Tracing bitcoins has long been easy in theory: The blockchain’s public record allows anyone to follow the trail of coins from one address to another as they’re spent or stolen, though not always to identify who controls those address. But that tracing becomes far dicier when Bitcoin users put their coins through a “mix” or “laundry” service—sometimes in the form of an unregulated exchange—that jumbles up many people’s coins at a single address, and then returns them to confuse anyone trying to trace their path. In other cases, users bundle together their transactions through a process called Coinjoin that gives each spender and recipient deniability about where their money came from or ended up.For companies like Chainanalyis, Coinfirm, and Ciphertrace that offer to trace stolen or “tainted” coins—and who generally don’t make their methodology public— that leaves limited options. They can either treat any coin that comes out of a mix that includes tainted coins as fully “dirty,” or more reasonably, average out the dirt among all the resulting coins; put one stolen coin into a mix address with nine legit ones, and they’re all 10 percent tainted. Some academics have called this the “haircut” method.But Anderson argues that haircut tracing quickly leads to enormous parts of the blockchain being a little bit tainted, with no clear answers about how to treat an infinitesimally unclean coin. Often the fraction can be so small it has to be rounded up, leading to artificial increases in the total “taint” recorded.But when Anderson mentioned this problem in January to David Fox, a professor of law at Edinburgh Law School, Fox pointed out that British law already provides a solution: An 1816 precedent known as Clayton’s Case, which dealt with who should be paid back from the remaining funds of a bankrupted financial firm. The answer, according to the presiding judge, was that whoever put their money in first should take it out first. The resulting first-in-first-out—or FIFO—rule became the standard way under British law to identify whose money is whose in mixed-up assets, whether to resolve debts or reclaim stolen property.
This paper examines data protection on blockchains and other forms of distributed ledger technology (‘DLT’). Transactional data stored on a blockchain, whether in plain text, encrypted form or after having undergone a hashing process, constitutes personal data for the purposes of the GDPR. Public keys equally qualify as personal data as a matter of EU data protection law. We examine the consequences flowing from that state of affairs and suggest that in interpreting the GDPR with respect to blockchains, fundamental rights protection and the promotion of innovation, two normative objectives of the European legal order, must be reconciled. This is even more so given that, where designed appropriately, distributed ledgers have the potential to further the GDPR’s objective of data sovereignty.
As cryptocurrencies gain popularity, the issue of how to regulate them becomes more pressing. The attractiveness of cryptocurrencies is due in part to their decentralized, peer-to-peer structure. This makes them an alternative to national currencies which are controlled by central banks. Given that these cryptocurrencies are already replacing some of the “regular” national currencies and financial products, the question then arises: should they be regulated? And if so, how? This paper draws the legal distinction between cryptocurrencies which are in fact currency and those which are securities disguised as currency. It further suggests that in cases where a token is indeed a security, regular securities regulation should apply. In all other cases anti-fraud measures should be in place in order to protect investors. Further regulation should only be put in place if the cryptocurrency starts increasing systemic risk in the general financial system.
NEW DELHI (Reuters) – India will move to stamp out use of cryptocurrencies, which it considers illegal, Finance Minister Arun Jaitley said on Thursday, launching a no-holds-barred attack on virtual currencies such as Bitcoin.
The Business Law and Economics Symposium, the Blockchain &
Society Policy Research Lab at IViR, and the Center for Law & Economics at ETH Zurich presents the Blockchain, Law & Policy workshop.
Date: February 12th, 2018 (8:30-17:15)
Location: IViR Documentation Room, Faculty of Law, University of Amsterdam, Roeterseilandcampus – building A, Nieuwe Achtergracht 166, Amsterdam
9:00-9:15 Opening statement by Stefan Bechtold & Giuseppe Dari-Mattiacci
9:15-10:15 Luis Garicano (LSE): The Governance of Blockchain: Hard Forks, Cryptocurrency and Norms
10:15-10:45 COFFEE BREAK
10:45-11:45 Davide Grossi (Groningen): A Social Choice-Theoretic Analysis of the Stellar Consensus Protocol
11:45-12:45 Stefan Bechtold (ETH Zurich) & Giuseppe Dari-Mattiacci (UvA): Property Without Law: Personalized Property Rights Through New Contracting Technologies
12:45-14:00 LUNCH (served in the conference room)
14:00-14;45 Joris Cramwinckel (Ortec Finance, Rotterdam): Blockchain Technology and Smart Contracts: Potential and Limits, with an Application to Pensions
14:45-15:45 Hermann Elendner (HU Berlin): Liquidity and Resiliency of Crypto-currency Markets
15:45:16:15 COFFEE BREAK
16:15-17:15 Balazs Bodo, Daniel Gervais and Joao Quintais (Amsterdam): Who Needs Copyright When We Have Blockchain and Smart Contracts?
Book-Smart, Not Street-Smart: Blockchain-Based Smart Contracts and The Social Workings of Law
This paper critiques blockchain-based “smart contracts,” which aim to automatically and securely execute obligations without reliance on a centralized enforcement authority. Though smart contracts do have some features that might serve the goals of social justice and fairness, I suggest that they are based on a thin conception of what law does, and how it does it. Smart contracts focus on the technical form of contract to the exclusion of the social contexts within which contracts operate, and the complex ways in which people use them. In the real world, contractual obligations are enforced through all kinds of social mechanisms other than formal adjudication—and contracts serve many functions that are not explicitly legal in nature, or even designed to be formally enforced. I describe three categories of contracting practices in which people engage (the inclusion of facially unenforceable terms, the inclusion of purposefully underspecified terms, and willful nonenforcement of enforceable terms) to illustrate how contracts actually “work.” The technology of smart contracts neglects the fact that people use contracts as social resources to manage their relations. The inflexibility that they introduce, by design, might short-circuit a number of social uses to which law is routinely put. Therefore, I suggest that attention to the social and relational contexts of contracting are essential considerations for the discussion, development, and deployment of smart contracts.