Digital contracts have proven really adept — at losing people’s money
With blockchain technology giving hackers the greenlight to empty accounts, institutionalised banking may be around for a while
Smart contracts were supposed to revolutionise 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. Problem is, one platform designed to host such contracts — Ethereum — has so far turned out to be a lot less trustworthy than a bank. Consider what happened with so-called multi-signature wallets, which are supposed to open only with the permission of two or more individuals — like a joint ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.