21st Century Methods for Democracy

Clinamenic

θερμοδυναμικός καπιταλιστής
what is a smart contract?
Really its the part of crypto that I'm most excited about.

So a blockchain is just a history of transactions that exists in the memory of all the computers working in it, a history that can be accessed by anyone. Differences here and there across blockchains, but that is the premise: a ledger in which there is no central entity that everyone else has to trust is acting in their interest.

So lets say there are a million active addresses on a blockchain, which means each one is being used, lets say by one person each. Each person has one address associated with them, and each address as a balance associated with it.

When you "send" Bitcoin, you just submit a change to the ledger in which the balance associated with your wallet address changes, as does the balance associated with the wallet address of the recipient. Its just data shifting around, one massive sequence of 1's and 0's changing to another massive sequence of 1's and 0's. Every change included many transactions, so its not just one transaction per iteration.

Because this is all code, it can be algorithmically manipulated. Wallet balance is pure data, and we merely associate an abstract value with this data. Smart contracts are algorithms that can be written to automatically and rapidly change balance data in very complex and conditional ways.

If you make a bet with someone that it will rain where you live this time next week, and you write a smart contract that draws from weather data from sensors in your area, you no longer need to rely on your friend choosing to fulfill their financial obligation. If it rains, you receive the money.

edit: that is, balance of your address has increased and that of your friend's has decreased.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Now consider how elaborate and precise these automatically enforced agreements can get, provided reliable data. If satellite footage detects fire (edit: on a farm), via machine vision, and that data gets fed into insurance smart contracts; if a sensor on your car is constantly measuring your speed and its relation to the local speed limit, and feeds that data to your insurance provider; etc.
 
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Clinamenic

θερμοδυναμικός καπιταλιστής
An algorithmic fine-tuning of virtually every kind of financial agreement, as far as I can tell, which frees up the costs that have previously been incurred to enforce the kind of trust that is now automatically enforced.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
If you make a bet with someone that it will rain where you live this time next week, and you write a smart contract that draws from weather data from sensors in your area, you no longer need to rely on your friend choosing to fulfill their financial obligation. If it rains, you receive the money.
Of course, we would be using a bet-making application developed by people who know how to write smart contracts, but perhaps someone will make an application with an intuitive experience that lets anyone create custom smart contracts.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Now consider how elaborate and precise these automatically enforced agreements can get, provided reliable data. If satellite footage detects fire (edit: on a farm), via machine vision, and that data gets fed into insurance smart contracts; if a sensor on your car is constantly measuring your speed and its relation to the local speed limit, and feeds that data to your insurance provider; etc.
It removes many of the costly assumptions and generalizations that are made when precise, situational data is either unavailable or its too laborious to take into account. Provided healthy competition, this savings won't just be enjoyed by the companies, but also by the customers/clients.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Just look at decentralized finance (DeFi), which is just a variety of apps that utilize smart contracts across various blockchains.

Synthetix, Aave, Compound, Curve, Uniswap, just some of the incumbent DeFi protocols out there.

Some of them already get mind-numbingly complex. Deposit 17.88 Xcoin in this interest-generating liquidity pool, and 17.88 Ycoin is generated as a redeemable synthetic asset which grows in accordance to your share of the liquidity pool. Redeem your Ycoin and it is erased, and you receive your Xcoin back with whatever interest it accrued.

Although technically its not interest, but yield, but I just needed to make a point and interest is a more established concept.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
I'm pretty sure "flash loans" involve depositing some amount of crypto and immediately receiving some future yield on that asset, paid in some synthetic asset, while the deposited asset stays locked up long enough to fulfill said interest.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
It's crazy. One downside is that the sheer complexity of this stuff will make it difficult for regulators to gauge the levels of risk being taken by whatever financial institutions venture into this space. Like your average financial tomfoolery, but on caffeine in a 24/7 global market.
 
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