So, that sounds bad, but how is it bad, and why? And what’s a smart contract, anyway?
Rewind to 2013. A scrawny Russian-Canadian programming wunderkind
proposes a cryptocurrency that would contain its own global programming platform, which people could use to perform certain functions, utilizing the blockchain for decentralized verification. In July 2015, Ethereum was birthed, and the first “smart contract” was created using Ethereum’s built-in language, Solidity. I know, the name needs some work.
A standard contract outlines the terms of a relationship between two or more parties. A contract is usually, though not always, enforceable by law. A smart contract enforces a relationship using the blockchain (or more accurately, cryptographic code).
So instead of hiring half a dozen attorneys to draw up an agreement, you do it with code, and the code is impartial, unemotional, not swayed by bribes or trickery. It’s the perfect system…
Except when the system itself is imperfect…
And that’s the problem–until we have AI that can write perfect smart contracts for us, we have to trust that the people who wrote the smart contracts are writing flaw-free code. But how much quality assurance testing is being done on these contracts is anyone’s guess. Many are open-source, so anyone can view them, but without training, it’d be like asking me to confirm that your Mayan calendar hieroglyphics really does confirm that 2012 is the end of days.
So before you send your Ether into the ether on the hope that your programmer didn’t leave a decimal point in the wrong place
, have a programmer buddy check out your smart contract–and make sure you sign a real-world contract with her, just in case.