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We need to talk about smart contracts

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Welcome to The Block. I’m Jeremiah Lewis, crypto-enthusiast and early adopter. This is a twice-weekly
 

The Block

February 28 · Issue #20 · View online
Weekly curated #cryptocurrency news and commentary.

Welcome to The Block. I’m Jeremiah Lewis, crypto-enthusiast and early adopter. This is a twice-weekly email digest comprising one or two short topical essays followed by a manageable collection of curated links.
If you know anyone who’d be interested in this kind of content, forward this email, or they can subscribe here. I love feedback, so don’t hesitate to email me.

The Mayans predicted this would happen.
The Mayans predicted this would happen.
The problem with "smart" contracts
Okay, the issue today is highlighted by the link below. Check it out:
Poor smart contract coding exposes millions of dollars in Ethereum
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.
Links of Note
In case you had doubts about institutional investors seeing the light, here’s yet another indication that big banks are coming around on crypto:
Crypto Exchange Poloniex Acquired By Payments Startup Circle
See, the thing is, Circle is backed by Goldman-Sachs. Yeah. That’s the kind of thing that should cause you to sit up and take notice. No?
How about this, then:
Bank of America Now Considers Crypto a Business Risk
The times, they are a changin’. At least for some. But for others, time is a circle you just keep riding. Take Laszlo Hanyecz, who famously bought a pizza with 10,000 bitcoins back on May 17, 2010.
Laszlo Hanyecz, Who Bought Pizza With 10,000 Bitcoin, Is Back At It
I’m just bummed he didn’t buy 10,000 pizzas with one Bitcoin. That would have been rad.
11-year-old Andrew Courey wrote a book on bitcoin
Poll: Bitcoin More Popular With Czechs than the Euro
50 Cent admits he ‘has never owned, and does not now own’ any bitcoin
Bill Gates calls cryptocurrency 'super risky' in Reddit AMA
Astute reader John Irwin alerted me to this bizarre video (kudos to the creator for using Night on Bald Mountain). If you’re following the Tether/FOMO/pump-n-dump threads online—you’ll greatly appreciate it. Be sure to turn Closed Captioning on. There’s also a whole channel of similar videos, so beware the rabbit hole.
BOGGED - YouTube
Wrap Up
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