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Smart Contracts? Thoughts from an IP and Contract Attorney

https://www.stephankinsella.com/2022/02/libertarian-answer-man-smart-contracts/

One of the big topics that caught my attention when I first acquired some bitcoin was smart contracts. I didn't hear about this from bitcoiners but rather the crypto crowd. It took years for me to realize what these snake oil salesmen were up to.

As a technical person with no experience in law the idea of a smart contract sounds appealing. Over time though, the idea started to sound far fetched to me. I started to wonder how any of these contracts except for purely digital and simple agreements would be enforced. That's not to mention that vulnerability of the chains themselves. I haven't really thought about smart contracts for a long time but I came across this post from the libertarian intellectual property attorney and author Stephan Kinsella.

I recommended reading the full post but this snippet pretty much sums it up.

> I don’t dismiss it(smart contract) either, just the hype and ignorance around it. I think that over time more things will become automated with forms, AI, arbitration, even automation, but it will develop incrementally and in the end its use case will be very narrow. This is because most people don’t understand a few things:

> 1. most contracts are very complicated and require verbal language (words) to express the terms (and can’t be done with simple symbolic logic; if anything contractual verbiage gets more nuanced and complicated over time, not simpler) and arbitrators/judges/courts to decide when there is a dispute.

> 2. most contracts involve real world assets, not digital ones, so can’t be fully automated

> 3. most contracts do not have an escrow component, that is, what you owe in the future is uncertain and even when it’s certain, the thing owed doens’t exist yet and may never exist. So there is now way to automate how to handle uncertain future conditions.

> Contracts just set up a framework for how to decide who owns some uncertain future assets, and who decides it, and how to enforce. This cannot be automated–or, even if or to the extent it can, it doesn’t solve any real problem that needs solving. It’s just “neat” and might attract nerds who like to watch Star Wars but no one in the real world cares about this shit

~ [LIBERTARIAN ANSWER MAN: Smart Contracts](https://www.stephankinsella.com/2022/02/libertarian-answer-man-smart-contracts/)

Shawn 1y ago

Exactly!

I always had a hard time imagining how smart contracts would logistically work in meatspace. It’s nice to hear from a lawyer, who actually understands them, answer: “They don’t.”

I do think that there’s a use-case for NFTs, though, and that is event tickets. Easy and safe to sell p2p online, and even buy anonymously. It would be instantly cryptographically verifiable that the ticket is genuine, not a duplicate, and not yet redeemed. Venues, bands, sports teams, conferences, etc. could mint their own tickets and sell them without an intermediary. And you get to “keep” the tickets to all the events you attended since they’d be attached to your public key.

I don’t know enough about the technical details of smart contracts, so maybe that’s what’s needed to make all this “work”. At least the escrow part of selling the tickets p2p? And/or the redeeming part where you actually enter the venue, making it so you can no longer sell the ticket to someone outside?

It’s interesting to think about. Of course, it destroys Ticketmaster’s business model, which is a stranglehold on the entire meatspace entertainment industry. I heard they make more money on reselling scalped tickets than the original sale. I don’t see them letting go easily.

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