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I understand that blockchain is immutable and eliminates the need of middleman with smart contracts. But I think there's still chance for everyone to cheat the system like -

  1. Seller sends the asset to buyer, Buyer receives it and claims that he received the wrong asset. Though I maintain the asset and track that asset was delivered within BC, buyer can still claim that it is not what he ordered.
  2. Similarly I'm a property owner and I uploaded pics of property, receipts of my recent property upgrades. I can bribe the contractor to acknowledge that upgrades were done and make the receipts available in blockchain.

How can BC enable trust in these type of situations?

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I don't think it is possible to link physical-world activities with digital-world activities in a trustless manner. There are a few methods which could be or are used to link physical-world activities to digital-world activities:

  • mutual trust between two parties;
  • third-party arbiter in case of dispute;
  • a third-party oracle;
  • "COD" -- in-person transactions;
  • limiting damage by, for example, making micropayments for a service or good (e.g., paying for electricity by the Wh);
  • use of a tamper-resistant black box created by a trusted third-party (e.g., a machine that executes contracts at certain times); or
  • force of law (e.g., if jurisdictions recognized the transfer of assets like property titles or corporate stocks, then the real world is synchronized to the digital world).

On the other hand, in your second example, if most/all transactions are done in detail on-chain (or at least linkable to a trusted off-chain source), then you can at least provide the transaction details which include your invoice for property renovations as proof of when a renovation took place and that it was done to your property (backed up by law since, presumably, the contractor won't want to put a renovation on the books and pay taxes on something that wasn't actually paid for).

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  1. The buyer would have to go against the seller and shipping company who both possess bills of lading as proof. This is a real world 2/3 majority similar to BFT
  2. You gain absolutely nothing out of this. So you would never do this in a real world scenario. Why on earth do you think a purchaser of a property is not going to look at the property before he buys it? The fraud would be crystal clear there. The purpose here is an atomic swamp of a house sale without notaries.
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This article published in the Harvard Business Review may help you understand the history of blockchain: https://hbr.org/2017/02/a-brief-history-of-blockchain

Thank you

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