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
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.
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)
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.
Ryan Bubb joined the NYU School of Law faculty in 2010. He was formerly a senior researcher for the Financial Crisis Inquiry Commission and a policy analyst at the Office of Information and Regulatory Affairs at the Office of Management and Budget. He earned a JD from Yale Law School and a PhD in political economy and government from Harvard University. Bubb’s research focuses on regulatory policy, financial institutions, business organizations, and law and economics.
The anarcho-capitalist incentive method is a bypass of societal payment systems. It allows bitcoin billionaires to make a fortune with crime and speculation on crime, or alternatively speculation on speculation on crime, without ever being traced (except maybe by the NSA), nor taxed.
Let me explain this reasoning in more detail, so you can let me know if any of it is wrong. All of the societally harmless uses of Bitcoin and Ethereum can be implemented in a safer manner using TALER, without bypassing the tax system which is, as flawed as it may be, the only instrument society has to redistribute from the wealthy to the poor. Without such a redistribution, the capitalist architecture collapses and humanity’s ability to exist on the planet dies with it. If everyone just cares about themselves, a future comes when the rich get chased by pitchforks while global challenges such as pollution and climate change would not be tackled by anyone.