This short essay reflects on some of the potential implications of automated enforcement via distributed ledger systems (including blockchain) to ensure the security of transactions for ‘freedom under law’ and the social foundations upon which the rule of law in modern legal orders is grounded.Keywords: blockchain, distributed ledgers, rule of law, individual liberty, automation, law enforcement, governanceJEL Classification: K20, K40, K42Suggested Citation:Yeung, Karen, Block
UCL Roberts Building, Malet Place, London WC1Organised by the UCL Centre for Law, Economics and Society with the support of the Modern Law Review and UCL Public EngagementThe workshop deals with emergent economic, political and legal phenomena in the field of FinTech. It pursues two distinct goals. First, it intends to generate awareness and facilitate a better understanding of the actors, phenomena and dynamics of the new financial order. Second, it explores the political and legal implications of financial and technological innovation based on blockchain technology. These debates will constitute the basis of an edited volume that introduces practitioners and researchers to the regulatory and political challenges of blockchain technologies and its diverse uses.The Speakers include:Tomaso Aste (UCL)Iris Chiu (UCL)Georgios Dimitropoulos (Hamad Bin Khalifa University Law School)Stefan Eich (Princeton Society of Fellows)Hermann Elendner (Humboldt University of Berlin)Jonathan Greenacre (Oxford University)Rohan Grey (Modern Money Network)Philipp Hacker (EUI)Michael Jacobides (London Business School and NY Fed)Rosa María Lastra (Queen Mary University of London)Ioannis Lianos (UCL)Pietro Ortolani (Max Planck Institute Luxembourg)Giovanni Sartor (European University Institute)Alexandros Seretakis (University of Luxembourg)Paolo Tasca (UCL)Angela Walch (St. Mary’s University School of Law)Aaron J. Wright (Cardozo School of Law)Karen Yeung (King’s College London)Claus D. Zimmermann (Sidley Austin LLP)
Cryptocurrencies are portrayed as a more anonymous and less traceable method of payment than credit cards. So if you shop online and pay with Bitcoin or another cryptocurrency, how much privacy do you have? In a new paper, we show just how little.Websites including shopping sites typically have dozens of third-party trackers per site. These third parties track sensitive details of payment flows, such as the items you add to your shopping cart, and their prices, regardless of how you choose to pay. Crucially, we find that many shopping sites leak enough information about your purchase to trackers that they can link it uniquely to the payment transaction on the blockchain. From there, there are well-known ways to further link that transaction to the rest of your Bitcoin wallet addresses. You can protect yourself by using browser extensions such as Adblock Plus and uBlock Origin, and by using Bitcoin anonymity techniques like CoinJoin. These measures help, but we find that linkages are still possible.
The blockchain could be the most consequential development in information technology since the internet. Created to support the Bitcoin digital currency, the blockchain is actually something deeper: A novel solution to the age-old human problem of trust. Its potential is extraordinary. Yet without effective governance, this approach may not promote trust at all. Wholly divorced from legal enforcement, blockchain-based systems may be counterproductive or even dangerous. And they are less insulated from the law’s reach than it seems. The central question is not how to regulate blockchains, but how blockchains regulate. They may supplement, complement, or substitute for legal enforcement. Excessive or premature application of rigid legal obligations will stymie innovation and forego opportunities to leverage technology to achieve public policy objectives. Blockchain developers and legal institutions can work together. Each must recognize the unique affordances of the other system.
We offer case studies of the following decentralized publishing projects:
- Freedom Box, a system for personal publishing
- Diaspora, a federated social network
- Mastodon, a federated Twitter-like service
- Blockstack, a distributed system for online identity services
- IPFS (Interplanetary File System), a distributed storage service with a proposed mechanism to incentivize resource sharing
- Solid (Social Linked Data), a linked-data protocol that could act as a back-end for data sharing between social media networks
- Appcoins, a digital currency framework that enables users to financially participate in ownership of platforms and protocols
- Steemit, an online community that uses an appcoin to incentivize development and community participation in a social network
Cryptocurrencies are an area of heightened pecuniary, numismatic, technological, and investment interest, and yet a comprehensive understanding of their theories and foundations is still left wanting among many practitioners and stakeholders. This discussion paper synthesizes and summarizes the salient literature on cryptocurrencies with a view to advancing a more general understanding of their order and purpose.