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Kurt Laitner

Mixed Signal Oscilloscope - iMSO-104 | Oscium - 1 views

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    wasn't someone looking for a new oscilloscope?
Tiberius Brastaviceanu

Fiber coating - drop mixing devic - Picasa Web Albums - 0 views

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    Tibi, drop mixing for wet (chemical) optical fiber coating 
Kurt Laitner

Crowding Out - P2P Foundation - 1 views

  • The curve indicates that while workers will initially chose to work more when paid more per hour, there is a point after which rational workers will choose to work less
    • Kurt Laitner
       
      in other words, people are financially motivated until they are financially secure, then other motivations come in
  • "leaders" elsewhere will come and become your low-paid employees
  • At that point, the leaders are no longer leaders of a community, and they turn out to be suckers after all, working for pittance, comparatively speaking
    • Kurt Laitner
       
      so part of the dynamic is that everyone is paid fairly, if not there is the feeling of exploitation
  • ...36 more annotations...
  • under certain structural conditions non-price-based production is extraordinarily robust
    • Kurt Laitner
       
      which are... abundance?
  • There is, in fact, a massive amount of research that supports the idea that when you pay people to do something for you, they stop enjoying it, and distrust their own motivations. The mysterious something that goes away, and that “Factor X” even has a name: intrinsic motivation.
    • Kurt Laitner
       
      the real question though is why, and whether it is the paying them that is the problem, or perhaps how that is determined, and who else gets what on what basis..  if you have to have them question the fairness of the situation, they will likely check out
  • giving rewards to customers can actually undermine a company’s relationship with them
  • It just is not so easy to assume that because people behave productively in one framework (the social process of peer production that is Wikipedia, free and open source software, or Digg), that you can take the same exact behavior, with the same exact set of people, and harness them to your goals by attaching a price to what previously they were doing in a social process.
  • Extrinsic rewards suggest that there is actually an instrumental relationship at work, that you do the activity in order to get something else
  • If you pay me for it, it must be work
    • Kurt Laitner
       
      only because a dichotomy of work and play exists in western culture
  • It’s what we would call a robust effect. It shows up in many contexts. And there’s been considerable testing to try to find out exactly why it works. A major school of thought is that there is an “Overjustification Effect.” (http://kozinets.net/archives/133)
    • Kurt Laitner
       
      yes, why is key
  • interesting examples of an effect called crowding
  • Offering financial rewards for contributions to online communities basically means mixing external and intrinsic motivation.
  • A good example is children who are paid by their parents for mowing the family lawn. Once they expect to receive money for that task, they are only willing to do it again if they indeed receive monetary compensation. The induced unwillingness to do anything for free may also extend to other household chores.
  • Once ‘gold-stars’ were introduced as a symbolic reward for a certain amount of time spent practicing the instrument, the girl lost all interest in trying new, difficult pieces. Instead of aiming at improving her skills, her goal shifted towards spending time playing well-learned, easy pieces in order to receive the award (Deci with Flaste 1995)
    • Kurt Laitner
       
      this is a more troubling example, as playing the harder pieces is also practicing - I would take this as a more complex mechanism at work - perhaps the reinterpretation by the girl that all playing was considered equal, due to the pricing mechanism, in which case the proximal solution would be to pay more for more complex pieces, or for levels of achievement - the question remains of why the extrinsic reward was introduced in the first place (unwillingness to practice as much as her parents wanted?) - which would indicate intrinsic motivation was insufficient in this case
  • Suddenly, she managed to follow the prescription, as her own (intrinsic) motivation was recognized and thereby reinforced.
    • Kurt Laitner
       
      or perhaps the key was to help her fit the medication into her day, which she was having trouble with...
  • The introduction of a monetary fine transforms the relationship between parents and teachers from a non-monetary into a monetary one
    • Kurt Laitner
       
      absolutely, in some sense the guilt of being late is replaced by a rationalization that you are paying them - it is still a rationalization, and parents in this case need to be reminded that staff have lives too to reinforce the moral suasion
  • "The effects of external interventions on intrinsic motivation have been attributed to two psychological processes: (a) Impaired self-determination. When individuals perceive an external intervention to reduce their self-determination, they substitute intrinsic motivation by extrinsic control. Following Rotter (1966), the locus of control shifts from the inside to the outside of the person affected. Individuals who are forced to behave in a specific way by outside intervention, feel overjustified if they maintained their intrinsic motivation. (b) Impaired self-esteem. When an intervention from outside carries the notion that the actor's motivation is not acknowledged, his or her intrinsic motivation is effectively rejected. The person affected feels that his or her involvement and competence is not appreciated which debases its value. An intrinsically motivated person is taken away the chance to display his or her own interest and involvement in an activity when someone else offers a reward, or commands, to undertake it. As a result of impaired self-esteem, individuals reduce effort.
    • Kurt Laitner
       
      these are finally very useful - so from (a) as long as self determination is maintained (actively) extrinsic reward should not shut down intrinsic motivation AND (b) so long as motivations are recognized and reward dimensions OTHER THAN financial continue to operate, extrinsic reward should not affect intrinsic motivation
  • External interventions crowd-out intrinsic motivation if the individuals affected perceive them to be controlling
    • Kurt Laitner
       
      emphasis on "if" and replacing that with "in so far as"
  • External interventions crowd-in intrinsic motivation if the individuals concerned perceive it as supportive
    • Kurt Laitner
       
      interesting footnote
  • In that case, self-esteem is fostered, and individuals feel that they are given more freedom to act, thus enlarging self-determination
    • Kurt Laitner
       
      so effectively a system needs to ensure it is acting on all dimensions of reward, or at least those most important to the particular participant, ego (pride, recognition, guilt reduction, feeling needed, being helpful, etc), money (sustenance, beyond which it is less potent), meaning/purpose etc.  If one ran experiments controlling for financial self sufficiency, then providing appreciation and recognition as well as the introduced financial reward, they might yield different results
  • cultural categories that oppose marketplace modes of behavior (or “market logics”) with the more family-like modes of behavior of caring and sharing that we observe in close-knit communities (”community logics”)
    • Kurt Laitner
       
      are these learned or intrinsic?
  • this is labor, this is work, just do it.
    • Kurt Laitner
       
      except that this cultural meme is already a bias, not a fact
  • When communal logics are in effect, all sorts of norms of reciprocity, sacrifice, and gift-giving come into play: this is cool, this is right, this is fun
    • Kurt Laitner
       
      true, and part of our challenge then is to remove this dichotomy
  • So think about paying a kid to clean up their room, paying parishioners to go to church, paying people in a neighborhood to attend a town hall meeting, paying people to come out and vote. All these examples seem a little strange or forced. Why? Because they mix and match the communal with the market-oriented.
    • Kurt Laitner
       
      and perhaps the problem is simply the conversion to money, rather than simply tracking these activities themselves (went to church 50 times this year!, helped 50 orphans get families!) (the latter being more recognition than reward
  • Payment as disincentive. In his interesting book Freakonomics, economist Steven Levitt describes some counterintuitive facts about payment. One of the most interesting is that charging people who do the wrong thing often causes them to do it more, and paying people to do the right thing causes them to do it less.
    • Kurt Laitner
       
      and tracking them causes them to conform to cultural expectations
  • You direct people _away_ from any noble purpose you have, and instead towards grubbing for dollars
    • Kurt Laitner
       
      and we are left with the challenge, how to work to purpose but still have our scarce goods needs sufficiently provided for?  it has to be for love AND money
  • When people work for a noble purpose, they are told that their work is highly valued. When people work for $0.75/hour, they are told that their work is very low-valued
    • Kurt Laitner
       
      so pay them highly for highly valued labour, and don't forget to recognize them as well... no?
  • you're going to have to fight your way through labour laws and tax issues all the way to bankruptcy
    • Kurt Laitner
       
      this is a non argument, these are just interacting but separate problems, use ether or bitcoin, change legislation, what have you
  • Market economics. If you have open content, I can copy your content to another wiki, not pay people, and still make money. So by paying contributors, you're pricing yourself out of the market.
    • Kurt Laitner
       
      exactly, so use commonsource, they can use it all they want, but they have to flow through benefit (provide attribution, recognition, and any financial reward must be split fairly)
  • You don't have to pay people to do what they want to do anyways. The labour cost for leisure activities is $0. And nobody is going to work on a wiki doing things they don't want to do.
    • Kurt Laitner
       
      wow, exploitative in the extreme - no one can afford to do work for free, it cuts into paid work, family time etc.  if they are passionate about something they will do it for free if they cannot get permission to do it for sustenance, but they still need to sustain themselves, and they are making opportunity cost sacrifices, and if you are in turn making money off of this you are an asshole.. go ahead look in the mirror and say "I am an asshole"
  • No fair system. There's simply no fair, automated and auditable way to divvy up the money
    • Kurt Laitner
       
      this is an utter cop out - figure out what is close enough to fair and iterate forward to improve it, wow
  • too complicated to do automatically. But if you have a subjective system -- have a human being evaluate contributions to an article and portion out payments -- it will be subject to constant challenges, endless debates, and a lot of community frustration.
    • Kurt Laitner
       
      yes to the human evaluation part, but "it's too complicated" is disingenuous at the least
  • Gaming the system. People are really smart. If there's money to be made, they'll figure out how to game your payment system to get more money than they actually deserve
    • Kurt Laitner
       
      yes indeed, so get your metrics right, and be prepared to adjust them as they are gamed - and ultimately, as financial penalties are to BP, even if some people game the system, can we better the gaming of the capitalist system.. it's a low bar I know
  • They'll be trying to get as much money out of you as possible, and you'll be trying to give as little as you can to them
    • Kurt Laitner
       
      it doesn't have to be this way, unless you think that way already
  • If you can't convince people that working on your project is worth their unpaid time, then there's probably something wrong with your project.
    • Kurt Laitner
       
      wow, talk about entrepreneurial taker attitude rationalization
  • People are going to be able to sense that -- it's going to look like a cover-up, something sleazy
    • Kurt Laitner
       
      and getting paid for others free work isn't sleazy, somehow...?
  • Donate.
    • Kurt Laitner
       
      better yet, give yourself a reasonable salary, and give the rest away
  • Thank-you gifts
    • Kurt Laitner
       
      cynical.. here have a shiny bobble you idiot
  • Pay bounties
    • Kurt Laitner
       
      good way to get people to compete ineffectively instead of cooperating on a solution, the lottery mechanism is evil
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    while good issue are brought up in this article, the solutions offered are myopic and the explanations of the observed effects not satisfying
Tiberius Brastaviceanu

Open Source 3-D Printed Nutating Mixer - Appropedia, the sustainability wiki - 0 views

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    "As the open source development of additive manufacturing has led to low-cost desktop three-dimensional (3-D) printing, a number of scientists throughout the world have begun to share digital designs of free and open source scientific hardware. Open source scientific hardware enables custom experimentation, laboratory control, rapid upgrading, transparent maintenance, and lower costs in general. To aid in this trend, this study describes the development, design, assembly, and operation of a 3-D printable open source desktop nutating mixer, which provides a fixed 20° platform tilt angle for a gentle three-dimensional (gyrating) agitation of chemical or biological samples (e.g., DNA or blood samples) without foam formation. The custom components for the nutating mixer are designed using open source FreeCAD software to enable customization. All of the non-readily available components can be fabricated with a low-cost RepRap 3-D printer using an open source software tool chain from common thermoplastics. All of the designs are open sourced and can be configured to add more functionality to the equipment in the future. It is relatively easy to assemble and is accessible to both the science education of younger students as well as state-of-the-art research laboratories. Overall, the open source nutating mixer can be fabricated with US$37 in parts, which is 1/10th of the cost of proprietary nutating mixers with similar capabilities. The open source nature of the device allow it to be easily repaired or upgraded with digital files, as well as to accommodate custom sample sizes and mixing velocities with minimal additional costs."
Tiberius Brastaviceanu

ShiftSpace | mix, annotate, shift, share, any website, anywhere - 0 views

  • an open source browser plugin for collaboratively annotating, editing and shifting the web.
Tiberius Brastaviceanu

Permaculture Principles | Design Principles - 1 views

  • how the principles of permaculture might apply to business.
  • The shift will be from merely prioritising output to thinking more widely.
  • how to build resilience for business
  • ...64 more annotations...
  • observation
  • A post-peak world will depend on detailed observation and good design rather than energy-intensive solutions.
  • not rely on weather forecasts but to learn to read the clouds,
  • “instead of researching the market, be the market”
  • businesses should be out there observing.
  • larger businesses tend to rely more on surveys and on second-hand information.
  • direct contact with customers.
  • move our idea of ‘capital’ from what we have in the bank, to the resources we have around us
  • not running a business on a constant high speed cash throughput with little or no capital reserves
  • lack of resilience in the just-in-time supply approach
  • a shift to storages of parts and materials, as well as the need to financially not be so dependent on debt financing
  • work slower with more financial reserves and take less risks, not building beyond what the company’s financial resources can support.
  • either to not borrow any money at all, or to borrow so much money that you can’t fail, being bigger than the people you borrow money from, so they have a vested interest in your succeeding!
  • energy efficient
  • long term
  • Looking to make buildings as autonomous as possible in a world entering energy descent is critical
  • see things that are flowing past and through the business that others don’t see as being a resource and having no monetary value as being valuable.
  • any intervention we make in a system, any changes we make or elements we introduce ought to be productive
  • This is instinctive to businesses
  • Obtain a Yield, in this context, is out of balance
  • much of business
  • have taken this to extremes
  • A well-designed system using permaculture principles should be able to self-regulate, and require the minimum of intervention and maintenance, like a woodland ecosystem, which requires no weeding, fertiliser or pest control.
  • moving from “we’re just obeying the law” to being proactive, acting before you get hit over the head with regulation and other vulnerabilities.
  • be able to put a foot on the break, not just going hell for leather on profit maximisation.
  • apply applied restraint, avoiding excessive, overfast growth that hasn’t been consolidated
  • looking for the negative feedbacks, from customers and from the environment in general
  • We need to increase the tightness of feedbacks.
  • Where nature can perform particular functions
  • we should utilise these attributes, rather than thinking we can replace them
  • Where nature can take some work off our hands we should let it.
  • a shift towards renewable resources
  • The emerging opportunities for businesses are things that are renewable. Renewable energy sources are the ones that will ensure a business’s stability in the long run. We can also broaden the concept of renewable resources to include things like goodwill and trust, things which a business can rebuild with good husbandry. Most business doesn’t just depend on law and competition, trust is at the heart of much business and it is very much a renewable resource.
  • The concept of waste is essentially a reflection of poor design. Every output from one system could become the input to another system. We need to think cyclically rather than in linear systems.
  • looking at our work from a range of perspectives
  • wider context
  • keep a clearer sense of the wider canvas on which we are painting, and the forces that affect what we are doing.
  • being strategic is important too
  • ask how is what we are doing part of a bigger picture, the move away from globalisation and towards the local, taking steps back from the everyday.
  • This can be done firstly by allowing space for Devil’s advocates, for black sheep, for hearing the voices of those outside of the dominant culture of the organisation and secondly by looking from a holistic perspective of how things interconnect, rather than just relying on experts who are embedded in detail. It emphasises the need to value the generalist, to give value to holistic thinkers.
  • allowing people to imagine different possibilities.
  • scenario planning
  • Permaculture has been described as the science of maximising beneficial relationships.
  • Solutions are to be found in integrated holistic solutions rather than increased specialisation and compartmentalisation
  • The challenge here is to move to seeing business as being part of the geographical community, as being rooted in place, rather than just part of a globalised community. At the moment for many larger businesses, the local is something one pays lip-service to as a source of good PR, something one is passing through, rather than actually being an integral part of the community.
  • This is a profound structural challenge for large organisations. Part of the resilience of the organisation comes from the degree of lateral integration. Resilience is in all solutions, it is the characteristic of ecological systems. If we apply these principles, resilience is one of the emergent properties
  • the notion that big is best needs to be challenged
  • new opportunities are very hard to understand and exploit from a macro level perspective, and are much better done from small scale perspective. It is here that the idea of appropriateness of scale becomes key.
  • more diverse systems have much more inbuilt resilience
  • have a diversity of small businesses, local currencies, food sources, energy sources and so on than if they are just dependent on centralised systems, globalisation’s version of monoculture.
  • not having all your eggs in one basket.
  • In the short term this kind of diversification could reduce profits, but in the longer term it will be more secure
  • this is about the reverse of specialisation, about having a mixed portfolio, and presents a big culture change for businesses.
  • it is a good strategy for business to keep a diverse portfolio of what sustains the business, keep some things that appear to be peripheral. They may not at this stage appear to be a serious part of how the business is run, but in this new world they will increasingly become so
  • ‘edge’
  • the point where two ecosystems meet is often more productive than either of those systems on their own.
  • overlap systems where possible so as to maximise their potential.
  • recognising that innovation doesn’t come from the centre but from fringe thinkers.
  • giving status to the marginal
  • It is important that the business has as many fingers in as many pies as possible, as many interfaces, and recognises that every person working for the business represents it in the community.
  • Natural systems are constantly in flux, evolving and growing.
  • Remaining observant of the changes around you, and not fixing onto the idea that anything around you is fixed or permanent will help too.
  • be flexible, lean and adaptable
  • A healthy approach is to start with no complete plan, to allow the process to be emergent. This is not a time when we can work to a rigid plan as conditions will change so fast. Organisations will need to stay on their toes, without rigid management.
Tiberius Brastaviceanu

Partner State - P2P Foundation - 0 views

    • Tiberius Brastaviceanu
       
      we call this a custodian
    • Tiberius Brastaviceanu
       
      we call this a custodian
  • So here we have it, the new triarchy: - The state, with its public property and representative mechanisms of governance (in the best scenario) - The private sector, with the corporation and private property - The commons, with the Trust (or the for-benefit association), and which is the ‘property’ of all its members (not the right word in the context of the commons, since it has a different philosophy of ownership)
    • Tiberius Brastaviceanu
       
      so where is direct democracy in all this?
  • ...39 more annotations...
  • In a first phase, the commons simply emerges as an added alternative.
  • becoming a subsector of society, and starts influencing the whole
  • phase transition and transformation will need to occur.
  • how a commons-dominated, i.e. after the phase transition, society would look like.
  • At its core would be a collection of commons, represented by trusts and for-benefit associations, which protect their common assets for the benefit of present and future generations
  • The commons ‘rents out’ the use of its resources to entrepreneurs. In other words, business still exists, though infinite growth-based capitalism does not.
  • More likely is that the corporate forms will be influenced by the commons and that profit will be subsumed to other goals, that are congruent with the maintenance of the commons.
  • The state will still exist, but will have a radically different nature
  • Much of its functions will have been taken over by commons institutions, but since these institutions care primarily about their commons, and not the general common good, we will still need public authorities that are the guarantor of the system as a whole, and can regulate the various commons, and protect the commoners against possible abuses. So in our scenario, the state does not disappear, but is transformed, though it may greatly diminish in scope, and with its remaining functions thoroughly democratized and based on citizen participation.
  • In our vision, it is civil-society based peer production, through the Commons, which is the guarantor of value creation by the private sector, and the role of the state, as Partner State, is to enable and empower the creation of common value. The new peer to peer state then, though some may see that as a contradictio in terminis, is a state which is subsumed under the Commons, just as it is now under the private sector. Such a peer to peer state, if we are correct, will have a much more modest role than the state under a classic state society, with many of its functions taken over by civil society associations, interlinked in processes of global governance. The above then, this triarchy, is the institutional core which replaces the dual private-public binary system that is characteristic of the capitalist system that is presently the dominant format.
  • fundamental mission is to empower direct social-value creation, and to focus on the protection of the Commons sphere as well as on the promotion of sustainable models of entrepreneurship and participatory politics
  • the state becomes a 'partner state' and enables autonomous social production.
  • the state does exist, and I believe that we can’t just imagine that we live in a future state-less society
  • retreating from the binary state/privatization dilemma to the triarchical choice of an optimal mix amongst government regulation, private-market freedom and autonomous civil-society projects
  • the role of the state
  • “the peer production of common value requires civic wealth and strong civic institutions.
  • trigger the production/construction of new commons by - (co-) management of complexe resource systems which are not limited to local boundaries or specific communities (as manager and partner) - survey of rules (chartas) to care for the commons (mediator or judge) - kicking of or providing incentives for commoners governing their commons - here the point is to design intelligent rules which automatically protect the commons, like the GPL does (facilitator)"
  • the emergence of the digital commons. It is the experience of creating knowledge, culture, software and design commons, by a combination of voluntary contributions, entrepreneurial coalitions and infrastructure-protecting for-benefit associations, that has most tangibly re-introduced the idea of commons, for all to use without discrimination, and where all can contribute. It has drastically reduced the production, distribution, transaction and coordination costs for the immaterial value that is at the core also of all what we produce physically, since that needs to be made, needs to be designed. It has re-introduced communing as a mainstream experience for at least one billion internet users, and has come with proven benefits and robustness that has outcompeted and outcooperated its private rivals. It also of course offers new ways to re-imagine, create and protect physical commons.
  • stop enclosures
  • peer to peer, i.e. the ability to freely associate with others around the creation of common value
  • communal shareholding, i.e. the non-reciprocal exchange of an individual with a totality. It is totality that we call the commons.
  • It is customary to divide society into three sectors, and what we want to show is how the new peer to peer dynamic unleashed by networked infrastructures, changes the inter-relationship between these three sectors.
  • In the current ‘cognitive capitalist’ system, it is the private sector consisting of enterprises and businesses which is the primary factor, and it is engaged in competitive capital accumulation. The state is entrusted with the protection of this process. Though civil society, through the citizen, is in theory ‘sovereign’, and chooses the state; in practice, both civil society and the state are under the domination of the private sector.
  • it fulfills three contradictory functions
  • Of course, this is not to say that the state is a mere tool of private business.
  • protect the whole system, under the domination of private business
  • protector of civil society, depending on the balance of power and achievements of social movements
  • protector of its own independent interests
  • Under fascism, the state achieves great independence from the private sector , which may become subservient to the state. Under the welfare state, the state becomes a protector of the social balance of power and manages the achievements of the social movement; and finally, under the neoliberal corporate welfare state, or ‘market state’, it serves most directly the interests of the financial sector.
  • key institutions and forms of property.
  • The state managed a public sector, under its own property.
  • The private sector , under a regime of private ownership, is geared to profit, discounts social and natural externalities, both positive and negative, and uses its dominance in society to use and dominate the state.
  • civil society has a relative power as well, through its capability of creating social movements and associations
  • Capitalism has historically been a pendulum between the private and the public sector
  • However, this configuration is changing,
  • the endangerment of the biosphere through the workings of ‘selfish’ market players; the second is the role of the new digital commons.
  • participatory politics
  • Peer production gives us an advance picture of how a commons-oriented society would look like. At its core is a commons and a community contributing to it, either voluntarily, or as paid entrepreneurial employees. It does this through collaborative platforms using open standards. Around the commons emerges enterprises that create added value to operate on the marketplace, but also help the maintenance and the expansion of the commons they rely on. A third partner are the for-benefit associations that maintain the infrastructure of cooperation. Public authorities could play a role if they wanted to support existing commons or the creation of new commons, for the value they bring to society.
  • if a commons is not created as in the case of the digital commons, it is something that is inherited from nature or former generations, given in trust and usufruct, so that it can be transmitted to our descendents. The proper institution for such commons is therefore the trust, which is a corporate form that cannot touch its principal capital, but has to maintain it.
Francois Bergeron

Whose Capitalism is it Anyway? | Management Innovation eXchange - 1 views

  • So what replaces competition—what drives growth today? We already know the answer: the kind of innovation that comes from collaboration, not competition.
  • How do you encourage the invention of something entirely new that serves both the profit motive and provides social benefit—even without access to Jeff Immelt’s special fund? You “build a lifeboat,” says Chris. Create a protected space, permission, and some funding “for the people who believe in the new thing and just can’t help themselves but to follow that belief.”
  • At the individual level, “that’s what they pay me to do,” is not enough of a reason to do something, argues Chris. “If you could, as a leader at any level, say ‘I’m only going to do things I believe in’ and if you can’t find work that overlaps with that, then ‘I’m in the wrong place.’” That’s a non-trivial moral stance—there just aren’t that many jobs out there that match up personal beliefs and values to everyday work. There is a way beyond this conundrum (though it’s not for the faint of heart), says Chris, “standing on the sun, it’s worth remembering that jobs are a relatively new phenomenon. Before there were large industrial organizations, everybody was an entrepreneur. And what we’re going to return to is a form of people finding their own work.”
  • ...1 more annotation...
  • winning is more often the result of the alignment of different interests than of a battle between them.
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    new economy and the importance of collaboration - worldwide. See the example of GE in India
Kurt Laitner

Smart Contracts - 0 views

  • Whether enforced by a government, or otherwise, the contract is the basic building block of a free market economy.
  • A smart contract is a set of promises, specified in digital form, including protocols within which the parties perform on the other promises.
  • The basic idea of smart contracts is that many kinds of contractual clauses (such as liens, bonding, delineation of property rights, etc.) can be embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive (if desired, sometimes prohibitively so) for the breacher.
  • ...77 more annotations...
  • A broad statement of the key idea of smart contracts, then, is to say that contracts should be embedded in the world.
  • And where the vending machine, like electronic mail, implements an asynchronous protocol between the vending company and the customer, some smart contracts entail multiple synchronous steps between two or more parties
  • POS (Point of Sale)
  • EDI (Electronic Data Interchange
  • SWIFT
  • allocation of public network bandwidth via automated auctions
  • Smart contracts reference that property in a dynamic, proactively enforced form, and provide much better observation and verification where proactive measures must fall short.
  • The mechanisms of the world should be structured in such a way as to make the contracts (a) robust against naive vandalism, and (b) robust against sophisticated, incentive compatible (rational) breach.
  • A third category, (c) sophisticated vandalism (where the vandals can and are willing to sacrifice substantial resources), for example a military attack by third parties, is of a special and difficult kind that doesn't often arise in typical contracting, so that we can place it in a separate category and ignore it here.
  • The threat of physical force is an obvious way to embed a contract in the world -- have a judicial system decide what physical steps are to be taken out by an enforcement agency (including arrest, confiscation of property, etc.) in response to a breach of contract
  • It is what I call a reactive form of security.
  • The need to invoke reactive security can be minimized, but not eliminated, by making contractual arrangements verifiable
  • Observation of a contract in progress, in order to detect the first sign of breach and minimize losses, also is a reactive form of security
  • A proactive form of security is a physical mechanism that makes breach expensive
  • From common law, economic theory, and contractual conditions often found in practice, we can distill four basic objectives of contract design
  • observability
  • The disciplines of auditing and investigation roughly correspond with verification of contract performance
  • verifiability
  • The field of accounting is, roughly speaking, primarily concerned with making contracts an organization is involved in more observable
  • privity
  • This is a generalization of the common law principle of contract privity, which states that third parties, other than the designated arbitrators and intermediaries, should have no say in the enforcement of a contract
  • The field of security (especially, for smart contracts, computer and network security), roughly corresponds to the goal of privity.
  • enforceability
  • Reputation, built-in incentives, "self-enforcing" protocols, and verifiability can all play a strong part in meeting the fourth objective
  • Smart contracts often involve trusted third parties, exemplified by an intermediary, who is involved in the performance, and an arbitrator, who is invoked to resolve disputes arising out of performance (or lack thereof)
  • In smart contract design we want to get the most out of intermediaries and arbitrators, while minimizing exposure to them
  • Legal barriers are the most severe cost of doing business across many jurisdictions. Smart contracts can cut through this Gordian knot of jurisdictions
  • Where smart contracts can increase privity, they can decrease vulnerability to capricious jurisdictions
  • Secret sharing
  • The field of Electronic Data Interchange (EDI), in which elements of traditional business transactions (invoices, receipts, etc.) are exchanged electronically, sometimes including encryption and digital signature capabilities, can be viewed as a primitive forerunner to smart contracts
  • One important task of smart contracts, that has been largely overlooked by traditional EDI, is critical to "the meeting of the minds" that is at the heart of a contract: communicating the semantics of the protocols to the parties involved
  • There is ample opportunity in smart contracts for "smart fine print": actions taken by the software hidden from a party to the transaction.
  • Thus, via hidden action of the software, the customer is giving away information they might consider valuable or confidential, but the contract has been drafted, and transaction has been designed, in such a way as to hide those important parts of that transaction from the customer.
  • To properly communicate transaction semantics, we need good visual metaphors for the elements of the contract. These would hide the details of the protocol without surrendering control over the knowledge and execution of contract terms
  • Protocols based on mathematics, called cryptographic protocols, tre the basic building blocks that implement the improved tradeoffs between observability, verifiability, privity, and enforceability in smart contracts
  • secret key cryptography,
  • Public key cryptography
  • digital signatures
  • blind signature
  • Where smart contracts can increase observability or verifiability, they can decrease dependence on these obscure local legal codes and enforcement traditions
  • zero-knowledge interactive proof
  • digital mix
  • Keys are not necessarily tied to identities, and the task of doing such binding turns out to be more difficult than at first glance.
  • All public key operation are are done inside an unreadable hardware board on a machine with a very narrow serial-line connection (ie, it carries only a simple single-use protocol with well-verified security) to a dedicated firewall. Such a board is available, for example, from Kryptor, and I believe Viacrypt may also have a PGP-compatable board. This is economical for central sites, but may be less practical for normal users. Besides better security, it has the added advantage that hardware speeds up the public key computations.
  • If Mallet's capability is to physically sieze the machine, a weaker form of key protection will suffice. The trick is to hold the keys in volatile memory.
  • The data is still vulnerable to a "rubber hose attack" where the owner is coerced into revealing the hidden keys. Protection against rubber hose attacks might require some form of Shamir secret sharing which splits the keys between diverse phgsical sites.
  • How does Alice know she has Bob's key? Who, indeed, can be the parties to a smart contract? Can they be defined just by their keys? Do we need biometrics (such as autographs, typed-in passwords, retina scans, etc.)?
  • The public key cryptography software package "Pretty Good Privacy" (PGP) uses a model called "the web of trust". Alice chooses introducers whom she trusts to properly identify the map between other people and their public keys. PGP takes it from there, automatically validating any other keys that have been signed by Alice's designated introducers.
  • 1) Does the key actually belong to whom it appears to belong? In other words, has it been certified with a trusted signature?
  • 2) Does it belong to an introducers, someone you can trust to certify other keys?
  • 3) Does the key belong to someone you can trust to introduce other introducers? PGP confuses this with criterion (2). It is not clear that any single person has enough judgement to properly undertake task (3), nor has a reasonable institution been proposed that will do so. This is one of the unsolved problems in smart contracts.
  • PGP also can be given trust ratings and programmed to compute a weighted score of validity-- for example, two marginally trusted signatures might be considered as credible as one fully trusted signature
  • Notaries Public Two different acts are often called "notarization". The first is simply where one swears to the truth of some affidavit before a notary or some other officer entitled to take oaths. This does not require the notary to know who the affiant is. The second act is when someone "acknowledges" before a notary that he has executed a document as ``his own act and deed.'' This second act requires the notary to know the person making the acknowledgment.
  • "Identity" is hardly the only thing we might want map to a key. After all, physical keys we use for our house, car, etc. are not necessarily tied to our identity -- we can loan them to trusted friends and relatives, make copies of them, etc. Indeed, in cyberspace we might create "virtual personae" to reflect such multi-person relationships, or in contrast to reflect different parts of our personality that we do not want others to link. Here is a possible classification scheme for virtual personae, pedagogically presented:
  • A nym is an identifier that links only a small amount of related information about a person, usually that information deemed by the nym holder to be relevant to a particular organization or community
  • A nym may gain reputation within its community.
  • With Chaumian credentials, a nym can take advantage of the positive credentials of the holder's other nyms, as provably linked by the is-a-person credential
  • A true name is an identifier that links many different kinds of information about an person, such as a full birth name or social security number
  • As in magick, knowing a true name can confer tremendous power to one's enemies
  • A persona is any perstient pattern of behavior, along with consistently grouped information such as key(s), name(s), network address(es), writing style, and services provided
  • A reputable name is a nym or true name that has a good reputation, usually because it carries many positive credentials, has a good credit rating, or is otherwise highly regarded
  • Reputable names can be difficult to transfer between parties, because reputation assumes persistence of behavior, but such transfer can sometimes occur (for example, the sale of brand names between companies).
  • Blind signatures can be used to construct digital bearer instruments, objects identified by a unique key, and issued, cleared, and redeemed by a clearing agent.
  • The clearing agent prevents multiple clearing of particular objects, but can be prevented from linking particular objects one or both of the clearing nyms who transferred that object
  • These instruments come in an "online" variety, cleared during every transfer, and thus both verifiable and observable, and an "offline" variety, which can be transfered without being cleared, but is only verifiable when finally cleared, by revealing any the clearing nym of any intermediate holder who transfered the object multiple times (a breach of contract).
  • To implement a full transaction of payment for services, we need more than just the digital cash protocol; we need a protocol that guarantees that service will be rendered if payment is made, and vice versa
  • A credential is a claim made by one party about another. A positive credential is one the second party would prefer to reveal, such as a degree from a prestigious school, while that party would prefer not to reveal a negative credential such as a bad credit rating.
  • A Chaumian credential is a cryptographic protocol for proving one possesses claims made about onself by other nyms, without revealing linkages between those nyms. It's based around the is-a-person credential the true name credential, used to prove the linkage of otherwise unlinkable nyms, and to prevent the transfer of nyms between parties.
  • Another form of credential is bearer credential, a digital bearer instrument where the object is a credential. Here the second party in the claim refers to any bearer -- the claim is tied only to the reputable name of issuing organization, not to the nym or true name of the party holding the credential.
  • Smart Property We can extend the concept of smart contracts to property. Smart property might be created by embedding smart contracts in physical objects. These embedded protocols would automatically give control of the keys for operating the property to the party who rightfully owns that property, based on the terms of the contract. For example, a car might be rendered inoperable unless the proper challenge-response protocol is completed with its rightful owner, preventing theft. If a loan was taken out to buy that car, and the owner failed to make payments, the smart contract could automatically invoke a lien, which returns control of the car keys to the bank. This "smart lien" might be much cheaper and more effective than a repo man. Also needed is a protocol to provably remove the lien when the loan has been paid off, as well as hardship and operational exceptions. For example, it would be rude to revoke operation of the car while it's doing 75 down the freeway.
  • Smart property is software or physical devices with the desired characteristics of ownership embedded into them; for example devices that can be rendered of far less value to parties who lack possesion of a key, as demonstrated via a zero knowledge interactive proof
  • One method of implementing smart property is thru operation necessary data (OND): data necessary to the operation of smart property.
  • A smart lien is the sharing of a smart property between parties, usually two parties called the owner and the lienholder.
  • Many parties, especially new entrants, may lack this reputation capital, and will thus need to be able to share their property with the bank via secure liens
  • What about extending the concept of contract to cover agreement to a prearranged set of tort laws? These tort laws would be defined by contracts between private arbitration and enforcement agencies, while customers would have a choice of jurisdictions in this system of free-market "governments".
  • If these privately practiced law organizations (PPLs for short) bear ultimate responsibility for the criminal activities of their customers, or need to insure lack of defection or future payments on the part of customers, they may in turn ask for liens against their customers, either in with contractual terms allowing arrest of customers under certain conditions
  • Other important areas of liability include consumer liability and property damage (including pollution). There need to mechanisms so that, for example, pollution damage to others' persons or property can be assessed, and liens should exist so that the polluter can be properly charged and the victims paid. Where pollution is quantifiable, as with SO2 emissions, markets can be set up to trade emission rights. The PPLs would have liens in place to monitor their customer's emissions and assess fees where emission rights have been exceeded.
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