79 Pages Posted: 2 Apr 2016 Last revised: 8 Aug 2016
Date Written: August 8, 2016
Distributed ledgers, also known as blockchains, 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. The new architecture of “trustless trust” makes it possible to trust the outputs of a system without trusting any actor within it. It raises the tantalizing possibility of an economy that is simultaneously more efficient, more fair, and more free. Its impacts will extend far beyond the technology and finance communities that gave birth to the blockchain.
For all its potential, trustless trust faces substantial challenges and creates significant dangers. The technologists building distributed ledger systems are ill-equipped to answer the most important questions. These are fundamentally matters of governance rather than computer science, and less about regulation of blockchains than how blockchains regulate. They tie into issues that legal scholars and philosophers have engaged with for some time. A theory of trustless trust and its relationship to law points the way to new solutions that supplement, complement, or substitute for legal enforcement. Surprisingly, law and the blockchain are destined more for cooperation than conflict.
Keywords: Blockchain, trust, bitcoin, cryptocurrency, reputation systems
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