ARTICLE 19 has issued a warning about the promotion of blockchain technology as a solution to censorship. In a report published today, the freedom of expression organisation identifies some of the risks that arise from the use of blockchain technology. It also identifies steps that states, public organisations and tech companies should take to ensure that human rights are protected when this technology is used.
Areas of law covered include:
1 Government attitude and definition
2 Virtual currency regulation
3 Sales regulation
5 Money transmission laws and anti-money laundering requirements
6 Promotion and testing
7 Ownership and licensing requirements
9 Border restrictions and declaration
10 Reporting requirements
11 Estate planning and testamentary succession
The GLI to: Blockchain & Cryptocurrency Regulation 2019 covers government attitude and definition, cryptocurrency regulation, sales regulation, taxation, money transmission laws and anti-money laundering requirements, promotion and testing, ownership and licensing requirements, mining, border restrictions and more
This article presents the top ten obstacles towards the adoption of distributed ledgers, ranging from identifying the right ledger to use for the right use case to developing scalable consensus protocols that provide some meaningful notion of public verifiability.
AbstractEmerging as a comprehensive and aggressive governance scheme in China, the “Social Credit System” (SCS) seeks to promote the norms of “trust” in the Chinese society by rewarding behavior that is considered “trust-keeping” and punishing those considered “trust-breaking.” This Article closely examines the evolving SCS regime and corrects myths and misunderstandings popularized in the international media. We identify four key mechanisms of the SCS, i.e., information gathering, information sharing, labeling, and joint sanctions, and highlight their unique characteristics as well as normative implications. In our view, the new governance mode underlying the SCS — what we call the “rule of trust” — relies on the fuzzy notion of “trust” and wide-ranging arbitrary and disproportionate punishments. It derogates from the notion of “governing the country in accordance with the law” enshrined in China’s Constitution.This Article contributes to legal scholarship by offering a distinctive critique of the perils of China’s SCS in terms of the party-state’s tightening social control and human rights violations. Further, we critically assess how the Chinese government uses information and communication technologies to facilitate data-gathering and data-sharing in the SCS with few meaningful legal constraints. The unbounded and uncertain notion of “trust” and the unrestrained employment of technology are a dangerous combination in the context of governance. We conclude with a caution that with considerable sophistication, the Chinese government is preparing a much more sweeping version of SCS reinforced by artificial intelligence tools such as facial-recognition and predictive policing. Those developments will further empower the government to enhance surveillance and perpetuate authoritarianism.Keywords: Social Credit, information and communications technologies, governance, social control, human rightsSuggested Citation:
At TILTing 2019 the Lab presented a study on the legal instruments that are, as of today, applicable to blockchain-based digital assets under European law, and the relative enforcement challenges. The broader question to be tackled is whether and how regulators deal with such challenges, and what are the interests at stake. http://ipkitten.blogspot.com/2019/05/tilting-perspectives-2019-report-2.html
When Satoshi Nakamoto designed the Bitcoin protocol, he had the insight to include the notion of transaction fees. These fees incentivized miners to include transactions into blocks. But initially, Bitcoin did not have, in any meaningful sense, a fee market.A large portion of early Bitcoin transactions were completely free up until 2013 (blue in the above chart). Wallet developers eventually hard-coded tiny fixed fees into their clients, thought of as donations to miners. At first these fees defaulted to 0.1 BTC, but they were driven down as the Bitcoin price rose.
Cryptocurrencies such as bitcoin or ethereum are gaining ground not only as alternative modes of payment, but also as platforms for financial innovation, particularly through token sales (ICOs). All of these ventures are based on decentralized, permissionless blockchain technology whose distinguishing characteristics are their openness to, and the formal equality of, participants. However, recent cryptocurrency crises have shown that these architectures lack robust governance frameworks and are therefore prone to patterns of re-centralization: they are informally dominated by coalitions of powerful players within the cryptocurrency ecosystem who may violate basic rules of the blockchain community without accountability or sanction.
Against this background, this paper makes two novel contributions. First, it suggests that cryptocurrency and token-based ecosystems can be fruitfully analyzed as complex systems that have been studied for decades in complexity theory and that have recently gained prominence in financial regulation, too. It applies these insights to three key case studies: the Bitcoin Hard Fork of 2013; the Ethereum hard fork of 2016, following the DAO hack; and the ongoing Bitcoin scaling debate. Second, the paper argues that complexity-induced uncertainty can be reduced, and elements of stability and order strengthened, by adapting a corporate governance framework to blockchain-based organizations: cryptocurrencies, and decentralized applications built on top of them via token sales. Most importantly, the resulting “comply or explain” approach combines transparency and accountability with the necessary flexibility that allows cryptocurrency developers to continue to experiment for the sake of innovation. Eventually, however, the coordination of these activities may necessitate the establishment of an “ICANN for blockchains”.
Keywords: blockchain; token sales; ICO; initial coin offering; governance; corporation; bitcoin; ethereum; hard fork; utility token; investment token; complexity theory; ICANN; hard fork
Blockchain, like the internet, or democracy, or money, is many overlapping things. It is a decentralized record of cryptocurrency transactions. It is a peer-to-peer network of computers. It is an immutable, add-on-only database. What gets confusing is the way in which these overlapping functions override one definition or explanation of blockchain, only to replace it with an altogether different one. The conceptual overlaps are like glass lenses dropped on top of one another, scratching each other’s surface and confusing each other’s focal dimensions.This guide takes apart the stack of these conceptual lenses and addresses them one by one through the reconstruction of the basic elements of blockchain technology. The first section of this report gives a short history of blockchain, then describes its main functionality, distinguishing between private and public blockchains. Next, the guide breaks down the components and inner workings of a block and the blockchain.The following section focuses on blockchain’s journalistic applications, specifically by differentiating between targeted solutions that use blockchain to store important metadata journalists and media companies use on a daily basis, and hybrid solutions that include targeted solutions but introduce cryptocurrency, therein changing the journalistic business model altogether. Finally, the report speculates on the proliferation of what are known as Proof-of-Stake blockchain models, the spread of “smart contracts,” and the potential of enterprise-level and government-deployed blockchains, all in relation to what these mean to newsrooms and the work of reporters.Key findingsFor media organizations, the use cases of blockchain can be grouped into three key areas: Auditable (and officially verifiable) database solutions for editorial and advertising Cryptocurrency-based business models Access to public data secured in blockchain-based file systems
The recent financial crisis and, especially, anti-austerity policies, reflects and, at the same time, contribute to a crisis of representative democracy. In this article, I discuss which different conceptions of trust (and relations to democracy) have been debated in the social sciences, and in public debates in recent time. The financial crisis has in fact stimulated a hot debate on “whose trust” is relevant for “whose democracy”. After locating the role of trust in democratic theory, I continue with some illustrations of a declining political trust in Europe, coming from my own research on social movements, but also of the emergence, in theory and practices, of other conceptions of democracy and democratic spaces, where critical trust develops. Indignados’ movements in Spain and Greece as well as the Occupying Wall Street protest in the US are just the most visible reaction of a widespread dissatisfaction with the declining quality of democratic regimes. They testify for the declining legitimacy of traditional conceptions of democracy, as well as for the declining trust in representative institutions. At the same time, however, these movements conceptualize and practice different democratic models that emphasize participation over delegation and deliberation over majority voting. In doing this, they present a potential for reconstructing social and political trust from below.
By consensus, smart contracts are a revolution in private ordering: they offer guaranteed enforcement, independent of the whims of territorial governments; efficient formation and interpretation; immunity from external interference; and complete deference to the parties’ wishes. Each of these claims is a myth. While smart contracts present themselves as natural and neutral, they are in fact deeply politicized. The Legal Realists tore down the foundations of smart contracts almost a century ago. Advocates for them have not solved the problems of the past—they have forgotten them.This Article offers a new critique of the optimism about smart contracts and desirability of securing mutual agreements by code rather than law. More specifically, this Article takes aim at the assertion that smart contracts can, and should, provide an alternative to traditional contract law. It contends that advocates for smart contracts rely reflexively on deeply contested assumptions from Lochner-era legal thought, including a political commitment to “freedom of contract,” insistence on a division between “public” and “private” spheres, and a minimalist view of the state’s role in managing private law systems of contract and property. More specifically, these assumptions cause smart contract partisans to fundamentally underestimate the role of the state in maintaining a functioning private law regime. This failure to recognize the inevitable extent of state intervention in private law means that smart contracts will create novel distributions of wealth and power that are normatively suspect.Furthermore, this Article draws upon two foundational moments in Internet law—early hopes for a realm beyond territorial governance, and attempts to override copyright law through technology—to demonstrate the errors that advocates and scholars alike commit based on the evanescent technology promise of this new method. Finally, this Article demonstrates that, far from realizing a utilitarian ideal of efficiency, smart contracts are constructed without democratic oversight and governance, which are essential for a legitimate system of private law.Keywords: contracts, legal theory, private law, private law theory, Lochner, smart contracts, law and technology, blockchain, Legal Realism, private order