European Review of Private Law – Kluwer Law Online

law | papers | Research Notes | smart contracts

The European Review of Private Law has a special issue on Smart contracts.

http://www.kluwerlawonline.com/toc.php?area=Journals&mode=bypub&level=5&values=Journals~~European+Review+of+Private+Law~Volume+26+%282018%29

 

ICO Issuers, Class Action Lawsuits Find Succor from US Regulator

blockchain | cryptocurrencies | law | Research Notes

Following action against Decentralized Exchange EtherDelta, last week also saw the US Securities and Exchange Commission issuing settled orders against two companies, Airfox and Paragon, for the sale of unregistered securities after raising capital through an Initial Coin Offering. The regulator may have given class action lawsuits against token issuers much needed guidance, one of which was filed against Paragon earlier this year. On the flip side, Washington has also given those who raised capital through the contentious vehicle an opportunity to make good allowing for the retroactive filing of their token as a security.

Source: Volume 2 Issue 45 – Diar

hearing | Hearings | United States Committee on Banking, Housing, and Urban Affairs

cryptocurrencies | law | opinion | papers | politics | Research Notes

THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS will meet in OPEN SESSION to conduct a hearing on “Exploring the Cryptocurrency and Blockchain Ecosystem.”  The witnesses will be Dr. Nouriel Roubini, Professor of Economics and International Business, New York University Stern School of Business; and Mr. Peter Van Valkenburgh, Director of Research, Coin Center.All hearings are webcast live and will not be available until the hearing starts. Individuals with disabilities who require an auxiliary aid or service, including closed captioning service for webcast hearings, should contact the committee clerk at 202-224-7391 at least three business days in advance of the hearing date.

Source: hearing | Hearings | United States Committee on Banking, Housing, and Urban Affairs

Blockchain Technology as an Institution of Property – Ishmaev – 2017 – Metaphilosophy – Wiley Online Library

blockchain | law | papers | Research Notes

This paper argues that the practical implementation of blockchain technology can be considered an institution of property similar to legal institutions. Invoking Penner’s theory of property and Hegel’s system of property rights, and using the example of bitcoin, it is possible to demonstrate that blockchain effectively implements all necessary and sufficient criteria for property without reliance on legal means. Blockchains eliminate the need for a third‐party authority to enforce exclusion rights, and provide a system of universal access to knowledge and discoverability about the property rights of all participants and how the system functions. The implications of these findings are that traditional property relations in society could be replaced by or supplemented with blockchain models, and implemented in new domains.

Source: Blockchain Technology as an Institution of Property – Ishmaev – 2017 – Metaphilosophy – Wiley Online Library

Cryptoeconomics: Can blockchain reinvent justice systems? | Answers On

applications | blockchain | justice | law | Research Notes

Kleros co-founder and CEO Federico Ast explores the role of blockchain, cryptoeconomics, and collective intelligence in building the future of justice.

Human communities of every era have had to solve the problem of social order. For this, they developed governance and legal systems. They did it with the technologies and systems of belief of their time.

Athenians of the Classical period believed that all citizens had the right to participate in the lawmaking process and as jurors in popular trials. They used a sophisticated piece of civic technology called kleroterion for random selection of jurors and avoiding manipulation of the system. Modern justice systems were created in the 17th and 18th centuries, at a time of consolidation of nation states.

These systems worked fine for many years, providing rule of law for industrial development and economic prosperity. But in early 21st century, they started to reach their complexity limits. The advent of the Internet and the creation of a global, digital, real time economy started to show the cracks in legal systems built in an era of paper contracts, horse transportation and national jurisdictions.

In today’s global economy, a large and increasing number of transactions are conducted online across jurisdictional boundaries. Clients from different countries hire contractors from all over the world for building software and other services. Investors from different countries participate in crowdfunding campaigns from everywhere. In their book Digital Justice (2017), experts Ethan Katsh and Orna Rabinovich-Einy estimate that disputes arise in 3 to 5% of online transactions, totaling over seven hundred million in 2015 alone.

Existing dispute resolution technologies are too slow, too expensive and too unreliable for an online real-time world. Even alternative methods like online dispute resolution (ODR) have failed to address this problem. ODR promised to bring resolution to this new type of disputes, but in the end it just streamlined existing court procedures, without really bringing an innovation.

Cars, not faster horses

Henry Ford famously said (although some people doubt the veracity of this): “If I had asked people what they wanted, they would have said faster horses.” A better justice system may not come from further streamlining existing processes but from fundamentally rethinking them from a first principles perspective.

In the last decade, we have witnessed how collective intelligence could be leveraged to produce an encyclopedia like Wikipedia, a transport system like Uber, a restaurant rating system like Yelp!, and a hotel system like Airbnb.

These companies innovated by crowdsourcing value creation. Instead of having an in-house team of restaurant critics as the Michelin Guide, Yelp! crowdsourced ratings in users.

Satoshi Nakamoto’s invention of Bitcoin (and the underlying blockchain technology) may be seen as the next step in the rise of the collaborative economy. The Bitcoin Network proved that, given the right incentives, anonymous users could cooperate in creating and updating a distributed ledger which could act as a monetary system. A nationless system, inherently global, and native to the Internet Age.

Cryptoeconomics is a new field of study that leverages cryptography, computer science and game theory to build secure distributed systems. It is the science that underlies the incentive system of open distributed ledgers. But its potential goes well beyond cryptocurrencies.

Kleros is a dispute resolution system which relies on cryptoeconomics. It uses a system of incentives based on “focal points”, a concept developed by game theorist Thomas Schelling, winner of the Nobel Prize in Economics 2005. Using a clever mechanism design, it seeks to produce a set of incentives for randomly selected users to adjudicate different types of disputes in a fast, affordable and secure way. Users who adjudicate disputes honestly will make money. Users who try to abuse the system will lose money.

Kleros does not seek to compete with governments or traditional arbitration systems, but provide a new method that will leverage the wisdom of the crowd to resolve a large number of disputes of the global digital economy for which existing methods fall short: e-commerce, crowdfunding and many types of small claims are among the early adopters.

Political institutions are the result of trying to solve the practical problems of social coordination. Human communities of all times developed the institutions better suited to their problems, their technologies and beliefs. Athenians of the Classical period built their court system on their belief of citizen participation and the technology of kleroterion for random selection. The founding fathers of the United States built American courts based on the best knowledge of the political theory of their time.

In a time of globalization and digitalization, cryptoeconomics may become the pillar for building the institutions of the Internet Age.


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This article was written by Federico Ast, co-founder and CEO of Kleros. Kleros is a current member of the Thomson Reuters Incubator, part of Thomson Reuters Labs.

Algorithmic regulation and rule of law | Mireille Hildebrandt

algorithms | law | papers | Research Notes

In this brief contribution, I distinguish between code-driven and data-driven regulation as novel instantiations of legal regulation. Before moving deeper into data-driven regulation, I explain the difference between law and regulation, and the relevance of such a difference for the rule of law. I discuss artificial legal intelligence (ALI) as a means to enable quantified legal prediction and argumentation mining which are both based on machine learning. This raises the question of whether the implementation of such technologies should count as law or as regulation, and what this means for their further development. Finally, I propose the concept of ‘agonistic machine learning’ as a means to bring data-driven regulation under the rule of law. This entails obligating developers, lawyers and those subject to the decisions of ALI to re-introduce adversarial interrogation at the level of its computational architecture.

Source: Algorithmic regulation and rule of law | Philosophical Transactions of the Royal Society of London A: Mathematical, Physical and Engineering Sciences

Opinion | What the Russia Hack Indictments Reveal About Bitcoin – The New York Times

bitcoin | law | opinion | Research Notes

Ironically, Bitcoin’s success depends on the same critical factor as a state-issued “fiat” currency: the collective trust of its community of users. Their confidence in the accuracy of the ledger of all Bitcoin transactions is what makes the currency viable. Law-abiding citizens want efficient, reliable payments. Bitcoin’s mysterious creator, Satoshi Nakamoto, realized this. His 2008 white paper said a great deal about cutting out banks; it said nothing about evading the rule of law.

Source: Opinion | What the Russia Hack Indictments Reveal About Bitcoin – The New York Times