ETF.com: What kind of input questions could a smart oracle handle?
Wolfram: "What was the weather yesterday?" But there are also things like "Did this IOT [internet of things] device record this particular measurement?" Or "Was that plant watered yesterday based on our soil moisture measurement device?" And so on.
ETF.com: Let's get back to the financial markets. Do computable contracts have trading applications, beyond just improving the behind-the-scenes for futures markets?
Wolfram: In terms of financial instruments, once you’ve made sort of the execution of a thing computational, you can take buckets of those things and start to have markets of them, which is what happened in the case of options.
ETF.com: Is cost the limiting factor, though?
Wolfram: Well, take weather insurance. You buy a $100 contract for weather insurance. If you actually want a global blockchain for that, if you really want tens of thousands of people to stick your data on their computers, it's not going to be cheap. And it's also pointless, because nobody cares. Just have some cloud-based provider transact those things, right?
The other end of the spectrum, though, is people doing $10 million transactions. These people are, realistically, not going to want to put their trust into the trust-less world of the blockchain, so to speak. They're going to want the legal system and insurance and all those kinds of things around their contracts.
ETF.com: So where is the middle ground?
Wolfram: I don't know. But I do think there is a middle ground. Maybe it will be permissioned blockchains within individual industries or within groups of companies.
ETF.com: What’s a "permissioned blockchain"?
Wolfram: When you talk about bitcoin or Ethereum or something, those are public blockchains that anybody in the world can connect to and put things on. But if you have a consortium of companies that are all, say, involved in the same particular supply chain, then you can have a blockchain those companies can put things onto. It's a private, not public, blockchain.
And if you do something with, say, 30 companies all contributing to this one blockchain, they can all have a copy of it. It's a really pretty decent software solution to the problem of maintaining a ledger for lots of people.
ETF.com: Seems like this could have application in, say, clearinghouses. The Depository Trust & Clearing Corporation and stock exchanges could use it to track who owns what, when and where.
Wolfram: Yes, that's a place where people are looking at this. Banks, too. But the ecosystem of computable contracts doesn't exist yet. We are kind of in this strange state, because it's not worth it to build [the ecosystem], either, if it isn't being accelerated by lots of money being in that space.
ETF.com: What sort of limitations do smart contracts introduce that don't exist in the status quo right now?
Wolfram: You lose wiggle room. Instead, it's basically, "Well, there was this piece of code we set up, and it ran, and these are the consequences." In a sense, it's more like dealing with the natural world. You can ask, "Why did the tornado turn left?" Well, ultimately it's the laws of physics that determined that. It's not like a human decided that.
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