Published on 3 November 2018 |
by Michael Barnard
3 November 2018 of Michael Barnard
Along with our normal daily coverage for clean technology news, CleanTechnica it also produces in-depth reports on various aspects of clean energy and clean transport. One of the emerging technologies we cover is not directly a clean technological innovation is blockchain, which promises to be a catalyst for innovation in the green economy in the near future. Blockchain is probably best known to the public as "having something to do with cryptocurrency and Bitcoin, right?", Which is partially correct, but the technology itself has a wide range of applications, some of which will be crucial in the fields of distributed renewable energy , network management and energy storage, and smart contracts, among others.
The full report Blockchain: an enabling innovator for clean technology, which was published in July, is a deep immersion in the blockchain and its potential, and we will publish further extracts from the report in the coming weeks. (Read the last episode here.)
There are 9 factors that will help identify the weak spot for smart contracts:
1. Herstatt risk due to currency volatility
2. Time value of money
3. Speed of transactions
4. Cost of transactions
5. Customer accounting and default costs
6. Criminal provisions
7. Multiply the parts
8. Writers of reliable contracts
9. Bad contracts
This article is the last of a series that analyzes each of these 9 factors.
Writers of trusted contracts
Smart contracts are applications that will be impenetrable to most buyers and to the most real sellers. Instead of relying on Visa and Amazon, you're trusting someone else, the developer of the contract.
Smart contracts are easily feasible by unscrupulous people who set them up specifically to take advantage of someone less sophisticated. Imagine a model-based contract that appears to have a configuration that returns payment for non-delivery, but actually pays a part regardless of what happens. Unless you look at the code and understand it, you'll never see it.
And it will often be the seller who will set up model-based smart contracts. After all, they are trying to sell stuff and pave the way for buyers. For larger contracts, there are currently expert negotiators on both sides and lawyers on both sides who make sure that the terms and conditions are as favorable as possible. For example, contracts with an important consulting firm will not be approved for release by the management or attorneys of the consultancy with 90-day net terms.
In addition to lawyers, smart contracts will have to involve the programmers initially. Surely, reliable, sophisticated and configurable intelligent contract systems will emerge that allow the selection of terms and conditions, the recognition of third parties and the like, but they are the first times. At this time, an additional cost for those doing this includes paying developers.
When a work contract turns out to be bad, there are remedies. There is a small court for claims, there is a good faith between the buyer and the seller, and there are value agreements in kind and the like. There are ways to make the parts quite complete and generally the money does not disappear. If one party dies while the money is under warranty before delivery of the value, there is a jurisprudence and often standard terms and conditions that cover the situation.
But with smart contracts, it is possible that money goes into storage and never, never, ever. The point of smart contracts is to keep money safe between two parties who enter into an agreement. But what if the conditions of the contract are not met due to a programming error or simply the lack of sophistication on the parts of the people who enter into the agreement? In that case, the money can go into storage and stay there forever. Imagine an intelligent contract that is looking at the wrong variable for the trigger condition, so it will never come. Imagine an external program that fails to put everything in a deliverable entirely. There is nothing inherent in the smart contracts that prevents those situations except that the developers test the programs, and we all know that the software history is full of flaws.
These factors will help us determine where blockchain-based smart contracts will shine. There are many cases where the benefits are strongly one-sided. But this does not mean that they have no value or that that value will not emerge.
Stay tuned for more excerpts from Blockchain: an enabling innovator for Clean Technologor view the summary and request the full report at https://products.cleantechnica.com/reports/