Preface – Smart contracts and decentralization
One of the fundamental ideologies of a blockchain ecosystem is “trust”, rather “trustless”(ness). With smart contracts, a block of code would have the ability to run automatically setting the terms of a “contract” as per protocol, and would immutably persisted in the blockchain. In this post, I am going to jot down my thoughts about trust in general and how it is a building block of the society we live in, and discuss the same in the light of a decentralized system (I use the terms system, framework and architecture interchangeably).
Trust and the society
Trust is a social construct that (atomically) occurs between two parties. As the human species has evolved, we have perfected ourselves in taking things for granted. Our day to day activities are reliant on multiple factors. Our regular morning routine (of working out) in the gym is based on a trust system that it would open in time. Putting efforts for an assignment or a piece of work is based on a trust system between two parties. One party trusts the other to finish the piece of work according to the accepted standards (sometimes documented in the form of a contract, and sometimes inherently accepted, based on the nature of work). Another party trusts the other party to do the right thing by recognizing the finished work (in the form of payment or other wise depending on the nature of work again). Now what happens if one of the parties doesn’t keep their end of the deal or one of the parties feels cheated or betrayed by the other? Good news to the attorneys – they get to make some bucks. Even this is a form of trust that the attorney is going to project your end of the story in the court of law in exchange of a remuneration. Trust, again!
It all starts with an intention – an individual’s intention to achieve a goal, and another’s intention to contribute towards it and gain something out of it. Now, knowing ourselves, our intentions are not always the purest, and sometimes, the conditions of a trust system may end up being unfair to one of the parties (due to unforeseen circumstances). In an effort to create a fair society, we have built a social system – the concept of contracts (where agreements and conditions would be documented), protocols to be followed that leads the intentions of the parties to fruition, and the court of law to settle matters of injustice. Despite all the efforts, more often than not, we end up in turmoils that causes great pain and agony.
Are smart contracts really “trustless”?
The truth is, we are the most selfish species known to us. Our inherent inability to follow protocols (and trying to game the system to work in our favor) has led us to the need of a new system – that we called “trustless”. It’s funny, how much trust we put into trustless systems, in this case, a decentralized framework with smart contracts. A million things could go wrong.
- A bug may lead to an undesired result.
- There is still a possibility that it would be used to serve malicious intentions of a particular someone or a group.
- The power that a minority of the community are gaining over significant majority, is essentially “re-allocation in institutionalised trust, from reliance on traditional ‘trusted third parties’ to a system of code and powerful actors within this system.” 1
- Interpersonal trust may be lost – a core element of modern society.
So, are smart contracts really trustless? A short answer is “not yet”. But, I trust (I am having fun writing this) with time, the system would refine.
Finally, some words in favor
Now, I am not a sceptic, or there is no ulterior motive behind this post. In fact, I am bullish on the ideology behind a decentralized framework. Fundamentally, I believe in goodness in the human race. However, if stats are to be believed, there is a very high probability that a selected few from this same race would try to rig the system. I believe, the smart contracts and the decentralized architecture would need years of refinement before they are put to use that address societal needs. The beauty of the decentralized frameworks lie in the design. At any point, the community may create a hard fork (in cases of a breach) and move everything till the point in time snapshot when the event (breach) happened with marginal impact. But, that also means that we put our trust back in the same questionable societal system.
Trust is a social fabric of our society and there is no society without it.