Great+Chain+of+Numbers+A+Guide+to+Smart+Contracts,+Smart+Property+and+Trustless+Asset+Management+-+Tim+Swanson

Implementation of DACs, however, is not without its problems. In view of this I spoke with Stephan
Kinsella, a patent attorney, author and Bitcoin investor “while there seems to be potential with
cryptocurrencies, cryptoprotocols and smart contracts in general, in my experience the legal industry
changes at a glacial pace. Many if not all of the segments are highly regulated and filled with wellestablished
incumbents especially those integrated with banks. As a result, most clients and partners
typically like to continue utilizing traditional services and solutions and thus are very resistant to
innovation. Similarly, letters of credit and dispute resolution boards have existed for decades so this is
not necessarily a selling point. While there are theoretical advantages to using independent arbitrators
or escrows, many contracts for property ownership or car ownership already set up a system of clauses
where parties choose an arbitrator or how to use an escrow. For instance, in terms of percentages,
even when disputes arise the amounts of parties that ultimately use an escrow are quite small. Though,
perhaps with enough buy-in this could change later in time.” 80
The problem, in his view, is that cryptocurrency is competing with an existing legal and commercial
transaction infrastructure. “Again, while smart contracts present a very efficient and optimized
marketplace, educating a userbase will be a constant uphill battle because in some ways you may have
to reinvent the wheel; or recode the wheel as it were. For instance, to hedge against a breach of
contract Bob may have to issue a $1 million bond to cover insurance. And in the event that this happens,
you would likely need to work with a 3 rd party who will have to look over the evidence of the case which
in turn adds cost to the transaction. Sometimes if a deal continues to sour, Bob will sue or simply writeoff
the loss. Yet these types of interactions can and will likely happen despite using cryptoledgers.
Furthermore, while cryptoprotocols offers many methods to constrain governance, such as title
management I do not see why banks would rewrite their system for this service any time over the next
several years. 81 They are typically risk averse and conservative. In fact, I still see legal contracts with
provisions that were written decades ago – even over a century – because they withstood legal scrutiny.
While smart contracts in theory could provide similar provisions, proponents and developers of nextgeneration
crypto platforms should be aware that it will take many years of continuous education to
convince businesses to adopt this different framework.”
According to Kinsella and others I spoke to on this matter, the smart contracts which would give rise to
the fewest problems would likely be narrow contracts covering easily quantifiable, fungible commodities
(e.g., oil, metals, ore, agriculture) or simple services, such as those provided by auto-repair shops and
beauty salons – that is to say, something that is objectively measurable, mechanical and consistent, and
low on consumer protection or complex representations and warranties. While Bob and Alice would
need to be aware of the various jurisdictions that provide different guidance and policies regarding the
licensure of services (e.g., cosmetics, accounting), cryptoledgers and trustless asset management could
enable a frictionless environment for bartering. Decentralized exchanges that can manage cryptotokens
could allow local service providers to buy, sell, and trade in-kind without going into fiat. 82 While the tax
and regulatory implications will unquestionably be different depending on the jurisdiction, this type of
“cryptobarter” system may become useful and socially empowering in countries with faltering monetary
institutions – like Argentina or Greece.
Argentina
In February 2014 I spoke with Wences Casares, an Argentine native and creator of a Bitcoin wallet used
by institutions. He recalls, in his youth growing up “in Patagonia I remember when we had so much
inflation twelve years ago that my mother would carry her salary around in plastic bags and spend it as
soon as she got it. She would go to a market and there were workers whose sole job was to replace the
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