In the Ethereum world "Smart Contracts" refer to code. On its own a Smart Contract doesn't necessarily create a legally binding contract . A Contract is neither code, nor a PDF file nor a printed signed document. A legally enforceable contract describes a (1) relationship between 2 or more parties (2) with rights and obligations attached which (3) is enforceable by a governmental authority. A…
A large vulnerability has been found in The DAO and someone is at the time of writing funneling all it’s Ether out. A proposal has been made for the various Ethereum implementations to: Create a Soft Fork to freeze funds in any DAO sharing the same code as The DAO. This would stop funds being released while giving the community time to correctly implement the next step A hard fork allowing people…
Direct voting does not work well outside small groups that know each other. Think New England town meetings, a group of business partners. The traditional way to get around this in a large group is through representative democracy. Once in a while we vote in a small group of people that can vote between themselves. Shareholder votes are not important in traditional companies In traditional…
Balance sheets are useful terms from accounting showing a snapshot of the financial state of a company. Balance sheets consists generally of 3 columns: Assets Liabilities Equity These map directly to the Rights and Obligations I rambled on about a couple of weeks ago. An Asset is a Right and a Liability is an Obligation, just with numbers assigned to it. The Equity I will get to shortly. As an…
In my previous article I talked about Rights and Obligations and how they apply to blockchains. If you have the right to someone’s obligation there may be a risk that the other party can’t (or won’t) comply. This is called Counter-Party risk. A simple example of counter-party risk is if you lend money to your nephew who lives on his parents couch playing computer games all day long, there is a…