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
Research Notes
Code is Law and the Quest for Justice | Ethereum Classic
People keep repeating the phrase “Code is Law” without clear understanding of what it’s supposed to mean. Some deliberately misinterpret it to mean that “ETC supports thieves and crooks” and similar nonsense. Let’s get some things straight. Code is law on the blockchain. In the sense, all executions and transactions are final and immutable. So, from our (Ethereum Classic supporters) standpoint by pushing the DAO hard fork EF broke the “law” in the sense that they imposed an invalid transaction state on the blockchain.This has nothing to do with contractual or criminal law, or other legal considerations. Stating that “code is law” is similar to acknowledging the laws of physics. The law of gravity says that when I push a piano out of a window, the piano will fall downwards. It does not mean that it’s necessarily “legal” for me to push that piano out of that window. And if I do so and the falling piano kills some passer-by, it would be insane for me to argue before the judge that I shouldn’t go to jail because I broke no laws of physics.On Ethereum blockchain, a Turing complete code operates with a very real and tangible value. Because of this, there is always a potential for mistakes and unintended outcomes. There will always be transactions and code execution results that someone is not happy about. There will be conflicts and disagreements, there will be code vulnerabilities and exploits, there will be scams and thefts, there will be all kinds of ugly things.Who should deal with all these conflicts? Let’s imagine for a moment that we decided ‘the blockchain community’ will take it upon itself to deal with it all.Who is going to make a call which on-chain code execution is “theft,” and which is not? Is this ponzi contract scammy enough to shut it down? Do we tolerate this dark market while it sells fake ids and marijuana, but draw the line once it starts to dabble in child porn and cocaine?Should there be a democratic voting system (moot court) to decide on these cases, changing the blockchain state based on such decisions? Should there be a committee that decides what smart contract behavior is ‘unacceptable’ and what transactions are ‘illegal’ enough to justify a hard fork?What may serve as a basis for such decisions? Where is the applicable body of law? Who is going to be the police, the judge and the jury? What is a due process? What is the appeal procedure? A lot of questions, and no good answers to these questions, when it comes to “blockchain justice”.But it’s even worse if there is no system at all. If ‘the blockchain community’ just makes a special exception in regards to a ‘special case’, choosing to administer justice ‘just this one time’. What is so special about this case, one may ask? Why does this theft get a special treatment, and the other thefts don’t? Who do you need to know, whose buddy do you need to be to get such exceptional treatment? How are you going to defend such preferential treatment against legal cases citing a precedent and subpoenas demanding reversal of specific transactions?It’s this whole snake’s nest that could be avoided by refusing to be dragged into conflict resolution and quest for justice as related to smart contract execution. And it only requires sticking to principles of blockchain neutrality and immutability.So, code is law on the blockchain. All executions are final, all transactions are immutable. For everything else, there is a time-tested way to adjudicate legal disputes and carry out the administration of justice. It’s called legal system.
Source: Code is Law and the Quest for Justice | Ethereum Classic
Blockchain and the Constitution of a New Financial Order: Legal and Political Challenges
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)
Source: Blockchain and the Constitution of a New Financial Order: Legal and Political Challenges
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When the cookie meets the blockchain
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.
Trust, But Verify: Why the Blockchain Needs the Law by Kevin D. Werbach :: SSRN
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.
Source: Trust, But Verify: Why the Blockchain Needs the Law by Kevin D. Werbach :: SSRN
BACK TO THE FUTURE: THE DECENTRALIZED WEB
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: A Brief Thematic Review by Usman W. Chohan :: SSRN
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.
Source: Cryptocurrencies: A Brief Thematic Review by Usman W. Chohan :: SSRN
Blockcerts: Using blokchain for identity management is (mostly) ridiculous // Jaap-Henk Hoepman
I was invited to speak at the Bitcoin in Education (BCINED) conference held in Groningen, September 5, 2017. Topic of my presentation: “Blockchain & Identity: Why you should avoid the blockchain like the plague“. While listening to the morning keynotes, praising the many benefits of using blockchains in education and for managing (academic) credentials in particular, I realised my message might provide a very much needed counterpoint. The short summary: using blokchain for identity management is ridiculous.
Source: Blockcerts: Using blokchain for identity management is (mostly) ridiculous // Jaap-Henk Hoepman
BlockSci: a platform for blockchain science and exploration
The Bitcoin blockchain — currently 140GB and growing — contains a massive amount of data that can give us insights into the Bitcoin ecosystem, including how users, businesses, and miners operate. Today we’re announcing BlockSci, an open-source software tool that enables fast and expressive analysis of Bitcoin’s and many other blockchains, and an accompanying working paper that explains its design and applications. Our Jupyter notebook demonstrates some of BlockSci’s capabilities.Current tools for blockchain analysis depend on general-purpose databases that have full support for transactions. But that’s unnecessary for blockchain analysis where the data structures are append-only. We take advantage of this observation in the design of our custom in-memory blockchain database as well as an analysis library.BlockSci’s core infrastructure is written in C++ and optimized for speed. (For example, traversing every transaction input and output on the Bitcoin blockchain takes only 10.3 seconds on our r4.2xlarge EC2 machine.) To make analysis more convenient, we provide Python bindings and a Jupyter notebook interface. This interface is slower, but is ideal for exploratory analyses and allows users to quickly iterate when developing new queries.The code below shows the convenience of traversing the blockchain using straightforward Python idioms, built-in currency conversion using historical exchange-rate data, and the use of pandas DataFrames for analysis and visualization..fees = [sum(block.fees) for block in chain.range(‘2017’)]times = [block.time for block in chain.range(‘2017’)]converter = blocksci.CurrencyConverter()df = pandas.DataFrame({“Fee”:fees}, index=times)df = converter.satoshi_to_currency_df(df, chain)When plotted, it results in the following graph showing the average transaction fee per block:BlockSci uses a custom data format; it comes with a parser that generates this data from the serialized blockchain format recorded by cryptocurrency nodes such as bitcoind. The parser supports incremental updates when new blocks are received, and making it easy to stay up to date with the latest version of the blockchain. We’ve used BlockSci to analyze Bitcoin, Bitcoin Cash, Litecoin, Namecoin, Dash, and ZCash; many other cryptocurrencies make no changes to the blockchain format, and so should be supported with no changes to BlockSci.In our working paper, we present four analyses that show BlockSci’s usefulness for answering research questions. We show how multisignatures unfortunately weaken privacy and confidentiality; we apply the cluster intersection attack to Dash, a privacy-focused altcoin; we analyze inefficiencies in the usage of block space; and we present improved methods for estimating of how often coins change possession as opposed to just being shuffled around.Here’s an illustrative example. Exploratory graph analysis using BlockSci allowed us to discover a behavioral pattern in the usage of multisignatures that weakens security. Multisignatures are a security-enhancing mechanism that distribute control of an address over a number of different public keys. Surprisingly, we found that users often negate this security by moving their funds from a multisig address to a regular address and then back again after a period of a few hours to days. We think this happens when users are changing the access control policy on their wallet, although it is unclear why they transfer their funds to a regular address in the interim, and not directly to the new multisig address. This pattern of behavior has led over $12 million dollars to be left insecure over the course of over 22,000 transactions. What users may not appreciate is that the temporary weakening of security is advertised to potential attackers on the blockchain.There’s far more to explore on public blockchains. BlockSci is publicly available now, and we hope you’ll find it useful. It is easy to get started using the EC2 image we’ve released, which includes the Bitcoin blockchain data in addition to the tool. BlockSci is open-source, and we welcome contributions. This is an alpha release; we’re continuing to improve it and the interface may change a bit in future releases. We look forward to working with the community and to hearing about other creative uses of the data and the to
Source: BlockSci: a platform for blockchain science and exploration