In DeFi, code is not law; code is a source of law

“Code is law” is one of those annoying phrases which is repeated a lot by folks in cryptoland who (a) don’t actually know where it comes from or (b) read the phrase literally. The phrase originates in Larry Lessig’s 2000 article of the same name and his book Code and other Laws of Cyberspace. In that essay, Lessig wrote:

Ours is the age of cyberspace. It, too, has a regulator. This regulator, too, threatens liberty. But so obsessed are we with the idea that liberty means “freedom from government” that we don’t even see the regulation in this new space. We therefore don’t see the threat to liberty that this regulation presents.

This regulator is code–the software and hardware that make cyberspace as it is. This code, or architecture, sets the terms on which life in cyberspace is experienced. It determines how easy it is to protect privacy, or how easy it is to censor speech. It determines whether access to information is general or whether information is zoned. It affects who sees what, or what is monitored. In a host of ways that one cannot begin to see unless one begins to understand the nature of this code, the code of cyberspace regulates.

Lessig did not, by this, mean blockchain code. Bitcoin would not happen for another nine years and although essays such as Nick Szabo’s Formalizing and Securing Relationships on Public Networks pre-dated Lessig, Szaboan smart contracts would be obscure curiosities for nearly two decades after first being proposed.

What is law?

The answer to this depends on who you ask. I am a strictly amateur jurisprudence scholar as I have to earn my bread by drafting technology contracts, but I have read a thing or two and accordingly have some basic thoughts on this subject which might be of interest at a dinner party if not an academic journal.

Two of the better modern theorists on the subject are H.L.A. Hart and Hans Kelsen, neither of whose works are widely taught in American law schools. Others, like Dworkin, have theories based in the legitimate use of force; given that the DeFi thesis is all about putting in place mathematical obstacles to force ($5 wrench attack excepted), those arguments are going to be less relevant when applied to the crypto ecosystem than meatspace, mainly because the amount of force required to stop crypto is, at this point, greater than any one state can presently marshal.

Hart’s theory was that there was a hypothetical rule, which he referred to as a “rule of recognition,” against which all other rules may be judged as being of binding legal authority or not. It might better be termed “you know sovereignty when you see it;” ask any practicing lawyer whether an order or edict is of a binding and legal character and they will be able to answer in the affirmative or the negative. Ask them why the rule is binding and what it has in common with all other rules can be somewhat more complicated, particularly in a multiple-sovereignty federal system. In the U.S. system we might say “actions which are unconstitutional are not legal; actions which are constitutional,” by which we mean anything which is carried out lawfully by any government entity under the Constitution, “are legal.”

But who, or what, made the Constitution legal? Hans Kelsen argued that it was something called the grundnorm, or basic norm, which is valid “because it is presupposed to be valid; and it is presupposed to be valid because without this presupposition no human act could be interpreted as a legal, especially as a norm-creating, act.” In essence, the grundnorm serves as a rational definition for what previous centuries may have referred to the “Mandate of Heaven” or “Divine Right of Kings;” it is the ultimate ought.

But these theories, as all theories in social science which can be comprehended by that which is observed, are necessarily and permanently incomplete. Recognizing this, a lesser-known scholar in London, Dr. Werner Menski of the School of Oriental and African Studies, argues that both norms and rules are insufficient; by reference to legal systems of Asia and Africa which incorporate a range of quasi-legal or (what we in the West would recognize as) nonlegal rules in customary law traditions without formal courts or in some cases, even the monopoly on the use of force, he argues that humans nonetheless continue to order their affairs in a fashion which serves the function of what we would call a legal system.

Menski’s argument is that “law” is in fact a hybrid construction made up of a variety of identifiable non-legal sources, and that the interaction of those sources taken in aggregate results in something that has an emergent property we refer to as a legal system. In his view of the world, abstract “rules of recognition,” principles on the application of force, or amorphous and unknowable “basic norms” are fictions that obscure reality: which is that a legal system is the sum of the institutional, and normative/moral baggage that the system, the past, and every individual brings to society with them.

…and code is not that

The most annoying thing about Lessig’s thesis and the subsequent parroting of it by everyone else on the Internet is that, despite being a comparative amateur in jurisprudence, I deal with web applications on the daily and it’s abundantly clear to me that the code that runs the Internet is not legal in nature. It is capricious and arbitrary and serves the interest of site admins and no others. In that capacity, it also lives in and is subordinate to the legal system, especially in cases where the legal system can get ahold of the person running that code (and it very nearly always can, no matter how big the target might be).

What Lessig referred to as “law” was in fact the non-appealable realm of discretion that hosts of internet applications (and, at that time, particularly, web applications) exercised over their servers, something that internet applications do in accordance with law rather than as lawmaker. This fact has been borne out again and again in the intervening decades since he coined the phrase, all the more so as the governments of the world begin to exercise increasing legal control over the Internet space. This is true not only for places like Europe where European social media laws, in particular the German NetzDG and the EU-wide Digital Services Act and GDPR, intervene heavily in the type of content platforms may host and the obligations they assume for hosting it (showing that Lessig was, in the final analysis, hopelessly naive – the evidence shows that governments are, in fact, the biggest threat to liberty on the Internet, and that the U.S. Constitution its greatest guarantor), but also in the United States, where the Constitution and Section 230 – legal arrangements, to be sure – delineate clear private property and free speech interests over code (see: Bernstein v. United States), servers and their operation. Keep an eye on NetChoice v. Paxton for the next big chapter of this story in the U.S.

The impact that the exercise of private discretion on private servers can have on the Internet as a whole can be compared to legal systems like the First Amendment – and indeed that’s one of the issues in Netchoice. Does this render such internet systems and their moderation policies “law,” though?

Not really, at least in any sense that a working lawyer would recognize. Let us use an example of my front yard instead of a server. Let us suppose it is a beautiful and breezy Connecticut summer day and I am out in my yard grilling steak, photosynthesizing, and avoiding seed oils with my fellow crypto people. Out of nowhere, a trespasser – let’s say it’s Richard Heart, for sake of argument and to add color to the example – decides to enter my yard and join the party, where he is unwelcome.

At that point, in the state of Connecticut I have a number of options. After notifying him that he needed to leave I could attempt to use reasonable force, but not more than that, to eject the trespasser. I could call the police. If he asserted a claim to my lawn I would be able to refute that claim, and procure his ejection, by reference to land records held at the town hall.

Suppose I decide to call the police, who charge him with third degree criminal trespass and remove him from my property, and obtain a bail order of protection barring him from being on my property or within 100 feet of me for the duration of the proceedings (a not atypical consequence). It could certainly be said that my actions were legal. But actions taken in accordance with the law, or informed by the law, does not make those actions, or those courses of action, also law. The law in question is C.G.S. 53a-109.

Let us now run a second hypothetical, where I am running servers –, the discussion forum for marmots in crypto – and Richard Heart swans into my servers looking to promote his cryptocurrency Hex. Here, I can be a little more aggressive than the trespassing example; the First Amendment treats my server not like my front yard, but like a printing press. Not only can I do anything up to and including a permanent banhammer from the server, but on account of federal law I have broad civil immunity for doing so. Here, the law in question is the First Amendment and 47 USC § 230(c)(2); but just as ejecting Heart from my lawn was legal, but not law, so too is the ejection of Heart from my servers.

In the traditional, Web2 context, code is not law. Code is a rulebook, to be sure, one which can be tuned to any use-case and agenda. But that does not make it law, any more than hosting a cookout makes me a lawgiver.

Updating Menski’s Triangle for the new example of DeFi (and AI?)

Before going any further we need to define DeFi. Assume arguendo the following definition: “DeFi is an ecosystem of applications and users designed to mediate transactions and communications, where the applications run on blockchain networks which are resilient to destruction and largely immune to judicial control otherwise than by obtaining control over users and their private keys.”

Let us update Menski’s Triangle as follows, either as “Menski’s Digital Triangle” or though I am loath to describe it with my own name, as I have not seen this put down anywhere else, “Byrne’s Square.”

Both diagrams really say the same thing.

I do not think it would be appropriate to speak of smart contract as constituting a law unto itself. We know that legal systems require something approximating sovereignty or a rule of recognition, as Hart required; they usually require some general normative presupposition of legitimacy at the base of the system, as Kelsen supposed; and they require, more often than not, a monopoly on the use of force, as Dworkin suggested. Equally though it strikes me that all three approaches, and particularly Dworkin’s, seem rather out of date in an era of autonomous agents and ineradicable, self-executing digital contracts on unkillable state machines with money.

Menski’s model seems the appropriate one to apply here, as it is open-ended and can account for new systems like smart contracts – and artificial intelligence, as long as we’re on the subject of evolving topics in Internet law – in its conception of a legal system. The pluralist model is accretive; when a new piece is dumped into its stew it does not throw away prior assumptions and, in platonic fashion, assume that we simply were talking about the wrong abstract essence and that through discovery and long-winded academic publication we will find a new one.

Legal pluralism is a practical discipline, one which invites us to run a diff between the past and the present, assumes that the new inputs – the “bits” – will have a relationship to everything else in the system, and tells us that by analyzing the real-world consequences of the introduction of these inputs will we arrive at an understanding of what the legal system we live in actually is: what legal rules are binding in courts, what “legal” rules are actually norms, and what “legal” rules are nothing of the sort.

In the legal pluralist’s conception of the world, when code is everywhere, the law of code is everywhere, too. But that does not make “code” and “the law” the same thing. The immutable character of the code is a consideration that creates the fact pattern, will help to determine the outcome of the proceeding, and may even influence the content of new rules created from law-givers.

Code is not the law itself, but its source, or at least one of them.

Even now we are seeing the frank, unilateral nature of DeFi contracts result in different jurisdictions reaching radically different conclusions about how human conduct should be regulated in relation to these immutable beasties. What in the United States is a felony is, apparently, excusable white-hattery in France. The fact that two advanced, typical western legal systems can reach such radically different conclusions tells me that DeFi, and “bits” more generally, are, now and forevermore, legally relevant facts of life.

DeFi code will therefore be a source of law and will likely be so for the rest of the natural life of anyone reading this blog post. Speaking as one who has been in crypto for over ten years, it is absolutely marvelous to see the legal system starting to evolve to accommodate our version of reality rather than the other way around.

To beat U.S. regulators, DeFi needs to design itself in accordance with the First Amendment

The best thing about America is freedom of speech. I mean this with the utmost seriousness. Having lived in England for 15 years, I have seen and lived with the alternative, where making true statements of fact (Campbell v Mirror Group Newspapers, YMA v PJS) and various other types of religious, political, or philosophical expression (right wing rhetoric, left wing rhetoric, protesting, praying silently), and seen and read about probably hundreds of arrests for this kind of speech. Indeed, a story from 2015 in the Telegraph indicated that five Internet trolls were being convicted every single day in England and Wales – for Internet trolling. England might have better crypto laws than we do, but it’s not a great place to have intense opinions.

Without going into too much background as this is a post about crypto and not English free speech rules, in England back in the day, as now, the expression of a true statement of fact is not necessarily protected by law simply because the fact is true. Legally, this has been the case for at least 500 years, and likely for the entirety of English history before that. Back in the 1700s, for example, a number of delicts punished the sort of speech which we see on Twitter daily and, at least for the members of the crypto bar I know, post daily. These include seditious libel, being speech which was either true or false but tended to give rise to disaffection among the public against the King and his ministers, and scandalum magnatum, a “fake news” law where slandering a great man of the realm was not punishable as a tort but also as a misdemeanor. (If the U.S. crypto bar teleported back to 1693 England, we’d be in a lot of trouble on a pretty regular basis.)

Then, as now, prosecutorial discretion played an important role in choosing which libels were prosecuted and which were not, and if so, how serious the punishment should be. If the government were really unhappy with you, they would simply take the fact pattern for seditious libel and charge you with treason; see e.g. the case of printer William Anderton from 1693. Anderton was charged with High Treason “for that he did Compose, Print, and Publish Two Malicious and Treasonable Libels,” including a rather interesting-sounding one titled “A French Conquest neither desirable nor practicable,” and in which was contained “the Rankest, Vilest, and most malicious Treasons that ever could be Imagined by any man to be put in Paper.”

Sounds bad! So bad that Anderton was, subsequently, executed at Tyburn; his confederates, however, being charged with merely seditious libel, were allowed to keep their lives.

This was the background of the First Amendment, which states in relevant part that “Congress shall make no law… abridging the freedom of speech, or of the press[.]”

The First Amendment was written with cases like William Anderton’s in mind and was, in the words of 20th century American legal scholar Zechariah Chaffee, designed to “make further prosecutions for criticism of the government, without any incitement to law-breaking, forever impossible in the United States of America.” U.S. courts got the memo and, unlike British courts which have for decades consistently failed to uphold the legal obligation to preserve free speech contained in the UK Human Rights Act, our courts guard speech jealously. As new forms of speech and expression emerge, the courts, generally quite rapidly, move to protect these new forms of expression from state interference or control.

This includes software and now, notably, cryptography. See e.g. Bernstein v. United States. That includes the software you write. Just because you write software, however, doesn’t mean that all of your business activities carried on subsequently are also protected speech – see e.g. the somewhat silly free speech kerfuffle around Tornado Cash, a business in all but name that happened to have a smart contract at its core. There is a difference, a big one, between using software in a (regulated) business and publishing software as a form of (unregulated) creative expression.

Ever since Opyn, 0x, and Deridex got dinged by CFTC for failing to register as, variously, Futures Commission Merchants, Designated Contract Markets or Swap Execution Facilities, I’ve had a couple of calls or podcasts a week with friends and clients alike wondering how, exactly, to adapt.

I think the answer is simple: First Amendment that shit, redesign how we make DeFi applications and get not most of the centralization out of the picture, but all of it. This requires complete separation of transaction execution and data provision, with the transaction execution needing to happen entirely on-chain and client-side, and the data provision needing to come from a third party service like a blockchain explorer which plays no role in transaction execution and has no connection to the wallet running client-side.

I talked about this with a space full of Chia folks a couple of weeks ago; a recording of that is below. Summing up that conversation for this blog post, DeFi’s current vulnerabilities arise from the fact that data and transaction execution are carried out together, for the sake of convenience and ease of use, by centralized facilities of some kind, usually in the form of a hosted user interface which the overwhelming majority of ordinary users must interact with in order to utilize the functionality of an AMM.

The UI – the centralized server – is what must disappear from all AMMs, following the “Space Marmot Test” I describe in the tweet and recordings below. DeFi businesses must cluster into two different types: (a) FOSS developers of DeFi software which runs entirely client-side, and (b) public data sources which those DeFi apps can hit.

While the law is a moving target and depending on the product your app aims at facilitating transactions in and whether you as a market participant might also be regulated, in terms of coming up with software, protocols, and ways of doing business that are likely to survive regulatory attack, you can’t do much better than running a business which is engaged in First Amendment protected expression.

What that looks like in terms of a finished software product utilizing distributed cryptosystems, I leave to brighter minds than my own. What I do know is that we can decentralize all the things – for real this time – and, if we do, our ecosystem will be much harder to kill.

What are we waiting for?

My thesis: AI is digital abundance, crypto is digital scarcity, and the world needs both

As the next crypto bull market appears to be gathering steam, I am occasionally asked what my long-term thesis on crypto is, and how that thesis has changed since 2014.

Most lawyers don’t especially need a market thesis. If you ask a litigator, “what’s your thesis?” The response will be “people will fight, and I will bill a zillion hours.” Outside GCs and tech contracts guys such as myself are expected to be a little more opinionated. Where traders are tasked with predicting the future of prices, or VCs are tasked with predicting which companies or protocols will be winners, commercial legal advisors have to guide entrepreneurs straight through the middle of Scylla and Charybdis so that they can succeed despite the fact that the rules will likely iterate several more times, in several different places, between the date the advice is given and the date it finally becomes irrelevant. Having a thesis is table stakes for this sort of work.

One common, and incorrect, refrain I often hear – several times a week – is that you can’t found a crypto company in the U.S. and that you should instead set up as a BVI or Cayman foundation or something like that. This is, generally speaking, not correct. US laws around securities and commodities are rather agnostic as to where you set up a corporation; what they care about is where your users are, the locations of the subject matter of the transactions your startup might facilitate. If you want to sell tokens that the SEC considers securities, for example, you could rent office space in a building across the street from the SEC’s by Union Station and print ICOs all day long, just as long as you aren’t selling those tokens to Americans, and were correctly availing yourself of the appropriate safe harbors.

Put differently, our regulators are so awful that people avoid the country even though they don’t have to, and the degree to which our regulators are awful communicates to these entrepreneurs that being incorporated in America is regarded as a reputational black mark and long term business risk. This is pretty much conventional wisdom among the crypto bar at this point. Questions where practitioners tend to disagree a little more concern (1) why our regulators are so hostile, and (2) whether our regulators will continue to be hostile in the future.

The answer to (1) is actually pretty easy, as long as you’re willing to talk turkey and be unafraid of offending people. Put simply, it’s entirely political. The United States was once a free country which as recently as 1905 took less than 5% of gross national income in government tax receipts. Now, its government is a bloated, heavily-indebted, Soviet Union-sized monster, constituting more than half of national economic life, run by a bunch of borderline Marxists (which designation includes most Republicans and Democrats) (a) who have done very well shuffling paper for a living for the last 10-30 years, (b) who don’t understand technology and (c) who stand to be made obsolete by it.

These folks are currently dominant in the universities, civil service, and upper echelons of the white collar professions. Exhibit A, ticking all of these boxes: Elizabeth Warren, who is also not at all coincidentally leading the charge against crypto on the Hill. Technology is a threat to these people’s way of life, a way of life which will almost certainly end in our lifetimes. Since these folks, being in power, are also in a great position to throw wrenches in the works and slow everything down, that’s what they choose to do.

The answer to (2) is rather more speculative, but I have seen enough to be more certain than not that I’m within striking distance of what will be the eventual outcome of the great crypto experiment. My thesis is that AI is going to demonstrate crypto’s necessity and drive adoption as quickly as AI proliferates. The faster AI’s takeoff, the faster crypto’s takeoff will also be.

Critics frequently harp on the fact that cryptocurrency does not yet have product-market fit, and/or that the Securities Act of 1933 is the right long-term regulatory regime for the asset class. In 2014 this view, which I also held at that time, was correct. Today, if we assume the world will cease to exist tomorrow, it is probably also correct.

To the extent those critics are currently right based on present technology levels, it is unlikely that they will be right for much longer. Artificial intelligence is the reason why.

We are already at a point where machines and software are so advanced, so capable of portraying human voices, faces, and emotions, that, among other things, soon we will not even be able to trust our eyes when having video calls with our own loved ones or speeches from our leaders, due to so-called “deepfakes.” This is a world where authentication, metering interaction with irrevocable digital cash (a la charging for receipt of e-mail like Balaji Srinivasan’s startup 21 tried five years ago), “proof of human,” and, in particular, strong cryptography, will become exceedingly important.

One thing the machines can’t do, and won’t be able to do for the foreseeable future, is bruteforce private keys. Which is where crypto comes in. We will soon be inundated by the endless shitposting of an army of infinite generative AI models trying to wend their way into our inboxes, our feeds, our head-space. Proving who the humans are and only letting them through if they prove they’re human – or pay a price – is the only way we’ll be able to filter the spam.

If it were true that in 2009 nobody needed the double-spending problem fixed, or that in 2014 nobody needed cryptographically secure state machines with money to execute contractual obligations, or that today anyone needs their transactions encrypted and hidden from AI-powered surveillance bots run by criminals or foreign threat actors, by 2029, it is entirely possible, even probable, that everyone will.

These are functions that no stock, nor bond, nor evidence of indebtedness, nor any investment contract has ever performed, but are ones at which cryptocurrencies of various kinds routinely excel. Regulators will eventually come to realize this of their own accord or because market forces compel them to.

So that’s my thesis. Crypto didn’t have product-market fit in the past because the technology for which cryptocurrency was actually built, practical AI, didn’t exist until this year. AI drives the price of creating distraction to zero, which will drive the amount of available distraction to infinity. The more AI the world has, the more crypto it will need to keep it at bay and put a price on – and defensive wall around – the most precious and irreplaceable resource of all: our time.

Image credit Patrick Blumenthal.

The “AI Misinformation” problem can be completely solved by cryptocurrency-based “proof of human”

I was on the Tweets Xeets this morning when I stumbled across this video of our stunning, brave, and illustrious Vice-President calling out “misinformation” enabled by artificial intelligence:

This comes on the heels of an AI-based executive order essentially requiring big compute clusters to register with the government, which my friend and colleague Matthew Richardson wrote about on my law firm’s website so I shall not add to it here.

“Misinformation” and “disinformation” are terms thrown around often in political discourse, usually by the political left. In practice, the terms have become roughly equivalent in meaning to the term “propaganda.” Even then, the term “propaganda” has morphed in meaning in recent years; there was implied in previous explanations of the term a pervasiveness which necessarily meant that misinfo, disinfo, and propaganda were the exclusive preserves of the state (see e.g. Jacques Ellul’s Propaganda from 1965, “[p]ropaganda must be continuous and lasting – continuous in that it must not leave any gaps, but must fill the citizen’s whole day and all his days; lasting in that it must function over a long period of time.”)

What is different in the current age from the 1960s is that publishing tools which were then only available to commercial enterprises and the state are now available to anyone. The busiest day this blog ever had, for example, was in 2021 when a blog post I wrote inquiring about the United States’ strategic blindness to the Taliban’s use of WhatsApp got picked up by some RW internet influencers and picked up more than 100,000 uniques in the course of a day. As recently as the 1990s that kind of reach for a political pamphlet would have been ridiculous, unheard of, impossible unless presented front-and-center on the opinion pages of the Gray Lady or, in the case of dissident literature, a truly exceptional case such as that of the Communist Manifesto or “Industrial Society and its Future,” complete outliers from what most people would consider to be normal political discourse. Similarly, Instagram influencers with an iPhone and a wardrobe budget routinely do numbers today that would have put entire ad agencies to shame in the 1960s if they saw with how little we achieve so much. The Internet allows anyone to become a propagandist, and the increasingly decentralized nature of political movements means that propaganda in service of a cause can be incredibly difficult to squash by its enemies. Even in the 2016-2022 period, when practically every major social media site served as an extension of the center-left U.S. security state, right wing thought still managed to break out. That right wing thought is now starting to proliferate in society, I think, can likely be attributed almost entirely to the fact that one of the major social media sites has decided to take its thumb off the scale and let nature run its course.

Generative AI is the “splitting the atom” moment for political propaganda. Images, words, and arguments can be created and posted ad infinitum by tireless and unceasing machines, superhuman shitposters who never tire and feel no shame. The question for us is not whether the machines will be better at shitposting than we are – that question is settled, the machines won. The question is how we determine whose opinions we will listen to and filter out the rest.

The answer, of course, is “proof of human.” The problem we are trying to solve is an ancient one, known to computer scientists simply as Sybil. The solution is not to regulate AI but to improve attribution and impose costs on communication. The answer here is cryptocurrency.

Why cryptocurrency? Easy. Cryptocurrency imposes cryptographically verifiable digital scarcity on a world where content generation is infinite and free. Hashes of images can be signed with digital signatures which revert back to certain identities, like .ETH or .XCH public key addresses, so we can verify that the images we see were posted by entities we trust. We can use blockchains like certificate authorities to filter out unknown entities. We can use crypto, too, as a gateway to block access to our inboxes – imposing financial penalties for people who wish to contact us by metering our e-mail inboxes, for example, or whitelisting addresses of people and services we want to let through. We can create real-world incentives like paying with wallets at shops that prove we are actual, flesh-and-blood individuals who were a certain place at a certain time and build up proof-of-human reputational scores. Introducing a fake image into the stream of commerce under your identity, and getting caught, will be a mark of shame that is reputationally attributable and inescapable. The list goes on.

Imposing these gates, roadblocks, and attributions in a sense not only fixes the AI problem – at least for now and for the foreseeable future, the AI cannot forge a digital signature – but also brings us back to a 1960s-era propaganda environment, with some modifications. Every statement, every image, will be expected to be paired with an identity – pseudonymous or not. State actors won’t be able to fake being grassroots and grassroots actors won’t be able to fake being states. Bot networks can be rendered prohibitively expensive to run.

Once again, rather than asking about the motivations any entity, and rather than discussing definitions of “misinfo” “disinfo” and “propaganda” that rely on meanings of these terms so watered-down as to be nearly meaningless, the only question about these images will once again become: “are they true, false, or misleading?” And the only question about identities online will be: “who is this, really?”

In a world where the amount of computing power – and silicon-based superintelligence running on that computing power – available to the everyday person with a laptop is exponentiating, it might not be the worst thing in the world to lash at least some portion of the Internet down to reality. Cryptocurrency is the technology that can do it, and it can do it without passing a single new regulation on AI or restriction on the freedom of speech – as long as U.S. regulators are willing to get out of the way.


William Allen writes:

Generally, yes, but I think you also need an economic piece (e.g. gating email with a micropayment) which needs a cryptographic state machine with money – i.e. a cryptocurrency – for such a system to be workable at scale with minimal human overhead. A cryptocurrency protocol conveniently bundles together the global state you need to know who is who and what has happened in the past, money, and all the other cryptographic primitives you’d need which are normally usable without blockchains. Without the money piece, you’re going to need to intermediate PayPal into everything, which hasn’t yet happened (so it probably won’t); without the state transition piece, you’ll have difficulty disintermediating a central counterparty as your certificate authority.

Image licensed under the Pixabay License.

IJBL Article: UK Rules, While Strict, Nonetheless Avoid America’s Securitarian Trap

Volume VII of the International Journal of Blockchain Law (IJBL) is now live, and an article I wrote is in it!

The IJBL is published by the Global Blockchain Business Council (GBBC).  IJBL is written and edited entirely by lawyers, and designed to help interested legal, business and non-legal communities better understand the regulatory world of blockchain and digital asset tech.

Volume VII explores the evolution of UK’s pioneering cryptocurrency regulation since 2009, in which I argue that the UK is charting a more fruitful regulatory course than the United States. Other articles cover the Southern District of New York’s recent rulings around token issuances and sales, the General Division of the Singapore High Court’s stance on cryptocurrency in insolvency contexts, and an analysis of International Organization of Securities Commissions (IOSCO)’s DeFi Consultation Report. 

Check it out for free here: