82,891
edits
Smart contract: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 5: | Line 5: | ||
But, ''[[blockchain]]'', you know? | But, ''[[blockchain]]'', you know? | ||
And consider this: if, in that CSA, due to a mutual mis-key when you set up the operating parameters in 1998, you allowed a wider range of collateral through than the CSA formally mandated, and no-one noticed until your counterparty blew up in 2008 and the ropey collateral it had been posting for a decade suddenly tanked, what good is your sainted piece of paper then? Not much, in this commentator’s humble opinion. | And consider this: if, in that CSA, due to a mutual mis-key when you set up the operating parameters in 1998, you allowed a wider range of collateral through than the CSA formally mandated, and no-one noticed until your counterparty blew up in 2008 and the ropey [[collateral]] it had been posting for a decade suddenly tanked, what good is your sainted piece of paper then? Not much, in this commentator’s humble opinion. | ||
So, where the contract is of a highly operational nature — and much of the machinery of finance is — smart | So, where the {{t|contract}} is of a highly operational nature — and much of the machinery of finance is — [[smart contract]]s aren’t so much a revolutionary idea as an obvious one. We already have them. | ||
But the problem is this: while 80% of your {{t|contract}} is electronic and suitably “smart” already, the other 20% — all the things that matter only when things turn growlish — ''isn’t''. The [[close out]] rights, [[Termination event|termination triggers]] and [[events of default]]: matters that can hardly be coded into anything, much less ascertained by electronic transmission between the parties. They require judgment, experience and evaluation, both of their existence (is that [[Material adverse change|adverse change]] really “material”? Hey, [[legal eagles]]! What does “[[material]]” mean?) and in terms of your reaction to them: Ok, the [[NAV trigger]] has been hit. But is this the real thing or is this drill? Do we want to close out? How is our overall position? What do we think of the counterparty’s forward prospects? What are the pros and cons? | But the problem is this: while 80% of your {{t|contract}} is electronic and suitably “smart” already, the other 20% — all the things that matter only when things turn growlish — ''isn’t''. The [[close out]] rights, [[Termination event|termination triggers]] and [[events of default]]: matters that can hardly be coded into anything, much less ascertained by electronic transmission between the parties. They require judgment, experience and evaluation, both of their existence (is that [[Material adverse change|adverse change]] really “material”? Hey, [[legal eagles]]! What does “[[material]]” mean?) and in terms of your reaction to them: Ok, the [[NAV trigger]] has been hit. But is this the real thing or is this drill? Do we want to close out? How is our overall position? What do we think of the counterparty’s forward prospects? What are the pros and cons? | ||