Along with some of my very talented colleagues, I will be posting The Weekend Read through the end of the summer.
A Funny Thing About Smart Contracts
The Economist has an article in their forthcoming print publication titled "Not-so-clever contracts" written by Schumpeter. The title is funny because even though smart contracts are called "smart" they actually just do whatever they were programmed to do and sometimes the code backfires on its developer!
Schumpeter makes some good points in the article, namely that it's much more likely that smart contracts will take hold in existing organizations far before they replace them. I'm sympathetic to this because, indeed, I don't think smart contracts can replicate sentient beings (yet? I read too much scifi). The piece also gives a little credence to our preferred strategy of sharing information with only the parties privy to a transaction and writing well-defined, secure code based off of leading industry standards while keeping the prevailing legal system in mind.
With that said, I don't think the article represents the serious people working on ways to deploy smart contracts in decentralized networks. (For an overview of the complexity of this problem, please see my first blog post for R3.) Specifically, Schumpeter focuses on The DAO as a prime reason to be bearish on smart contracts. I don't think this is fair. As an emerging phenomenon, decentralized cryptocurrencies are going to see many failures - technical and political. Let's judge and learn from the failures that security researchers didn't anticipate beforehand.
Slow Clap for ZCash
I'd like to give a stern thumbs up to the ZCash* team for delaying the release of their privacy-preserving cryptocurrency in order to accommodate more security audits. I think this choice reflects the seriousness of the team in putting out high-quality code. It's unpleasant to miss deadlines in the public eye but I think honesty should be celebrated when we see it.
We should also celebrate other awesome things ZCash did this week, like extending the Ethereum contract language to efficiently support verification of zkSNARK proofs. This effort was revealed at the close what appears to have been the most productive hackathon ever hosted by Pokemon. (PS, I hope this photo means someone has put Ithaca Hours on a blockchain.)
* - Disclosure: My husband is an advisor to ZCash along with a bunch of other geniuses.
Privacy is Hard
This week, the American Banker came out with a piece on blockchain vendor strategies. The piece is well-written and highlights three attitudes from three vendors, including R3, on their approach to privacy on "blockchain" platforms. Our solution straddles a middle ground (Goldilocks style, if you will) of the views presented which range from: "no private contractual data should be stored on a distributed ledger" (DA) to all information must be on a single ledger (Symbiont). Though our solution does not use a single ledger, we also think it's necessary to store contractual data on a ledger.
How can there be such divergent views on the proper approach to this technology? Well, privacy is extremely difficult to solve for in financial transactions on a shared ledger and this field is in its nascence.