What is a Smart Social Contract?
A Smart Social Contract (SSC) utilizes smart contract protocols to put social contracts on assets. SSCs allow an individual to place ‘constraints’ on their money by adding stipulations to the contract of the digital units they own. For example, an advocate for gun control could add a social contract to their digital currency that says ‘this exact unit of money cannot be used to buy a firearm in the next 10 years.’ There would be many potential implications to this action, but they could knowingly doing this because they believe the risk is worth the reward, and they want to influence the societies in which they participate
A Brief History of Smart Contracts
Nick Szabo first described smart contracts in 1994. The difficulty to implement smart contracts and to develop dApps on Bitcoin led to the creation of Ethereum. Creation of ERC-20 protocol, among others, has led to the proliferation of smart contract diversity and usage.
Saga is a digital stable coin that is backed by reserves, but its dollar value will be determined by the protocol of a smart contract that thoughtfully measures the supply and demand of the token. Also, within the smart contract is a mechanism to measure price volatility with respect to the relationship between money supply and reserve ratios. All of these factors will be moderated and/or tweaked to have the most economically sound issuance of the Saga currency over time. See a cool video here with the founder, Ido Sadeh Man.
Corporate Social Responsibility
There is a group focused on how to use SSCs to regulate Corporate Social Responsibility (CSR). CSR is the idea that a company can build their ethos on the promise that they will ‘give back to society.’ The level of transparency as to how and if this is actually taking place isn’t clear. For example, when Apple donates money to cancer research, where is it really going? Which exact projects is that money going towards, versus how much is just going into an administrators pocket? SSCs could revolutionize the CSR world by providing greater transparency to both the investor and the company.
Liquidity Constraints
With restrictions on how money can be used comes the idea of liquidity constraints. The more rules you put on your money, the less liquid your money will likely become. Maybe that is OK, though. Let’s use my SSC example from above — no firearms can be purchased with specified funds during the next 10 years. Now let us assume I want to buy a kayak. Well, Cabela’s likely will not take my restrictive money to buy a kayak from them, but I bet Amazon would be much more open to that idea. I have been building a business model to consult future contract makers on what liquidity restraints they would be adding to their money, given the rules they want to constrain it by.
Oracles
The examples of SSCs I have discussed likely will rely on real-world oracles. These are third party ‘miners’ who are properly incentivized to ensure real-world actions are appropriately logged on the blockchain. This is the mechanism currently being used by ‘miners’ in the Augur ecosystem who are staking REP to then report real-world outcomes of markets that have closed on Augur. Augur’s white paper is a fun read.
Conclusion
SSCs offer an avenue towards further democratization of our societies. Not only will we be able to constrain when and where our money can be used, but also how. Voting and similar mechanisms have shown to work over human history to enact change, but it is my firm belief that money speaks louder than words. Give a person the ability to vote, and they might do it. Give a person the ability to control how their money is spent, and they will fall in love with it. Diversity is a good thing, let’s enable our society to speak with our assets and see how it changes the world.
Disclaimer
I am an avid learner and user in the crypto/blockchain industry, but have no business relationships with the parties mentioned above. Opinions are my own. If you are interested in SSCs, and want to dream about them together, please reach out!