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Trust, But Verify: Why the Blockchain Needs the Law

60 Pages Posted: 28 Sep 2016 Last revised: 15 Sep 2017

Kevin D. Werbach

University of Pennsylvania, The Wharton School, Legal Studies & Business Ethics Department

Date Written: August 1, 2017

Abstract

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.

Keywords: Blockchain, Bitcoin, Internet, Trust

Suggested Citation

Werbach, Kevin D., Trust, But Verify: Why the Blockchain Needs the Law (August 1, 2017). Berkeley Technology Law Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2844409

Kevin D. Werbach (Contact Author)

University of Pennsylvania, The Wharton School, Legal Studies & Business Ethics Department ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States
215-898-1222 (Phone)

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