Randomness invalidates criminal smart contracts

A smart contract enforces specific performance on anonymous users without centralization. It facilitates payment equity in commerce by providing irreversible transactions. Smart contracts are also used for illegal activities such as money laundering and ransomware. Such contracts include criminal smart contracts (CSCs), proposed in CCS’16, that can be efficiently implemented in existing scripting languages. This aggravates concerns about the dangers of CSCs. However, PublicLeaks, a CSC for leaking private data, is conditionally implemented as it is influenced by various factors. For example, PublicLeaks does not necessarily reach a desirable terminal state for a criminal leaking private information, and other possible terminal states may invalidate the CSC. In this study, we propose a CSC based on PublicLeaks by formulating random factors such as the donation ratio. Our contract forks into five terminal states, including a unique one in PublicLeaks due to randomness. We simulated the maximal probabilities of these terminal states and found that the desirable terminal state in PublicLeaks is reachable with low probabilities (lower than 25%). The terminal state where the criminal fails to leak private information is attained with relatively high probabilities (over 65%). Therefore, our simulations show that CSCs are not always as powerful as expected, and the risk posed by them can be mitigated

Governing the Interface Between Natural and Formal Language in Smart Contracts

Much of the confusion about the proper regulation of smart contracts stems from the fact that both code and law are expressed in language. Natural (human) and formal (computer) languages are profoundly different, however. Natural language in the form of a true legal contract expresses human meaning and expectation. Code simply acts, and when code acts contrary to the understanding of the parties to a contract, courts must have a theoretical and legal basis in order to intervene--which this Article provides. Present scholarship on the governance of smart contracts centers on logistical problems relating to the effects of automation on operation and execution, most notably problems of inflexibility and lack of enforcement discretion. However, automatic execution is nothing new in contract law. Rather, it is the legal interface between contract law and code that must catch and hold our attention. We focus on the point where the ‘natural language’ of contract law crosses over into the ‘formal language’ of computer code. Natural language contract terms are made accessible to a human and receive some sort of confirmation to establish the contractual magic, a set of bespoke legal rules between two parties encapsulated in some document or through behavior that makes the intention of the parties unmistakable. The formal language program portion of a smart contract executes, sometimes in accordance with these expectations, sometimes not. This Article asserts that human expectations determine the legal obligations of a contract, and that code merely executes it. It then explores the legal bases and ramifications of this human-centered law of smart contracting

Consecuencias penales y tributarias a la modificación fraudulenta de los smart contracts. Especial referencia al caso The DAO

The modification of the smart contracts –«contracts» that are formalized in the code of a blockchain– supposes that, due to their mechanics of operation in the blockchain that configures them as «self-executing», in the event that a fraudulent alteration thereof that derives a transfer of assets, this modification is difficult to correct, although it is detectable for the parties. The paradigmatic example was The DAO conflict, in which one part of the network members accepted fraud for not violating the principles of non-intervention and modification of the code. The objective of this analysis is the determination of the possible legal consequences that arise around this type of situation.La modificación de los denominados smart contracts –«contratos» que se formalizan en el código de un blockchain– supone que, por su mecánica de funcionamiento en la cadena de bloques que los configura como «autoejecutables», en el caso de que se produzca una alteración fraudulenta de los mismos que derive una transmisión patrimonial, esta modificación sea difícilmente corregible, aunque sea detectable para las partes. El ejemplo paradigmático fue el conflicto de The DAO, en la que una parte los miembros de la red aceptaba el fraude por no infringir los principios de no intervención y modificación del código. El objetivo de este análisis es la determinación de las posibles consecuencias jurídicas que nacen en torno a este tipo de situaciones