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- Thursday, November 24th, 2022 at 20:38 #410210gotificialParticipant
# 1. foreword
I’ve heard someone says as follows.
“Currently, smart contracts are actively used in the field of DeFi. Since smart contracts were not created for everyday transaction activities, we can say they are currently operating successfully.”
He will be the only one who agrees with this statement. One of Ethereum’s most important motives for its emergence (2013) was the smart contract. And ERC20 appeared a long time after that, 2015. This disproves the fact that Ethereum’s smart contract appeared for the purpose of DeFi. In other words, Ethereum appeared to support everyday transactions, and DeFi is just one of those general purposes.
However, currently smart contracts are used almost only in DeFi. It is rarely used in everyday transactions. That’s, smart contracts are currently failing. The problem is that the cause of the failure is still unknown. People usually look for the cause in the oracle problem or etc.. But it’s an illusion. The real cause is as follows.
The Corporate Hostility Against Smart Contracts
Smart contracts aim for decentralization and transparency. However, companies prefer centralization and secrecy. Therefore, companies avoid smart contracts. However, it is the company that decides which method to adopt, a centralized system or a smart contract system. This is the most fundamental and decisive reason why smart contracts have not been activated throughout the economy.
I am personally surprised that this fact has not yet been talked about in general. So far, the oracle problem and other technical problems have been mistaken for obstacles to activation of smart contracts. As such, the blockchain ecosystem is still in a very primitive stage.
# 2. the causes that have been discussed so far
**1) The Oracle Problem**
Case 1: Robber A points a gun to a ethereum holder B’s head and threatens him to transfer coins. So B transferred 1 ethereum to A. On the ethereum platform, this transaction runs without any restrictions.
Case 2: C and D created a smart contract that bets 1 Ethereum on whether it will rain tomorrow and deployed it to the ethereum platform. When it rains, C will give D 1 ethereum, and vice versa, D will give C 1 ethereum. It was left to an oracle service provider E to determine whether it rained. It didn’t rain in America the next day. However, E provided a transaction with the information that it rained to the smart contract. The smart contract transferred 1 ether from C to D.
People say there is an oracle problem in Case2. No one raises the oracle problem in the Case 1. But no one mentions the exact reason. Here, we can find that the definition of the oracle problem has been unclear.
Until now, the oracle problem has been recognized as a problem when data outside a blockchain platform is contrary to objective facts. Even if the internal data are contrary to objective facts, this is not a problem. It can be seen that this is a very convenient and spontaneous definition. However, the concepts inside and outside are relative. Also in Case 2, even if it is false data from the outside, once it comes inside, the oracle problem disappears from that point on. In other words, because new transactions are executed based on the internal false data, it is regarded as there are no oracle problems after that.
A prudent person will find that the important thing in the above two scenes is not whether it is objective facts, but signatures. In addition, the electronic signature must be that of the predetermined members of a smart contract. That’s, in Case 2, the transmission of signed data by another oracle service provider F, other than E, has no meaning. That doesn’t mean anything, even if the data are in line with objective facts.
In Case 2, E is a member of the smart contract. Namely, it is a party to the contract. As such, if a person is a pre-determined party to a contract or a person who is authorized in the contract, the authenticity of the contents of his transaction does not matter. The reason why the content of the transaction issued by B in Case1 does not matter is also the same.
The principle of blockchain is that transactions issued by contract members, that’s, the parties, are executed without questioning the contents. Case1 and Case2 are the same in this respect. In other words, the distinction that there is an oracle problem on one side and there is no problem on the other is meaningless. Rather, it is correct to call Case 1 an internal oracle problem while Case 2 is an external oracle problem. However, the unconscious consensus on the oracle problem has been that the internal oracle is not a problem, only the external oracle is a problem. There is no basis for this agreement. It’s just nonsense.
If so, the only remaining thing is the ethical teaching that the content of the transaction should be made in sincere efforts to match the truth. This is the same for Case1 as well as Case2. And actually everyone is doing that. Oracle service providers are trying to ensure that the data they provide is as true as possible. And individuals who usually send coins also carefully store and transfer coins. And it is the same that the transactions they issued are executed immediately and unconditionally.
In conclusion, the oracle problem is a meaningless notion. It is just an illusion that occurs based on the inside and outside of the data. The oracle problem was just an fantasy, such as the mythical dragon or Christmas Santa. In the real world, when a judge has a trial, there is inevitably the possibility of a wrong decision, but just as society does not collapse because of it, even if there are errors in external data, there is no risk of the collapse of the blockchain ecosystem. It is enough just to supply data as faithfully as possible. This is exactly the same as the blockchain does not collapse even if Case1 occurs.
In conclusion, the oracle problem results in a simple traditional matter of caution and sincerity that can be ignored. Then, how should smart contracts be developed in the future in relation to the oracle problem? Individual smart contract developers can freely create simple oracle service solutions for their own smart contracts and launch them together. The solutions are oracle service providers as members (parties) of smart contracts. Therefore, these solutions have the authority to generate signatures required by the smart contracts. The solutions will enclose signatures that meet predetermined criteria while supplying data to smart contracts. As a result, the difference between Case 1 and Case 2 completely disappears. The idea of the oracle problem disappears completely.
Ethereum’s smart contract source code maximum capacity is 24K. Google’s source code will be almost terabytes. Then, can’t Google be included inside the blockchain?
At least in terms of technology, there is no mission impossible to solve in the blockchain world. Google can enter the blockchain without difficulty. The method is simple. For example, you can adopt a 1 blockchain 1 smart contract system. And it can be linked to another platform, that is, Ethereum, in a multi-chain form. Multi-chain technology is an idea that is not too difficult and is also a technology that is already commercially available.
Blockchain requires the concept of P2P. However, there is no particular restriction on the number of nodes. It only needs to be scalable, and in an extreme case, it can be argued that it is P2P with only two nodes. Then, if Google creates signatures for all transactions and runs one more node instead of a backup, the Google program itself becomes a two-node blockchain. Even if only one node is operated, it can be called a one-node blockchain if the transaction is continuous by the hash value and the code is open.
The multi-chain may have different monetary units, and the number of nodes may vary for each platform, and thus may be operated as a blockchain consisting of only one node and one smart contract, as in the previous example. In this way, the capacity of smart contracts can be unlimited. Not only the source code but also the database capacity can be unlimited.
In conclusion, the problem of scalability is also not a reason for the deactivated smart contracts. In addition, speed, gas cost, privacy, etc. are similarly all problems that can be solved in any way, so they are not discussed further here.
**3) Instability in Value**
Cryptocurrency is highly volatile in value. This makes it impossible to use cryptocurrency directly for monetary purposes. In other words, it is impossible to display product prices in BTC or Ethereum in stores. In this state, smart contracts cannot enter the field of everyday transactions. There are two main ways smart contracts can pursue to eliminate value instability and enter everyday transactions.
i. Immediate exchange payment
The easiest way to think about it is to support a system that immediately converts cryptocurrency into real currency at the platform level. For example, when paying for a hamburger, you can think of a method in which Ethereum is exchanged for dollars on the exchange as necessary according to the exchange rate based on that point, and the exchanged dollars are deposited into the seller’s bank account.
ii. Digital Currency
It means that coins are expressed in real currency units such as dollars and yuan. It includes CBDC, USDT/S, etc. However, since this introduces coins outside the platform, there is a concern that the coins issued by the platform itself will be alienated. Of course, if the platform issues DC on its own and smart contracts use it, the problem is solved. Furthermore, if the platform does not support it, the smart contract may issue an internal Smart Contract Digital Current (SCDC) for its own use only. This may be a rather complicated story, but in the case of Layer 1, which adopts a versatile database, it is possible. In any case, dollars are deposited into the seller’s bank account immediately after a transaction.
In conclusion, the value volatility of cryptocurrency can be technically overcome without any special difficulties through the above methods, so it cannot be concluded that the value volatility of cryptocurrency is a decisive factor in the activation of smart contracts. Instead, if only the fundamental obstacles introduced in the following are resolved, people will actively rush to the work of removing the problem of value volatility, and thus this problem will be solved without much difficulty.
# 3. The Corporate Hostility Against Smart Contracts
If you want to know why smart contracts are not activated, you only need to understand why Colombian mafias do not use smart contracts in their drug trade.
Many contracts are now automatically signed online. An online shopping mall is a representative case, and there are countless other cases such as insurance contracts, rental car contracts, and IoT contracts. And there are many of these transactions that can be easily converted to smart contracts. However, most of these contracts are still made in traditional server-client environments. In this system, distributed ledgers do not exist, and instead only backups are widely performed.
This is the most fundamental reason. Companies do not want to adopt decentralization. They prefer centralization and try to hide and monopolize information. Since the distributed ledger appeared through Satoshi’s righteous consideration to quell their desire, it fundamentally conflicted with them. In short, the distributed ledger is hostile to businesses. Smart contracts are a hostile system for companies.
It is not the consumer but the company that adopts the smart contract system. In the field of the drug trade, it is the Colombian mafia corporations that would adopt it. Therefore, if the company system can be built with either the server-client structure or the decentralized smart contract structure, the company naturally chooses the former. In terms of construction costs, the centralization method is generally cheaper.
In the end, the case where a company proactively builds a smart contract is only when the issuance of a coin itself is the purpose. This is why the current blockchain market has become a gambling place for DeFi.
That is fundamentally a problem of the structure of class confrontation between companies and consumers. Modern national computer systems have made progress solely in the tax sector. This allowed the state to have complete control over corporations. On the other hand, they are not designed to allow the public or consumers to control corporations. The first repulsive attempt at this was BTC. The BTC platform is designed to allow control over monetary activity based on its unmanipulability and transparency. And these features can be used in all areas other than money.
The most appropriate means for consumers to check companies is blockchain, and its specific implementation appears as a smart contract. Of course, the state can control companies through the computer system, but this did not prevent collusion between the state and companies. Of course, the state can control companies through the computer system, but this can’t prevent collusion between the state and the companies. Rather, it has encouraged the collusion.
If Wall Street had introduced blockchain, the Lehman Brothers crisis could have been prevented in advance. If smart contracts are adopted in all other areas of economic activity, all injustice in society will disappear.
However, the adoption of such decentralization must be done wisely. The most problematic in this respect is equity or bi-directionality of decentralization. Just as the state and businesses should be transparent in front of the people and consumers, the people and consumers should be transparent in front of the state and businesses. At least they should be transparent in front of the state. However, the current decentral extremists’ argument only puts forward one-sided transparency. Only the transparency of the state and corporations is shouted. It is just a dictatorship of decentralization. Just a dictatorship of democracy. A proper pre-regulation of the Tornado Cach or TerraLuna is absolutely necessary.
Most of the current trading systems in the business world should be converted into smart contract systems in principle unless they are technically impossible and particularly expensive. This should be enforced by law. This recognition is very important. However, most government officials do not have it. The reason they didn’t have this perception so far was because, first, they didn’t realize the tremendous public interest of smart contracts, and second, they had vague anxiety about the oracle problems. If these two problems are overcome, Congress and the government will be able to order companies to introduce the means fo corporate ethics, that’s, smart contracts, without hesitation. In this case, the Colombian Mafia must deal with all ledger processing in mental arithmetic.
Since smart contracts are based on blockchain, if a company adopts them mandatory, the state does not need to monitor the transparency of the company. It means the people implement corporate regulations which the state has been in charge of. This will prevent collusion between the state and businesses. The so-called bribes disappear from society. Of course, it is not necessary to disclose all corporate secrets, and information that should be properly protected can be converted into private using technologies such as Railgun.
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