Smart Contract Business Drivers: Trusted Contract Writers, Bad Contracts (Blockchain Report Excerpt)

CleanTechnica


Published on November 3rd, 2018 |
by Michael Barnard





November 3rd, 2018 by Michael Barnard 


Along with our regular daily clean tech news coverage, CleanTechnica also produces in-depth reports on various aspects of clean energy and clean transport. One of the emerging technologies we cover that isn’t directly a clean tech innovation is blockchain, which promises to be a catalyst for innovation in the green economy in the very near future. Blockchain is probably most widely known to the public as “having something to do with cryptocurrency and Bitcoin, right?,” which is partially correct, but the technology itself has a wide range of applications, some of which will be crucial in the fields of distributed renewable energy, grid management and energy storage, and smart contracts, among others.

The full report Blockchain – An Innovation Enabler for Clean Technology, which was published in July, is a deep dive into blockchain and its potential, and we will be posting more excerpts from the report over the coming weeks. (Read the last installment here.)


There are 9 factors which will help to identify the sweet spot for smart contracts:

1. Herstatt risk due to currency volatility
2. Time value of money
3. Speed of transactions
4. Cost of transactions
5. Accounts receivable and default costs
6. Penalty clauses
7. Multiplying parties
8. Trusted contract writers
9. Bad contracts

This article is the latest in a series which digs into each of these 9 factors.

Trusted Contract Writers

Smart contracts are applications that will be impenetrable to most buyers and most actual sellers. Instead of putting your trust in Visa and Amazon, you are placing your trust in someone else entirely, the developer of the contract.

Smart contracts are easily gamed by unscrupulous people who set them up specifically to take advantage of someone else who is less sophisticated. Imagine a templated contract which appears to have a configuration which returns payment for non-delivery, but actually pays one party regardless of what happens. Unless you look at the code and can understand it, you’ll never see that.

And it will frequently be the seller who sets up the templated smart contracts. After all, they are trying to sell stuff and smooth the way for buyers. For larger contracts, there are currently experienced negotiators on both sides and lawyers on both sides making sure that terms and conditions are as favorable as possible. Contracts with a major consultancy, for example, won’t get approved for release by the consultancy’s management or lawyers with net 90 day terms.

In addition to lawyers, smart contracts will need to involve programmers initially. Eventually trusted, sophisticated, and configurable smart contract systems which allow selection of terms and conditions, recognition of third parties and the like will emerge, but it’s early days. Right now, an additional cost for anyone doing this includes paying developers.

Bad Contracts

When a business contract turns out to be bad, there are remedies. There is small claims court, there’s good faith between the buyer and the seller, and there’s value-in-kind agreements and the like. There are ways to make the parties whole enough and typically the money doesn’t just disappear. If one party dies while money is in escrow before delivery of value, there is case law and often boilerplate terms and conditions which cover the situation.

But with smart contracts, it’s possible for the money to go into escrow and never, ever come out. The point of smart contracts is to keep money safe between two parties entering into an agreement. But what if the conditions of the contract aren’t met due to a programming error or just lack of sophistication on the parts of the people entering into the agreement? In that case, the money can go into escrow and stay there forever. Imagine a smart contract that is looking at the wrong variable for the triggering condition, so it never comes. Imagine an external program which fails to put anything into a deliverable entirely. There is nothing inherent in smart contracts that prevents those situations except developers testing programs, and we all know that the history of software is riddled with defects.

These factors will help us determine where smart contracts based on blockchain will shine. There are many cases where the advantages are strongly one-sided. But that doesn’t mean that they have no value or that value won’t emerge.


Stay tuned for more excerpts from Blockchain – An Innovation Enabler for Clean Technology, or view the summary and request the full report at https://products.cleantechnica.com/reports/


Support CleanTechnica’s work by becoming a Member, Supporter, or Ambassador.

Or you can buy a cool t-shirt, cup, baby outfit, bag, or hoodie or make a one-time donation on PayPal.






Tags: blockchain, smart contracts





About the Author

Michael Barnard is a C-level technology and strategy consultant who works with startups, existing businesses and investors to identify opportunities for significant bottom line growth in the transforming low-carbon economy. He is editor of The Future is Electric, a Medium publication. He regularly publishes analyses of low-carbon technology and policy in sites including Newsweek, Slate, Forbes, Huffington Post, Quartz, CleanTechnica and RenewEconomy, with some of his work included in textbooks. Third-party articles on his analyses and interviews have been published in dozens of news sites globally and have reached #1 on Reddit Science. Much of his work originates on Quora.com, where Mike has been a Top Writer annually since 2012. He’s available for consulting engagements, speaking engagements and Board positions.









Be the first to comment

Leave a Reply

Your email address will not be published.


*


Privacy Policy

WideBitcoin.com is committed to safeguarding your privacy. Contact us at if you have any questions or problems regarding the use of your Personal Data and we will gladly assist you.

By using this site or/and our services, you consent to the Processing of your Personal Data as described in this Privacy Policy.

Table of Contents

  1. Definitions used in this Policy
  2. Data protection principles we follow
  3. What rights do you have regarding your Personal Data
  4. What Personal Data we gather about you
  5. How we use your Personal Data
  6. Who else has access to your Personal Data
  7. How we secure your data
  8. Information about cookies
  9. Contact information

Definitions

Personal Data – any information relating to an identified or identifiable natural person.
Processing – any operation or set of operations which is performed on Personal Data or on sets of Personal Data.
Data subject – a natural person whose Personal Data is being Processed.
Child – a natural person under 16 years of age.
We/us (either capitalized or not)

Data Protection Principles

We promise to follow the following data protection principles:

  • Processing is lawful, fair, transparent. Our Processing activities have lawful grounds. We always consider your rights before Processing Personal Data. We will provide you information regarding Processing upon request.
  • Processing is limited to the purpose. Our Processing activities fit the purpose for which Personal Data was gathered.
  • Processing is done with minimal data. We only gather and Process the minimal amount of Personal Data required for any purpose.
  • Processing is limited with a time period. We will not store your personal data for longer than needed.
  • We will do our best to ensure the accuracy of data.
  • We will do our best to ensure the integrity and confidentiality of data.

Data Subject’s rights

The Data Subject has the following rights:

  1. Right to information – meaning you have to right to know whether your Personal Data is being processed; what data is gathered, from where it is obtained and why and by whom it is processed.
  2. Right to access – meaning you have the right to access the data collected from/about you. This includes your right to request and obtain a copy of your Personal Data gathered.
  3. Right to rectification – meaning you have the right to request rectification or erasure of your Personal Data that is inaccurate or incomplete.
  4. Right to erasure – meaning in certain circumstances you can request for your Personal Data to be erased from our records.
  5. Right to restrict processing – meaning where certain conditions apply, you have the right to restrict the Processing of your Personal Data.
  6. Right to object to processing – meaning in certain cases you have the right to object to Processing of your Personal Data, for example in the case of direct marketing.
  7. Right to object to automated Processing – meaning you have the right to object to automated Processing, including profiling; and not to be subject to a decision based solely on automated Processing. This right you can exercise whenever there is an outcome of the profiling that produces legal effects concerning or significantly affecting you.
  8. Right to data portability – you have the right to obtain your Personal Data in a machine-readable format or if it is feasible, as a direct transfer from one Processor to another.
  9. Right to lodge a complaint – in the event that we refuse your request under the Rights of Access, we will provide you with a reason as to why. If you are not satisfied with the way your request has been handled please contact us.
  10. Right for the help of supervisory authority – meaning you have the right for the help of a supervisory authority and the right for other legal remedies such as claiming damages.
  11. Right to withdraw consent – you have the right withdraw any given consent for Processing of your Personal Data.

Data we gather

Information you have provided us with
This might be your e-mail address, name, billing address, home address etc – mainly information that is necessary for delivering you a product/service or to enhance your customer experience with us. We save the information you provide us with in order for you to comment or perform other activities on the website. This information includes, for example, your name and e-mail address.

Information automatically collected about you
This includes information that is automatically stored by cookies and other session tools. For example, your shopping cart information, your IP address, your shopping history (if there is any) etc. This information is used to improve your customer experience. When you use our services or look at the contents of our website, your activities may be logged.

Information from our partners
We gather information from our trusted partners with confirmation that they have legal grounds to share that information with us. This is either information you have provided them directly with or that they have gathered about you on other legal grounds. See the list of our partners here.

Publicly available information
We might gather information about you that is publicly available.

How we use your Personal Data

We use your Personal Data in order to:

  • provide our service to you. This includes for example registering your account; providing you with other products and services that you have requested; providing you with promotional items at your request and communicating with you in relation to those products and services; communicating and interacting with you; and notifying you of changes to any services.
  • enhance your customer experience;
  • fulfil an obligation under law or contract;

We use your Personal Data on legitimate grounds and/or with your Consent.

On the grounds of entering into a contract or fulfilling contractual obligations, we Process your Personal Data for the following purposes:

  • to identify you;
  • to provide you a service or to send/offer you a product;
  • to communicate either for sales or invoicing;

On the ground of legitimate interest, we Process your Personal Data for the following purposes:

  • to send you personalized offers* (from us and/or our carefully selected partners);
  • to administer and analyse our client base (purchasing behaviour and history) in order to improve the quality, variety, and availability of products/ services offered/provided;
  • to conduct questionnaires concerning client satisfaction;

As long as you have not informed us otherwise, we consider offering you products/services that are similar or same to your purchasing history/browsing behaviour to be our legitimate interest.

With your consent we Process your Personal Data for the following purposes:

  • to send you newsletters and campaign offers (from us and/or our carefully selected partners);
  • for other purposes we have asked your consent for;

We Process your Personal Data in order to fulfil obligation rising from law and/or use your Personal Data for options provided by law. We reserve the right to anonymise Personal Data gathered and to use any such data. We will use data outside the scope of this Policy only when it is anonymised. We save your billing information and other information gathered about you for as long as needed for accounting purposes or other obligations deriving from law, but not longer than 1 year.

We might process your Personal Data for additional purposes that are not mentioned here, but are compatible with the original purpose for which the data was gathered. To do this, we will ensure that:

  • the link between purposes, context and nature of Personal Data is suitable for further Processing;
  • the further Processing would not harm your interests and
  • there would be appropriate safeguard for Processing.

We will inform you of any further Processing and purposes.

Who else can access your Personal Data

We do not share your Personal Data with strangers. Personal Data about you is in some cases provided to our trusted partners in order to either make providing the service to you possible or to enhance your customer experience. We share your data with:

Our processing partners:

  • facebook.com
  • google.com
  • bing.com
  • twitter.com
  • pinterest.com

Our business partners:

  • facebook.com
  • google.com
  • bing.com
  • twitter.com
  • pinterest.com

Connected third parties:

  • facebook.com
  • google.com
  • bing.com
  • twitter.com
  • pinterest.com

We only work with Processing partners who are able to ensure adequate level of protection to your Personal Data. We disclose your Personal Data to third parties or public officials when we are legally obliged to do so. We might disclose your Personal Data to third parties if you have consented to it or if there are other legal grounds for it.

How we secure your data

We do our best to keep your Personal Data safe. We use safe protocols for communication and transferring data (such as HTTPS). We use anonymising and pseudonymising where suitable. We monitor our systems for possible vulnerabilities and attacks.

Even though we try our best we can not guarantee the security of information. However, we promise to notify suitable authorities of data breaches. We will also notify you if there is a threat to your rights or interests. We will do everything we reasonably can to prevent security breaches and to assist authorities should any breaches occur.

If you have an account with us, note that you have to keep your username and password secret.

Children

We do not intend to collect or knowingly collect information from children. We do not target children with our services.

Cookies and other technologies we use

We use cookies and/or similar technologies to analyse customer behaviour, administer the website, track users’ movements, and to collect information about users. This is done in order to personalize and enhance your experience with us.

A cookie is a tiny text file stored on your computer. Cookies store information that is used to help make sites work. Only we can access the cookies created by our website. You can control your cookies at the browser level. Choosing to disable cookies may hinder your use of certain functions.

We use cookies for the following purposes:

  • Necessary cookies – these cookies are required for you to be able to use some important features on our website, such as logging in. These cookies don’t collect any personal information.
  • Functionality cookies – these cookies provide functionality that makes using our service more convenient and makes providing more personalised features possible. For example, they might remember your name and e-mail in comment forms so you don’t have to re-enter this information next time when commenting.
  • Analytics cookies – these cookies are used to track the use and performance of our website and services
  • Advertising cookies – these cookies are used to deliver advertisements that are relevant to you and to your interests. In addition, they are used to limit the number of times you see an advertisement. They are usually placed to the website by advertising networks with the website operator’s permission. These cookies remember that you have visited a website and this information is shared with other organisations such as advertisers. Often targeting or advertising cookies will be linked to site functionality provided by the other organisation.

You can remove cookies stored in your computer via your browser settings. Alternatively, you can control some 3rd party cookies by using a privacy enhancement platform such as optout.aboutads.info or youronlinechoices.com. For more information about cookies, visit allaboutcookies.org.

We use Google Analytics to measure traffic on our website. Google has their own Privacy Policy which you can review here. If you’d like to opt out of tracking by Google Analytics, visit the Google Analytics opt-out page.

Read more about cookies on our Cookie Policy

Contact Information

email: [email protected]

Changes to this Privacy Policy

We reserve the right to make change to this Privacy Policy.

You can configure your Internet browser, by changing its options, to stop accepting cookies completely or to prompt you before accepting a cookie from the website you visit. If you do not accept cookies, however, you may not be able to use all portions of the WideBitcoin Websites or all functionality of the Services.

Please note that disabling these technologies may interfere with the performance and features of the Services.

You may also disable cookies on the WideBitcoin Sites by modifying your settings here:

Visitor comments may be checked through an automated spam detection service.

Last Update: May 25, 2018