How do you enforce a smart contract

[687_2]

Yes, smart contracts dealing with non-bitcoin things have to somehow be attached to the real world. This attachment point is tricky. If you're thinking about for example representing ownership of a house, or a car, say, you're going to have to get governments to recognize the token as the true notion of ownership. Otherwise a buyer buys a house token for, say, 1000 bitcoins, the seller hands over the token but never signs the deed over; as far as the local gov't is concerned the seller still owns the house and the buyer just got shafted for 1000 btc.

There are lots of kinds of smart contracts though; some are more tractable. Like for example futures, forward contracts or other derivatives that are purely settled in BTC. Or next step up, something involving one or more trusted or semi-trusted "oracles" which interface to the real world by giving truth values about events.

None of these issues are really much of a problem, at least in the US. A valid contract needs only two things:

1) Meeting of the minds
2) Consideration

Even verbal agreements are enforceable in US courts (I don't know about elsewhere) so long as they have these two things, so contracts on the blockchain or even off chain are no problem to enforce at all, as long as both parties have assets in the same or cooperating jurisdictions. It will be a pain in the ass for the buyer if the seller defaults, but the buyer will eventually win in court.

Does it complicate things if the buyer buys the token, then sells it to someone else and so on with many trades happening before the latest owner tries to redeem the token for the house?

What if the token has been stolen somewhere along the way?

It might slow down law enforcement or the courts a day or two, because they'll want to make sure they have the right people an property. If you buy a stolen vehicle (for example), you're out the cash and the vehicle when the FBI or State police come to collect it, even if you had no idea the vehicle was stolen.

[redsn0w]

I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.

The problem here is that 'any governments' don't recognize the bitcoin blockchain, so a contract will be valid only if it is between private parts; but if one of those part wants to 'enforce' the contract I do not think the government will accept it.

Well in many countries you can actually form contracts as you like - at least within the legal boundaries and to certain extents. If courts accept the blockchain as enough of a proof, then the contract may have decent chances of being recognized, I believe...

Here in italy (for example) a person has opened a company and the contribution of assets was all in bitcoin, as you can see here:

- http://www.newsbtc.com/2015/04/12/oraclize-company-bitcoin-incorporation/

So I think in some country the 'bitcoin blockchain' is recognized at 100%

[ensurance982]

I think this mainly boils down to the fact that you're using the blockchain or Bitcoins to prove ownership. The actual execution has to be done by regular means: Courts, police, lawyers, etc.

The problem here is that 'any governments' don't recognize the bitcoin blockchain, so a contract will be valid only if it is between private parts; but if one of those part wants to 'enforce' the contract I do not think the government will accept it.

Well in many countries you can actually form contracts as you like - at least within the legal boundaries and to certain extents. If courts accept the blockchain as enough of a proof, then the contract may have decent chances of being recognized, I believe...

Here in italy (for example) a person has opened a company and the contribution of assets was all in bitcoin, as you can see here:

- http://www.newsbtc.com/2015/04/12/oraclize-company-bitcoin-incorporation/

So I think in some country the 'bitcoin blockchain' is recognized at 100%

Interesting. It still boils down to how courts rule in case there's as lawsuit or some sort of serious disagreement between two parties engaged in such a contract, I believe!

[herzmeister]

also, google might buy "the blockchain" after all and provide proper contractual enforcement:

http://www.sbs.com.au/news/article/2015/04/17/google-has-patented-ability-control-robot-army

http://google.com/killer-robots.txt 

[AtheistAKASaneBrain]

When you buy something, you want to check out if the owner is really the owner. Maybe he is a swindler, and is attempting to sell you stolen property.

Wherever the property is registered, the registration could have listed in its paperwork, the corresponding smart property contract that would have to be activated before the sale is possible.

It would be something like a trust, where the trust owns the property. The thing you do when transferring trust property is to simply change the trustees. Many trusts are written so that the trustee can be changed. The new trustee is the one that now controls the property.

If the property is owned by a smart property contract, the new administrator of the contract is the new controller, and essentially the new owner.

True, but let's say someone enters your house bought via a smart contract... how do you send the police on him, if the smart contract has no recognize by the official authorities?
This is the main problem i see with this.

This is on point. Say you buy a car, or a house or any property. Just because it says so in the blockchain, if someone tries to steal it or damage it... are the authorities forced to assist you? unfortunately i dont think so unless it gets aknowledged by then that the blockchain smart contracts have the same value as a traditional signed contract.

[TwinWinNerD]

It's smart, it will figure out a way on its own. #skynet

[BADecker]

Get a bunch of your buddies together with their guns, and go enforce it.