Dirk Elsner is a senior at DZ Bank Manager Innovation and digitalization. In this column, he expresses his personal opinion. In 2008 he founded the private economy blog BlickLog which has won several awards.
the theme block chain is a popular topic in the financial and tech industry. At the high-level level of many conferences expectations are being screwed steadily upward, though without waiting for experience and results from practice. This practice can be humbling.
Under the (use some experts held block chain the term Distributed Ledger = distributed passbook) means simplified the common use of a specific technical security protocol in distributed computer networks, so in block chain technology networks that are not controlled by a central entity. The block chain is basically a distributed on as many computers Public transaction log for a specific digital good (even “token” referred to). Such tokens are, for example, the crypto currencies Bitcoin and ether. But there may be other digital or digitizable goods, such as contracts or other documents. So-called smart Contracts are another possible application.
No more lawyers required
Smart Contracts are computer protocols with which certain contracts ready, checked and their settlement will provide technical support (Wikipedia). This is a program code that simplifies a series of if-then commands executes. Ulrich Greveler has the concept of “intelligent contracts” recently declared for the science side Scilogs:
“Actually, it is not a contract but an algorithm that determines which conditions (input) in which direction (Output ) to lead. A decision then has an impact on the payment of the above amount in the contract amount. This Agreement is executed by all block Chain computers simultaneously, all come here necessarily to the same result. … All Block Chain machines provide contemporaneous, who owns the amount and allow transfers the sum to; there is no human intervention, no waiting (if the contract does not include this), no one needs to be familiar; performance of the contract is completed unstoppable; the block chain here is as an unstoppable clock mechanism is. “
Greveler talks about the possible use of financial contracts on currencies or shares, as well as for insurance and is also a number of weaknesses. So no lawyers were for writing the “contracts” necessary for (the triggering conditions so) for Smart Contracts but are the possible inputs limited. For unusual or rare events also lacked a corrective instance, “the ‘interpretation of the Treaty and, just’ the, nature falls judgment.” Contracts are no longer written on this principle in legal language, but directly into executable computer code. There are now some well-known projects that experiment with Smart Contracts. One of the most ambitious projects is called DAO.
Company without people
DAO stands for Decentralized Autonomous organization and is from Smart Contracts and a voting system. The DAO project made in May this year on the block chain scene beyond headlines because it broke the recent crowdfunding records and in just three weeks was collecting $ 160 million from various investors. Although behind the project initiators are, it is referred to as a company without people. Not a board, but the shareholders do here the proposals (= proposals) where and how the money should be invested and vote on. Execution automatically just about the Smart Contracts (see detail Hannes Grassegger on time online in “The first company without people”).
Whether the DAO project can be so ever considered a company that is legally controversial. The case and the construction are indeed unusual, because the DAO construct has “neither a physical seat, nor a boss and is very different position than anything you previously knows as” wrote founder scene.
The construct is difficult for outsiders to understand because when DAO is strictly speaking a parent Smart Contract (incidentally, can be viewed here) a different platform, the Ethereum’s. Ethereum turn is the Bitcoin similar cryptocurrency, but also provides a development environment for Smart Contracts.
In order to participate in DAO, had prospective first acquire the ether token to then in DAO token to switch. This can be thought of as if it initially eintauscht its cash in cigarettes, then move them into cigars that only can be used then to purchase additional products. The DAO tokens are so investments can be made in other Ethereum projects.
robbery or transfer?
If you leave out the complicated concept tumult from Smart Contract, block chain, Ethereum or ether, then sounds the philosophy of DAO as a digital investment fund, which is managed directly by the investors to “democratic” principles. DAO signs contracts to make a profit from it. The Altcoinspekulant designated the project as a symbiosis of Social Lending, crowdfunding and private equity.
mid-June made DAO headlines because a previously obscure the project by 56 million US dollars “virtually deprived”. Whether it was actually a robbery or a transfer that was indeed unexpected, but corresponded to the DAO rules, is controversial among experts. Some write, the attackers have used an error in the program code and the money can branch off into a kind of “subsidiary” without the consent of the other DAO investors. There it was beyond the reach of the other shareholders. The alleged attacker himself speaks of himself as having exploited only the rules of Smart Contracts, which is why one can not speak of theft. He had used only contractually agreed options.
The DAO-Hack is a serious test for the concept of Smart Contracts and puts some weaknesses openly. This also means that it is more difficult than imagined, coincident declaration of will translate into program code. When controlled via block chain technology contracts is all about purely mechanically controlled if-then relations and not to human value judgments. A is a condition satisfied, then B is executed (for example, a payment) automatically. As the condition is reached, the machine does not matter. Axel Kannenberg indicates another weak point. Programming layman can before consent not know in such a smart contract if the code actually executes what is promised.
Gescheitert is nothing here
DAO was now under the auspices of the developer to a secure Ethereum address (WhiteHatDAO) transferred, by the way taking advantage of the same vulnerability. The communities of DAO and Ethereum discuss various other measures. However, it is debatable whether these are in line with the previous philosophy of Smart Contracts. Here is actually valid: “code is law.”
write off the concept of Smart Contracts because of the problems is entirely premature. Many innovations in the last few centuries have taken years or decades to application readiness. It has also not set about the development of the car after the first accident. The hype around the block chain had become too large and so far hardly anyone has talked about the practical issues of specific applications. That has changed now, and rightly so. Failed is not here. Growing up new technologies only after setbacks.