the gumball machines makes a "smart contract" with a gumball vendor. The gumballs are scanned on delivery and if the amount matches the agreement the payment is triggered. Still easy. Still comprehensible. Perhaps instead of an automatic scanning a person involved could check if all gumballs are fine before the payment is triggered. Now what you mean is like an non-written agreement that they could agree that 2% of all delivered gumballs could look a bit dirty or that that there could be a tolerance of the overall weight of all gumballs or things like that. If those soft agreements are not put into the contract beforehand as parameters or if there is no person involved that can verify the delivery even if the weight is slighty lower - then both parties have a problem with that "contract" and need to re-design it (cancel and re-agree on a new one).

That is why I'd like to see an example of its implementation: to look for possible parameters (are there any?).

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Posted (edited)
On 5/14/2018 at 11:58 PM, tar said:

That is why I'd like to see an example of its implementation: to look for possible parameters (are there any?).

I think you are looking for an example where wet-code (the messy and confusing real world that includes your dirty gumballs example) can communicate with the dry code (the smart "contract" software). Have I got that right?

If there are examples, I haven't heard of any. Whoever can build that bridge will become an instant billionaire or the next Satoshi. As I've said before, it's not a mere matter of code or platform or compatibility issues. It will require a quantum leap of thought and it's where I'm focusing my energy.

Edited by Pablo

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If you peel the onion down, imo you are left with simply

1) A bunch (a lot) of Entities (Oracles) that will supply the input for a smart contract,

2) the smart contract that changes the state in the ledger and 

3) Entities that interpret the new state of the ledger

The Oracles must be identified and trusted to be able to forfill that role of Oracle. Therefor a good working identity solution is key here, Oracle addresses must be mapped on real life entities that exist outside the ledger.

The smart contract can imo be seen as a logical circuit, i.e. [input a,b,c] => smart contract => [output x,y,..], but see also https://www.quora.com/Can-any-computer-program-be-written-as-a-logic-circuit

The interpretation of the new state is also up for debate, is it law by its own, or should it be used as extra info in a dispute?

just my 2cts...Interesting subject 🙂

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