There's an entire genre of stories about deals with the devil or supernatural items ("Monkey's Paw"), where the deal is binding - and the punishment is getting exactly what you asked for.

There's also a famous play by Shakespeare about whether it's reasonable to hold someone to the letter of a contract...

It seems to me that the set of useful contracts you can write that are completely unambiguous is very small.

Consider an employment contract on a blockchain.

There doesn’t seem to be any way to do this without relying extensively on oracles that reflect fuzzy human judgement about what the terms of the contract really mean, let alone whether certain actions took place, let alone whether those met or violated the terms.

Oracles seem to be a good solution. A lot of the time people just need some boilerplate to conduct a transaction and will need to refer back to the contract in the case of a dispute only. Contract as code allows us to naturally standardise on boilerplate for common cases whilst allowing for specialised code in specialised cases.

The 1% of contracts that are disputed could be conditionally successively escalated until human arbitration, settlement or a trial is reached. Oracle reports and contract executes accordingly.

Fair point, although it’s hard to see what value the smart contract is really adding in this case. The record keeping (what everyone decided) is better I guess. I’m not sure that there’s any (boilerplate) part of a standard employee agreement that could be evaluated on-chain.

Somewhat tangential objection, but AFAIK, the only “action” a smart contract can take is, effectively, to disburse funds.

It can’t force anyone to do anything, although it can pay people to do stuff if you fund it enough. You probably need more oracles and/or subcontracts to make sure they really do it though.

Anyway, doesn’t this mean we need to lock up enough funds to cover all eventualities ahead of time, for all contingencies of the contract? It seems like that could be millions of dollars. What if I lose my arm in a bandsaw and the company was directly responsible?

> Fair point, although it’s hard to see what value the smart contract is really adding in this case.

In the 99% case, it allows us to transact whilst protected by contracts which pay out later as you mentioned.

> I’m not sure that there’s any (boilerplate) part of a standard employee agreement that could be evaluated on-chain.

"Employee was paid on time and in full" comes to mind.

> Anyway, doesn’t this mean we need to lock up enough funds to cover all eventualities ahead of time, for all contingencies of the contract? It seems like that could be millions of dollars. What if I lose my arm in a bandsaw and the company was directly responsible?

An interesting one. Presumably one would not sign a smart employment contract that was not tied to some kind of insurance token which covered employee claims?

Well, anything that relies on goods/services in the real world is going to be difficult by virtue of the fact that nodes aren't able to determine whether a good/service was really delivered. You could, however, get a rudimentary employment contract by keeping payments in an escrow account until the end of the month (or your employment is terminated early). This would prevent wage theft by the employer while also allowing an employee not to get paid for not doing their job, though it couldn't handle more complex clauses like penalizing violation of an NDA.

However, there are plenty of cases where the employment contract can consist of creating a digital object that solves a problem in NP (for instance, code that passes a randomized test suite), in which case the employment contract can exist completely on the blockchain.

Aside from the entertainment value of fixed-in-stone contracts, there is also the issue (touched on in the article) that the result would slow the economy drastically.

That didn't work out so well for Shylock.