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Elaine Ou

Smart Contracts Are Still Way Too Dumb

They've proven good mainly at helping people lose money.
Trust still matters.

Trust still matters.

Photographer: Chris Ware/Keystone Features/Getty Images

Smart contracts were supposed to revolutionize finance. So far, however, they have proven adept mainly at helping people lose their money.

The digital contracts make use of blockchain technology to get around trusted intermediaries like banks. Let's say you want to send your landlord $2,000 every month. You can go to your bank, set up a recurring payment and rely on the inherently flawed humans at the bank to follow through. Or you can publish a bit of software on the internet that instructs a global network of computers to make the transfer automatically, according to whatever conditions you stipulate. In principle, you can do the same with all kinds of agreements, from insurance to derivatives.