Ethereum has caused quite a buzz in the crypto world. Smart contracts and BaaS services now being offered by Microsoft have got the enthusiasts buzzing on the potential of what blockchain based services could bring.
There are however a few things that smart contracts cant do at present. Something that even eth founder has admitted to. You can argue that these might be limitations of smart contracts, but you have to remember that you dont need to use smart contracts everywhere. In some cases these might be very useful. Please understand that the technology under discussion here is quite new and can be improve and will be improved upon in time. What is to be covered here is why as a business owner or supplier a system such as a smart contract will not be used.(Again this is my opinion).
- No Legal Binding
From a sellers prospective I have to buy eth which is a token on the ethereum blockchain to put into the smart contract. This has to be valued at the same amount as the user putting in for the purchase. What that does is basically double the cost of the seller. Lets say I want to sell a candle costing $1 or Pkr 105, I have to buy eth worth Rs 1 or $1 and put it as a bond. This increases my cost and puts me at double the risk. Now as a retailer I have to not only send the item but have to put additional funds in place to back that. While in a perfect world this would make sense. Not only that if the seller just marks the item as sent and doesnt actually send it, it will put the buyer and seller funds both at risk. If the buyer decides to cheat he can simply implement that he never received the product to begin with. So from a business stand point of view my cost is doubled to operate while the rewards tend to stay pretty much same. One thing that can be used here is time bound contracts.
The smart contracts are not that smart yet, so the receiver is required to mark in a certain period of time that he/she received the proper item or not. Yes he has put equivalent amount at risk by locking that in a time bound contract but if the buyer receives the item and decides to mark that he did not receive the item or he received a bad item and wants a full refund it will put the seller at great risk. This also causes the seller short of his item and his funds are now stuck, which in-turns put the buyer at a very strong bargaining point even if the seller did everything right. This can also play bad for the seller suppose the seller sent a bad product, or didnt ship at all, now the refund is a problem since either both can lose funds without actually receiving anything.
Since no government officially supports smart contracts, they have no legal binding. This is one area where smart contracts can shine. Contracts, partnerships, verifications are all areas that smart contracts can live by. For this to be successful in today’s world, it will be required for law to accept this as legal.
These issues are highly dependent on human nature and also exist in current system. However the aspect that there are trusted third parties that can resolve the issues based on facts and figures makes smart contracts not so feasible YET.
Enter Open Bazaar:
Personally I view openbazaar as more complete system. One thing that it offers is to provide a source of income while also giving the services of escrow agents. Where neutral third parties can become moderators of trade without even knowing they are mods. The only time these mods come into play is when a dispute occurs and to solve this dispute they are paid. I believe open bazaar has the potential to replace the current smart contract visions by ethereum and many other such coins/smart contracts tokens. As it helps develop a system which with current set-ups maybe more feasible. The cost for the sellers is good, additionally even if you put contracts on open bazaar not sure if that is possible right now can be enforced my neutral third party that can act with without vested interest, with viewable facts provided by both parties. I believe right now open bazaar has the potential to be a true decentralized platform for buying and selling goods as well as services that people envision with smart contracts.