How Smart Contracts Could Play a Pivotal Role in Supply Chains

A space we looked at closely.

How Smart Contracts Could Play a Pivotal Role in Supply Chains

May 25, 2023    Matthew Gideon, Senior Editor

With more suppliers adopting digitization, traditional contractual agreements in the supply chain space are being superseded by new arrangements known as smart contracts, a type of self-executing program that automates the actions required to fulfill a contract, saving the involved parties time, energy and money.

A smart contract is an arrangement that’s digitized and takes effect after being created, without the need for any other type of physical or digital interaction once a set of pre-determined conditions are met. Even though smart contracts have offered another way to draft and create contracts for almost 20 years, they’re still relatively rare. The unique aspect of smart contracts is that they don’t require human interaction once they are drawn up, automating the process of fulfilling contractual obligations.

Traditional contract execution relies on the natural language used between humans. The process of drawing one up starts with an offer from one side to the other. From there, considerations are made by the involved parties requiring the participants to meet legally enforceable obligations laid out in the terms of the contract. After that, the contract is approved, allowing the participants to declare mutuality – the official announcement that the two sides have agreed to and understand the terms. 

Drafting a smart contract follows a different process. They are written in computer code rather than in regular human language, digitizing the contract execution process and making it almost entirely automatic. 

In their most current form, smart contracts are built on blockchains, a form of decentralized, distributed and pubic digital ledgers that are used to record transactions taking place across many computers around the globe, making it impossible to retroactively alter the records. 

Smart contracts begin with a term sheet that utilizes human nuance to guide the programming code used to draw up the agreement. Then, a programmable language known as bytecode is integrated into the contract, allowing it to self-execute once certain conditions are met based on information gathered externally. Finally, the contract self-executes once the programming recognizes that the information from the external data fulfills the contractual obligations of all participating parties. 

A major benefit of using smart contracts is that they can be drawn up in minutes, rather than hours or days as with traditional contracts. Also, the payments involved in smart contracts are automatically executed, unlike traditional contracts which require manual payments. Additionally, smart contracts save the participating parties money because they are almost completely digital, and do not often require the involvement of third parties. Most importantly, the automation of smart contracts creates fewer opportunities for human errors or, worse, contract manipulation. 

A.J. Zottola, co-chair of the Intellectual Property Transactions Practice Group at the law firm Venable LLP, highlights some of the ways that smart contracts could be beneficial to supply chains. He says security is a major advantage of smart contracts, along with the ability to execute increasingly complex agreements almost instantaneously. “That could facilitate a lot of supply chain transactions in a positive way,” he says. 

For all their advantages, smart contracts come with certain problems. It’s extremely difficult to amend a smart contract that has already been executed. Instead, the parties must come up with a completely new contract that supersedes the old one. “Before, you would have changed the terms and made the old contract disappear, but it doesn’t work like that anymore,” Zottola says. 

A similar concern arises with contract termination and rescission. “From a traditional book-keeping perspective, that could become pretty cumbersome,” he says. “A lot of people who have to rescind, terminate or modify contracts don’t necessarily want the old one lying around, but it will be there.” 

The process of creating smart contracts is also quite complicated. In addition to an attorney, signatories need a computer programmer. “You almost need a host of intermediaries to help you draft up that term sheet that is then turned into code,” Zottola says. “It puts a lot of importance into making sure everybody understands what the conditions are that lead to a self-executing event. I don’t think that has necessarily been sorted out.” 

The automated aspect of smart contracts can cause additional problems. Issues that used to be easily remedied between trusted partners become more difficult to resolve if smart contract transactions are recorded on a blockchain, Zottola says. “It’s almost as if you’d need to have a closed network for supply chains to build up that level of trust, so that everybody participating in the contract is in agreement with its conditions.” 

The timeline for mass adoption of blockchains and smart contracts is hard to predict, Zottola says. Wider acceptance requires reaching consensus on how they should be defined, regulated and executed. 

“It may not necessarily happen in the U.S. first,” he says. “You’re going to be dealing with a landscape where some countries have set rules and are comfortable with adoption. Then again, you’re going to have to figure out how to work across borders or incorporate participants from other countries.”

“Nobody has got this settled yet,” he says.   ...  ' 

Coverting Laws to Programs

How do-able and useful is such  such smart coding.  How ways is it to include elements like intent?  What other considerations must it be compliant to?  Consideration of interacting smart contracts?

Converting Laws to Programs, By Esther Shein in CACM

Communications of the ACM, January 2022, Vol. 65 No. 1, Pages 15-16   10.1145/3495564

 Sometimes the intricacies of tax laws are mind-boggling, even to lawyers. Sarah Lawsky, a law professor at Northwestern University School of Law and Jonathan Protzenko, a principal researcher at Microsoft Research, were working to translate Section 121 of the U.S. Tax Code, which stipulates how much a taxpayer can deduct from their income taxes from the profit of the sale of a home, into rogrammable code.

They found themselves stumped, because while the law stipulates a profit on the first $250,000 of a home sale is not to be taxed, "there's like nine layers of exceptions," including whether a person served in the military or is married, or if a spouse is deceased, Protzenko says.

U.S. law is "insanely complicated, so when you have that amount of insanity there's no way a human can confidently claim, `Give me your situation and I'll give you the right answer'," he says. "You need code to capture and precisely express what's supposed to happen, because English is too fuzzy and irregular."

Protzenko and Lawsky spent hours debating a fine point, "and she said, `Gosh, I thought I knew this text well'," he recalls. "She teaches it to her students every year, but transcribing law into code requires you to think about the most minute details, and there was a fair amount of head scratching to make sure we were 100% correct about what the law means."

Thankfully they were, and the code was embedded into Catala, a programming language developed by Protzenko's graduate student Denis Merigoux, who is working at the National Institute for Research in Digital Science and Technology (INRIA) in Paris, France.

It is not often lawyers and programmers find themselves working together, but Catala was designed to capture and execute legal algorithms and to be understood by lawyers and programmers alike in a language "that lets you follow the very specific legal train of thought," Protzenko says.

In highly regulated industries, critical laws are translated precisely into code that reflects their intent. This is especially true when it comes to tax software and software that verifies Health Insurance Portability and Accountability Act (HIPPA) compliance. Yet, tax software "does not formalize statutes in a meaningful way,'' according to Lawsky.

Tax forms created by the government essentially take tax laws and put them into algorithms—and they are not a direct translation of the law, she says.

For example, in a prepublication article for the Ohio State Technology Law Journal, Lawsky wrote that software programs such as TurboTax encode tax forms, which are not law. They are prepared by the government, which collects information and turn portions of the law into an algorithm for taxpayers to apply.

"The difficult part of the coding, and the judgment calls, are almost entirely performed by the government, not by those who code tax preparation software," Lawsky wrote.

"And because forms turn law into algorithms, the forms themselves—not the instructions … may contain judgments about the law [and] sometimes law that is unclear," she says. "The forms themselves abstract away from the law."

You would think something as numerical as income tax law would be similar to mathematical logic, but it is not, Protzenko says, because it is not written with the precision and clarity that would "make it amenable to a very mathematical reading of it."

For example, that law does not mention a number may need to be rounded into whole cents. "The law won't tell you what you're supposed to do with rounding numbers and that can lead to ambiguity and a lack of specification of what's supposed to happen," he says.

Healthcare law is also very complex. Faisal Khan, senior legal counsel at healthcare law firm Nixon Gwilt Law in Vienna, VA, says, "Software for HIPAA compliance must incorporate algorithms that target and hit on all the top-level statutory requirements and implementing regulations.'

To make that happen, Khan says, "There must be a team of compliance-related input as many of the regulations essentially function as guidelines for companies to adhere to."

That means a process or security check that may be compliant for a small company may not automatically be compliant for a large company or health system, Khan says. Moreover, software data should be verified by compliance specialists because enforcement professionals at the U.S. Department of Health and Human Services are not only going to review documents, but also will scrutinize how key individuals and stakeholders are following HIPAA compliance processes and tweaking those processes as necessary as things change, according to Khan.

Thus, while software is a key solution to reducing costs and standardizing practices, "There needs to be a human element to support implementing an algorithm-based solution on the ground," Khan says. "What works from a logic perspective may not be the best solution based upon company operations and existing processes."  .... ' 

Wider View of Smart Contracts

 Smarter but also more usefully cooperative too.

Smart Contracts are Here and They’re Getting Smarter

by Thomas Frey | Dec 9, 2021 | Future Trends   in Futurist Speaker

In a recent podcast interview, Max Galka, CEO of Elementus.io (a “search engine for non-private blockchain”) explained the fundamentals of blockchain-based smart contracts using a travel insurance policy as an example.

In that scenario, a person taking out a travel insurance policy would instantly have the potential payout amount put into escrow by the insurer. If the plane left on time the money would revert to the insurance company, but if it was delayed, money would be transferred to the policyholder.

Departure and arrival times presumably would be defined in the policy in terms of plane pushback, wheels up, and the permission to de-board. Since these conditions are factual and not subject to interpretation, no lawyers or other parties are needed to determine whether on-time departure and arrival was achieved.

This may not be the best example, since policyholders might try to game the system, perhaps by actually trying to delay the plane. And insurance companies don’t have sufficient capital to hold in reserve at all times to cover every one of their possible obligations.

But the illustration makes the point about how smart contracts are self-executing. And they’re about to enter the mainstream of our lives in many scenarios similar to that illustration.

What’s Smart about Smart Contracts?

First, a note about terminology. In today’s IT world, the term “smart contract” is broadly applied to refer to the placement of nearly any program or decentralized application (DApp) on the blockchain.

For our purposes, though, we’re going to explore the concept in the context of smart legal contracts, contracts in the traditional sense of the word – agreements between parties that take the form of programs placed on the blockchain where the provisions are monitored and executed.

In this context, the concept of smart contracts emerged well before the advent of blockchain technology. The person who coined the phrase was a computer scientist, Nick Szabo, who likened the concept to the mechanical technology behind a vending machine.

Mechanisms in the vending machine verify that the purchaser has deposited sufficient money, verify that they’ve made a valid selection, and determine whether change is due. Only then does it deliver the product. No human being acts as an intermediary to verify the transaction – to the chagrin of someone who sees their Milky Way get hopelessly wedged so it can’t fall down the chute!  ... ' 

Smart Contract Bug

 Recall we looked at the concept of a 'smart contract'. Here a useful example of related bugs

Smart Contract Bug Results in $31 Million Loss  in Schneier

A hacker stole $31 million from the blockchain company MonoX Finance , by exploiting a bug in software the service uses to draft smart contracts.

Specifically, the hack used the same token as both the tokenIn and tokenOut, which are methods for exchanging the value of one token for another. MonoX updates prices after each swap by calculating new prices for both tokens. When the swap is completed, the price of tokenIn­that is, the token sent by the user­decreases and the price of tokenOut­or the token received by the user­increases.

By using the same token for both tokenIn and tokenOut, the hacker greatly inflated the price of the MONO token because the updating of the tokenOut overwrote the price update of the tokenIn. The hacker then exchanged the token for $31 million worth of tokens on the Ethereum and Polygon blockchains.  .... '   (with related  discussion in comments)   .... ' 

Hybrid Smart Contracts

 Uses and considerations:

5 Ways Hybrid Smart Contracts Are Changing the Blockchain Industry  by 7wData

For years, the blockchain industry has been defined by the excitement around smart contracts, or tamper-proof digital agreements that automatically execute when a certain condition is met. Typically associated with blockchains like Ethereum, smart contracts allow developers to build decentralized applications or “dApps” that recreate all sorts of products without the need for a rent-seeking middleman. However, over the last year, smart contracts have begun to evolve.

While developers are still building smart contracts on top of blockchains like Ethereum, they’ve also begun to combine them with an entirely new piece of technology: oracles. Oracles are entities that enable blockchains to interact with data and systems from the traditional world. 

As a result, “hybrid smart contracts”, or smart contracts that combine on-chain code with off-chain oracles, have taken the world by storm due to the enhanced functionality they enable for dApps. Today, hybrid smart contracts power several new use cases across dozens of industries, and the combination of blockchains like Ethereum and popular oracle networks like Chainlink are now securing digital agreements that handle tens of billions of dollars in user funds.

Here are five exciting ways in which the hybrid smart contract model is transforming the blockchain industry. 

Today, the hybrid smart contract model forms the backbone of much of the decentralized finance (DeFi) industry, which seeks to recreate traditional financial products using decentralized architecture to honor financial terms. Hundreds of popular DeFi applications that let users borrow, lend, trade, save, and create assets now rely on an oracle network to fetch, validate, and deliver aggregated data from the real world. This data then determines how smart contracts execute and settle on blockchains. 

For DeFi giants like lending apps Aave and Compound, oracle networks can crowdsource accurate price data in a highly reliable and tamper-proof manner. Price data is the lifeblood of DeFi and is used to execute liquidations, determine lending rates, and verify limit orders by providing the fair market valuation of cryptocurrency, commodities, and more.

Hackers know this and often try to manipulate price data as a way of breaking a smart contract, causing great harm to DeFi apps that rely on low-quality data or insecure oracle mechanisms. To avoid this problem, many DeFi apps have turned to oracle networks that fetch data from premium data providers and that consist of nodes that are operated by professional DevOps teams.

The rise of the hybrid smart contract model has also been a boon for DeFi developers; instead of trying to figure out how to build infrastructure to securely source price data for their smart contracts, they can focus on their products and simply plug into an existing decentralized oracle network for their data when ready. In the same way that apps like Uber combine services like Twilio for messaging, Stripe for payments, and Google Maps for location, DeFi apps are being built by combining on-chain smart contract code with oracles for off-chain price data. 

Beyond DeFi, the hybrid smart contract model is being used to build all sorts of interesting applications that can change people’s lives for the better. Decentralized oracle networks now have the ability to deliver data onto blockchains about the weather from sources like the National Oceanic and Atmospheric Administration via Google Cloud or Accuweather, meaning projects like Arbol can build parametric insurance contracts that automatically pay out when a certain weather condition is hit. ... ' 

Smart Contract Monitoring with Tenderly

Continue to look at how the aspect of a 'contract' can be integrated with code and logic.

Ethereum smart contract monitoring platform Tenderly raises $15.3M   BY KYT DOTSON

Tenderly, a platform that helps developers monitor smart contracts on the Ethereum blockchain, announced Thursday it has raised $15.3 million in a Series A funding round led by Accel.

Headquartered in Belgrade, Serbia, Tenderly provides a set of tools for developers to test and watch the health of their code on the Ethereum blockchain through monitoring smart contracts, real-time alerting, troubleshooting and more complex integrations.

“Ever since we started building Tenderly, our goal has been to create an all-encompassing platform that will make developers’ lives easier,” said Andrej Bencic, chief executive of Tenderly. “Now we are in the position to take this broad concept and turn it into reality.”

The objective of the company is to provide comprehensive tools for developers to discover errors in smart contracts before they are deployed and catch them early when they happen in the wild.

Smart contracts are pieces of self-executing code written on the blockchain that run when predetermined conditions are met. They are the fundamental building blocks of decentralized applications and are typically used to automate the execution of agreements between parties.

On the development side, Tenderly provides a visual debugger that inspects transactions and helps inspect each of the smart contracts to make certain that they will operate correctly. Along with that, it has a simulator to allow the developers to run code through its paces before it goes into ctual production.

Once live, Tenderly has real-time monitoring and alerting so that when things do go wrong, problems can be detected early. That means custom triggers for anything that could start going wrong including potential exploits or errors that could affect the natural progress of smart contracts and security warnings.

Right now, the popularity of nonfungible tokens – a type of crypto asset which can represent anything from digital art to video game items – is creating a lot of attention for distributed applications, especially on Ethereum. Transactions involving NFTs are powered by smart contracts and bugs could be extremely costly, not just for users, but developers.

The company said that crypto startups such as Nexus Mutual, Uniswap, Chainlink, Sushi Swap, InstaDApp and DeFi Saver all use Tenderly regularly to check their Dapps for code correctness.

The company intends to use this new infusion of financing to expand its core offering with new tools and services and bring in more talented people. The startup currently has a team of 14 people.

“Our goal is to further cement Tenderly as the best destination for all developers looking to monitor, test and debug smart contracts, simulate transitions, build better DApps and help improve the Ethereum ecosystem,” said Bencic.  .... '

Interaction of Law, Software, Evidence, Compliance

 When software acts as evidence.   And also when it further acts in conjunction with compliance-required  data.    Brought up as part of a study of compliance-based systems, and integration of smart contract concepts. 

The article below was pointed to me by Bruce Schneier in his blog:  'Risks of Evidentiary Based Software'   , where there is likely to be useful comments on the topic.  Other comments?   ....

Dangers Posed by Evidentiary Software—and What to Do About It  in Lawfareblog.com  By Susan Landau   ...   '

Law, Rule of Law and Computer Science

Lots to consider here, and it seems we are not close to understanding the implications.  The pressure to automate lots of this is very strong. 

Understanding Law and the Rule of Law: A Plea to Augment CS Curricula,  By Mireille Hildebrandt

Communications of the ACM, May 2021, Vol. 64 No. 5, Pages 28-31   10.1145/3425779

Some people think they are above the law. In a constitutional democracy this cannot be the case. Neither the head of state nor the doctor or the police are above the law. They should all be enabled to do their work, but we do not buy the claim that they could act as they wish. In 18th century Europe we replaced the authoritarian rule by law with a rule of law, to mitigate uninhibited power, and to ensure that those in power can be held to account in a court of law. Whereas rule by law is rule by persons (law as an instrument of control), rule of law implies a division of powers where those who enact the rules do not get the last word on their interpretation.13

This also refers to the difference between law and ethics. Replacing rule by law with rule of law means we do not want to depend on the ethical inclinations of those who rule us. Instead, we can send them home if we don't agree with the rules they impose (democracy) and we can contest their interpretation of those rules in court (rule of law). As a thought experiment I ask the reader how this would apply to the rules computing systems impose: Can we send home the developers (and/or those who implement these systems to gain a profit or to engage in public administration)? Can we contest their rules in a court of law when they impact our choice architecture?

Law and the rule of law have been implemented by way of intricate checks and balances that safeguard the contestability of legally relevant decision making, thus preparing the ground for robust, legitimate, and binding decisions. This is how we create and sustain societal trust: not by cherishing the illusion of an ideal world where power plays no role, but by creating and sustaining countervailing powers. Simultaneously, law is about coordinating human interaction, making sure that governments treat their citizens with equal respect and concern,5 thus providing for legal certainty and justice. That is why it is imperative that nobody is above the law.

This also goes for the architects of our computational environments, who increasingly design and engineer the space we inhabit. Computer scientists, Web developers, roboticists, and software engineers must understand both when and how the law applies to them, and insofar as they develop modules, systems or applications for specific use cases, they should be sensitized about how and when the law may apply. This goes for issues of privacy and data protection, cybercrime, intellectual property rights and private law liability (for example, tort), but also for issues of jurisdiction (what law applies) and international law (how national legal systems interact at the global level). It goes even more for the idea of the rule of law that should inform our understanding of the law.

Based on many years of teaching law to master's students of computer science,8 I have come to believe that by teaching them about law I am not only helping them to comply with current law, but also offering them a unique opportunity to engage with the foundations and implications of their own 'trade' (precisely because computing systems also produce rules that affect human behavior).   ....  ' 

Incomplete Contracts

Followup on previous piece: 

Incomplete Contracts  by Jesse Walden  in Andreessen Horowitz

cryptocurrencies & blockchains

One way to think about various kinds of crypto projects is through the lens of contract theory. An axiom of this area of legal scholarship states: “all but the simplest contracts are incomplete”. That is, contractual arrangements cannot anticipate every possible outcome or set of actions, given complex and dynamic changes in the world the contract lives in.

When contracts are incomplete, they rely on renegotiation when unexpected contingencies like bankruptcy, regulation or even simple changes in details emerge. Such contingencies often require third parties like the legal system to help interpret and mediate between the two parties, and can lead to unpredictable outcomes. In this way, contracts are always about the unknown eventualities of decision making, incentives, and governance authority.

But if we accept that contracts are simply decision logic — akin to computer programs, then contract theory gives us a framework for thinking about different types of smart contracts and crypto-enabled projects — and how they can scale (including governance of them) .... ' 

From Blockchain to Contracts

Have been looking at the use of 'smart contracts' in a broader way.  Is this one direction?   Incorporating trust.

Investing in Aleo  by Katie Haun and Ali Yahya  in Andreessen Horowitz

From the beginning, our core thesis has been that the best way to think of a modern blockchain is as a new class of computer that has the ability to run a special kind of program. These programs are sometimes called smart contracts, and they’re different from ordinary programs in that they have a life of their own. They are independent, and once written, they obediently execute themselves subject to nobody’s authority. Because of this property, smart contracts are uniquely capable of earning trust. 

But smart contracts today have two big limitations: (1) they are fully transparent by design and therefore don’t allow for privacy (2) they don’t scale to millions (let alone billions) of users. These limitations exist because trust requires verification. Transactions on a blockchain need to be transparent so that everyone can verify that they are correct. And, they tend not to scale because it takes time and energy for all computers on the network to perform that verification.

But research in a cutting edge area of cryptography called zero-knowledge proofs promises to unlock an elegant solution to the privacy and scalability problems. We spent a great deal of time looking at various approaches and teams working on this. Aleo’s solution is both elegant and pragmatic.  ... '

AWS Enhances Amazon Managed Blockchain with Ethereum support

 This is interesting because it incudes ethereum support for Smart Contracts, being examined here.

AWS Enhances Amazon Managed Blockchain with Ethereum support  By Maria Deutscher  in SiliconAngle

Amazon Web Services Inc. has launched an enhanced version of its Amazon Managed Blockchain service that features support for the popular Ethereum blockchain platform.

Launched in 2015, Ethereum is the basis of Ether, the second most valuable cryptocurrency after Bitcoin by market capitalization. The blockchain platform features a technology known as smart contracts that makes it possible to automate tasks such as transferring funds.

Over recent quarters, the value of Ether has soared amid a surge of investor interest in cryptocurrencies. Meanwhile, enterprises such as insurance giant Aon PLC have started exploring ways of applying Ethereum’s smart contracts for tasks such as streaming the insurance underwriting process.

The new Ethereum support in Amazon Managed Blockchain, announced quietly Tuesday, will enable AWS to support such use cases for its customers. Amazon Managed Blockchain is a service launched in 2019 that allows companies to set up and run blockchain infrastructure. It abstracts away much of the technical heavy lifting involved in the task to simplify operations for customers.   ... "

https://ethereum.org/en/developers/docs/smart-contracts/

Tezos and Wolfram for Blockchain

 New to me, and interesting, with quite a bit of detail and even sample code.  Will be examining smart contract implications.

Third-Generation Blockchain Functionality with Tezos and the Wolfram Language

As CEO of Wolfram Blockchain Labs (WBL), (John Woodard, CEO Wolfram Blockchain Labs)   I think one of the most exciting parts of my job is collaborating with other leaders in the blockchain space to expand tools for developers and business use cases. For several years now, we’ve been adding a steady stream of blockchain functionality into the Wolfram Language to enable development of knowledge-based distributed applications and computational contracts. You may have noticed the growing number of popular blockchains (ARK, Bitcoin, bloxberg, Cardano, Ethereum, MultiChain…) partnering with us and integrating into our platform. It’s already led to some cool explorations, and we have a lot more in the pipeline.

Today, WBL is happy to announce its latest such collaboration, a partnership with TQ Tezos. That includes Tezos blockchain integration in the Wolfram Language, which is great news for smart contract developers and enthusiasts. But that’s just the beginning. Our long-term plans include a lot of big ideas that we think everyone will be excited about!   ... " 

Using AI to Work with Regulations

Consider possible use as  'Contract-Digital-Twin'  (my term)  to determine how it might simulate the application of regulations in varying contexts.   A smart contract of sorts.   Thoughts? 

Researchers use AI to help businesses understand Code of Federal Regs, other legal docs

Researchers at the University of Maryland, Baltimore County (UMBC) have made strides in automated legal document analytics (ALDA) by creating a way to machine-process the Code of Federal Regulations (CFR). The CFR is a complex document containing policies related to doing business with the federal government. All business affiliates of the federal government must comply with the CFR. For government contracts to be equitably open to a broad range of businesses, policies within the CFR must be accessible.  ... "

Book: Mastering Blockchain

Just brought to my attention.     Inform me if you would like a review related mention.

New O'Reilly Book:

Mastering Blockchain:  Unlocking the Power of Cryptocurrencies, Smart Contracts, and Decentralized Applications 1st Edition

by Lorne Lantz  (Author), Daniel Cawrey  (Author)  ...  

The future will be increasingly distributed. As the publicity surrounding Bitcoin and blockchain has shown, distributed technology and business models are gaining popularity. Yet the disruptive potential of this technology is often obscured by hype and misconception. This detailed guide distills the complex, fast moving ideas behind blockchain into an easily digestible reference manual, showing what's really going on under the hood. .... " 

Coders Flock Back to Crypto Projects

 Intriguing direction.  Of the belief that developers will become replaced by automated methods

Coders Flock Back to Crypto Projects with Prices Surging Again

In Bloomberg  By Olga Kharif

Software developers are migrating back to cryptocurrency projects at record levels, with early-stage venture firm Electric Capital reporting that the numbers of new coders rose this year for more than three consecutive months for the first time since 2017. Electric estimated the number of new crypto developers grew 15% per month during the first 10 months of 2020, while more than 80% of all active developers began their work in the last two years. Open source blockchain platform Ethereum and decentralized finance applications are particularly attractive to developers. Electric's Maria Shen said, "Many projects like smart contract platforms rely on developers joining their ecosystem to be successful. Ethereum clearly has more activity and this is why other platforms fight for developers.”

Rules as Code: White Paper

More on the direction of encoding legal rules and reasoning, like smart contracts, in coding.   And their accurate use and manipulation. 

'Rules as Code' will let computers apply laws and regulations   by Guido Governatori, The Conversation  in TechExplore

Can computers read and apply legal rules? It's an idea that's gaining momentum, as it promises to make laws more accessible to the public and easier to follow. But it raises a host of legal, technical and ethical questions.

The OECD recently published a white paper https://oecd-opsi.org/report-launch-opsi-innovation-primer-on-rules-as-code/ on "Rules as Code" efforts around the world. The Australian Senate Select Committee on Financial Technology and Regulatory Technology will be accepting submissions on the subject until 11 December 2020.

Machines cannot read and respond to rules that are expressed in human language. To make rules machine-readable and actionable, the interpretation of the rules must also be coded. Determining how best to code law is important as we venture deeper into a digital future.  ... " 

Automating Declarations of Conflicts of Interest

Had not heard of this specifically stated this way. Contracts.   Considerable discussion below. 

We Need to Automate the Declaration of Conflicts of Interest

By Richard T. Snodgrass, Marianne Winslett,   Communications of the ACM, October 2020, Vol. 63 No. 10, Pages 30-32   10.1145/3414556

Over the last 70 years of computer science research, our handling of conflicts of interest has changed very little. Each paper's corresponding author must still manually declare all their co-authors' conflicts of interest, even though they probably know little about their most senior coauthors' recent activities. As top-tier conference program committees increase past 500 members, many with common, easily confusable names, PC chairs with thousands of reviews to assign cannot possibly double-check corresponding authors' manual declarations against their paper's assigned reviewers. Nor can reviewers reliably catch unreported conflicts. Audits at recent top-tier venues across several areas of computer science each uncovered more than 100 instances where, at the first venue, a pair of recent coauthors failed to declare their conflict of interest; at the second venue, someone was assigned to review a recent co-author's submission; and at the third venue, someone reviewed a submission written by a prior co-author from any year. Even the concept of a conflict deserves closer scrutiny: an audit at yet another recent top-tier venue edition found more than 100 cases in which prior co-authors from any year reviewed each other's submissions.  ;;; " 

Exploring World of Smart Contracts with MadMax

 A space we have now looked at for some time, a somewhat technical example well worth going through.   Note close attention to 'vulnerabilities' which remain at disturbing levels. 

MadMax: Analyzing the Out-of-Gas World of Smart Contracts

By Neville Grech, Michael Kong, Anton Jurisevic, Lexi Brent, Bernhard Scholz, Yannis Smaragdakis  Communications of the ACM, October 2020, Vol. 63 No. 10, Pages 87-95   10.1145/3416262

Ethereum is a distributed blockchain platform, serving as an ecosystem for smart contracts: full-fledged intercommunicating programs that capture the transaction logic of an account. A gas limit caps the execution of an Ethereum smart contract: instructions, when executed, consume gas, and the execution proceeds as long as gas is available.

Gas-focused vulnerabilities permit an attacker to force key contract functionality to run out of gas—effectively performing a permanent denial-of-service attack on the contract. Such vulnerabilities are among the hardest for programmers to protect against, as out-of-gas behavior may be uncommon in nonattack scenarios and reasoning about these vulnerabilities is nontrivial.

In this paper, we identify gas-focused vulnerabilities and present MadMax: a static program analysis technique that automatically detects gas-focused vulnerabilities with very high confidence. MadMax combines a smart contract decompiler and semantic queries in Datalog. Our approach captures high-level program modeling concepts (such as "dynamic data structure storage" and "safely resumable loops") and delivers high precision and scalability. MadMax analyzes the entirety of smart contracts in the Ethereum blockchain in just 10 hours and flags vulnerabilities in contracts with a monetary value in billions of dollars. Manual inspection of a sample of flagged contracts shows that 81% of the sampled warnings do indeed lead to vulnerabilities.  ... '  

Green Energy Pilot using Smart Contracts

Good piece on current use of smart contracts.

California Agency Backs Green-Energy Pilot Using RSK’s Bitcoin Smart Contracts  By Nathan DiCamillo in CoinDesk

The California Energy Commission, the state’s primary energy policy and planning agency, is funding an experimental market for carbon-credit trading on a public blockchain. 

Under a plan announced Friday, demo digital tokens will be given to participating businesses that cut their carbon footprint by powering electric van sharing, said Eduardo Javier Muñoz, CEO of EVShare, a startup that’s now involved in the pilot through electric vehicle company Green Commuter. (EVShare is not a contractor with the Commission and the pilot is led by smart energy nonprofit Energy Coalition). If the pilot goes into production, the credits can be used to pay for electricity consumption, rides and services in the future.

Mobility-related transactions will be recorded on the RSK blockchain, a smart contract-oriented platform that is similar to Ethereum but runs on top of the Bitcoin network.  Transactions sent to a microgrid–a separate system from the city’s power grid–are being recorded by Community Electricity on the Energy Web Foundation’s blockchain.

The market is part of a $20 million initiative that will track data related to solar panels, energy storage, electric vehicles and charging infrastructure in Bassett, an unincorporated community in Los Angeles County. The commission’s previously disclosed $9 million grant will cover nearly half the cost; Google, the University of California at Los Angeles and others are covering the remaining $11 million, according to EVShare.  ... " 

Code as Evidence in Contracts, Disputes

A UK piece on the topic  of computing and dispute resolutions, code as evidence, which came up with respect to smart contracts.  Click through for useful and detailed links. 

The role of usability, power dynamics, and incentives in dispute resolutions around computer evidence  in Bentham’s Gaze by Alexander Hicks  

As evidence produced by a computer is often used in court cases, there are necessarily presumptions about the correct operation of the computer that produces it. At present, based on a 1997 paper by the Law Commission, it is assumed that a computer operated correctly unless there is explicit evidence to the contrary.

The recent Post Office trial (previously mentioned on Bentham’s Gaze) has made clear, if previous cases had not, that this assumption is flawed. After all, computers and the software they run are never perfect.

This blog post discusses a recent invited paper published in the Digital Evidence and Electronic Signature Law Review titled The Law Commission presumption concerning the dependability of computer evidence. The authors of the paper, collectively referred to as LLTT, are Peter Bernard Ladkin, Bev Littlewood, Harold Thimbleby and Martyn Thomas.

LLTT examine the basis for the presumption that a computer operated correctly unless there is explicit evidence to the contrary. They explain why the Law Commission’s belief in Colin Tapper’s statement in 1991 that “most computer error is either immediately detectable or results from error in the data entered into the machine” is flawed. Not only can computers be assumed to have bugs (including undiscovered bugs) but the occurrence of a bug may not be noticeable.  ... "