Not-So-Smart Blockchain Contracts and Artificial Responsibility' by Adam J. Kolber in (2018)
Stanford Technology Law Review comments
The first high-profile decentralized autonomous organization formed in 2016. Called “TheDAO,” it used smart contracts on a bitcoin-style blockchain to allow strangers to come together online to vote on and invest in venture capital proposals. Newspapers raved about the $160 million it quickly raised, even though it purported to have no central human authority, including no managers, executives, or board of directors.
Technologists have grand plans for smart contracts and autonomous organizations. Rather than staying at traditional hotels with elaborate human staff, we may pay for hotel rooms using bitcoin (or another cryptocurrency) which will automatically unlock the room door. If the toilet breaks, the room itself will contract with a plumber to fix it. Similarly, a smart contract may allow us to hire a self-driving car. The car will not only drive passengers around but arrange for its own routine maintenance.
TheDAO itself, however, is now a cautionary tale. A bug in its smart contract code was exploited to drain more than $50 million in value. Some purists denounced efforts to mitigate the problem, arguing that the alleged hacker simply withdrew money in accordance with the organization’s agreed-upon contractual terms in the form of computer code. Since the “code is the contract” in their minds, the alleged hacker did nothing wrong.
I defend two related claims. First, contra the purists, I argue that the code does not reflect the entirety of the parties’ agreement, and so the “code is the contract” slogan does not resolve whether TheDAO exploitation should have been mitigated. I take no position on whether mitigation was appropriate except to say that the matter depends on many considerations aside from smart contract code itself.
Second, I point to a broader danger lurking in the code-is-the-contract view. TheDAO had tremendous “artificial responsibility” in that we gave it considerable control that couldn’t be easily revoked or reined in. Not-so-smart contracts in the future may prove even more dangerous: hotel guests might be locked out of their rooms, and self-driving cars might drive off bridges. I argue that unadulterated commitment to the code-is-the-contract slogan increases artificial responsibility and its associated risks.
Given Australia's move to a Consumer Data Right it is interesting to sight comments in 'Reintermediation in Fintech: Evidence from Online Lending' by Tetyana Balyuk and Sergei A. Davydenko. They
argue
The peer-to-peer loan market was designed to allow borrowers and lenders to interact online without banks as middlemen. Yet we document that P2P lending platforms over time have evolved from trading venues into new credit intermediaries. Lenders now overwhelmingly outsource all decision-making to the platforms' software and adopt passive investment strategies. The dominant role of lending platforms with little skin in the game makes the market vulnerable to moral hazard, checked by the threat of institutional investors' withdrawal. Our findings suggest that the absence of private information spurs reintermediation as the platform's expertise in loan evaluation crowds out that of investors.
