R3 Should Have Used a Smart Contract
Don’t you hate it when you become a billion-dollar company through no effort of your own, only to have some asshole take it away from you?
Such is the plight of R3.
A year ago, Ripple gave R3 an out-of-the-money call option to buy 5 billion XRPs at $0.0085 apiece. Now that the price of XRP has gone up by 4000%, the option is worth a billion dollars and represents R3’s single most valuable asset. Ripple wants to renege, and R3 is understandably annoyed.
You guys!! This is exactly the type of thing that should have been done with a smart contract.
R3 is a busy consortium, so maybe they forgot what line of work they were in. A quick reminder: R3 created their own distributed ledger platform to execute smart contracts in a trust-minimized manner. It’s called Corda, and it already has a contract template to represent blockchain token assets.
People will be quick to point out that the Ripple agreement can’t simply be a smart contract, because there are weird edge cases and unforeseen circumstances that can’t be accommodated with code. For example, Ripple claims that they were misled in the agreement, because they thought they would benefit from R3’s banking partnerships. “R3 turns out to be useless” is not a state that can be codified by a smart contract.
That’s fine: Nobel Prize laureate Oliver Hart has a whole body of work about how to deal with incomplete contracts. The solution is to pre-allocate decision rights. In a Corda smart contract, it might look something like this:...MORE
