[12-Mar-15]
DECENTRALIZED BLOCKCHAIN TECHNOLOGY
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The advent of Lex Cryptographia may force us to reevaluate the interaction between these regulatory levers. One of the key consequences of the blockchain could be a rapid expansion of what Lawrence Lessig referred to as “architecture”—the code, hardware, and structures that constrain how we behave182—or at a minimum a redefinition of how laws and regulations are designed, implemented, and enforced Laws fulfill a variety of different roles: they establish the rights that individuals can invoke against each other or their own governments; they embody threats of punishment and coercion in order to maintain social order, punishing bad actors and incentivizing good behavior; they represent societal values and outline the structures of governments, organizations, and markets.183 As set forth above, through the deployment of increasingly complex systems of smart contracts and decentralized organizations, the technology can be used to establish rules and structures for organizations, formal entities, and potentially even governmental bodies. If designed to capture human input, the technology can be used to reflect community values and social norms, automatically enforced through self-executing code. Smart contracts may even re-write or bypass some of the most basic tenets of property law, effectively turning property or even constitutional rights into a subset of contract law. Judicial enforcement of law could also be displaced by blockchain technology. Smart contracts can be made to rely on a certain degree of human judgment at any point during the contract’s execution. For instance, in order to determine whether or not certain contractual conditions have been met, contractual conditions could be made dependent on the judgment of one or more external parties (so-called “Oracles”).184 Of course, one of these parties could be the judiciary, but it could also be a panel of independent arbitrators, or a jury summoned from around the Internet, selected and paid based on their track record of deciding earlier disputes.
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LESSIG, supra note 176, at 24 (“Important rules are imposed, not through social sanctions, and not by the state, but by the very architecture of the particular space. A rule is defined, not through a statute, but through the code that governs the space.”). 183 Id. at 340. 184 See Contracts, THE BITCOIN FOUNDATION WIKI, https://en.bitcoin.it/wiki/Contracts (last accessed Mar. 1, 2015) (outlining the technical specifications for oracles); Vitalik Buterin, Ethereum and Oracles, ETHEREUM BLOG (July 2014), https://blog.ethereum.org/2014/07/22/ethereum-and-oracles/ (outlining how smart contracts can rely on inputs from third-party data sources).