Economist Oliver Hart Joins Prysm Group to Resolve Smart Contract Issues
Nobel-prize winning economist, Oliver Hart has recently revealed that he will be working as the Senior Advisor at blockchain-based economics and governance startup, Prysm Group in an attempt to address the issue of contract incompleteness in smart contracts.
Contract incompleteness is a concept that involves the lack of discussion on relevant details within a contract. While it is unclear as to why such a phenomenon would occur, some involved parties have the tendency to leave out aspects within the terms and conditions, which eventually results in problems over time.
According to Forbes’ report, Hart has been eagerly focusing on the “fuzzy” aspects of such contracts and feels that the blockchain technology can play a significant role.
Hart has earned a reputable name for himself, as he was awarded with a Nobel prize in June of 2016, for his contribution alongside Bengt Holmstrom in their work, “residual rights control”. The award-winning concept emphasizes on “control over an agreement” in the event that things don’t go as expected.
Forbes shared the example of Ethereum breaking down into two, that is, Ethereum and Ethereum Classic, which seems to be the foundation for the need of improving smart contracts. Apparently, the noted “fuzziness” in the contract forced $60 million worth of ETH out, which was not intention in any way whatsoever.
Since the system lacked control and an authoritative figure, hacked funds that remained in the hacker’s wallet was considered Ethereum Classic (ETC), while the remainder, which consisted of individuals who wanted to return stolen tokens to its rightful owners made up Ethereum (ETH).
The Need to Dig Deeper into Smart Contracts
Hart believes that focusing on establishing contracts alone does not suffice, as “it’s also useful to think about what procedures are put in place for dealing with what isn’t there.” As the Senior Advisor, Hart will be analyzing on a “case-by-case basis” and will be evaluating communication between involved parties as well as the direction that must be taken to “resolve disputes”.
This is supposedly Hart’s first attempt at working for a blockchain startup, however, his specialization in “contract incompleteness” and his hands-on experience dealing with the likes of the Department of Justice and Uber, have given him the strength to consider working for Prysm Group.
Co-Founder of Prysm Group Has Two Particular Tasks for Hart
Co-Founder, Cathy Barrera has offered two breakdowns as to how Hart should handle agreements. The first involves ways in which miners can be rewarded while the latter will focus on the creation of applications on the blockchain.
Barrera, who previously studied under Hart, explicitly shared, “depending on the context that you’re trying to apply blockchain, the smart contracts can be designed in a more targeted way […] Or they might be more difficult to design, and you have to incorporate more variables to try to get that specific behavior that the participant is engaging in.”
Hart will be working alongside Microsoft’s former Chief Economist, Preston McAfee who specializes in bringing together firms and the use of technology.
McAfee shared with Forbes that, “in any situation where a public ledger with nuanced permissioning is valuable, blockchain can be superior alternative to a trusted third party […] Or even a complement to a trusted third party.”
Hart believes that incentives are essential for blockchain technology, adding that “governance, how these things are organized” will also play a strong role.
Limitations to Moving Contracts on Blockchain
Lawyer, Preston Byrne believes that moving contracts on blockchain can help to “eliminate overhead costs”, and has the opportunity to exceed traditional, paper contracts. However, he thinks that there are limitations as to how far such storage of contracts would reach. In particular, he said:
“I don’t think moving contracts to a chain will reduce disputes, it will simply help to get a mathematically-certain set of facts, which will either be used to automate a business process or to prove a chain of events with a high degree of certainty in the event of a later dispute.”
Close-Mindedness Associated with Successful Economists?
We’ve all heard of economist, Paul Krugman who has been continuously shutting down the likes of bitcoin and its associated technology – to the point where the proclaimed expert sees the giant as creating a setback in how far traditional systems have come. Others including Joseph Stiglitz and Robert Shiller have also held skeptical views on the matters, which makes many wonder what Hart believes.
This being said, it has been revealed that Hart himself also shares some doubt in the technology, however, unlike many who combine blockchain and cryptocurrency together, the present, Senior Advisor prefers to view them as two separate concepts. He honestly shared that “like many economists I’m a bit skeptical, to say the least […] to the extent that I think blockchain and bitcoin can be separated, I think I’m more enthusiastic about blockchain.”
As for Hart’s strategy moving onwards, he will not only focus on incentives, but also ensuring that a relationship is built “with the other person.”