Who is Liable for an Attack on Cryptocurrency Consensus?

Abstract

Cryptocurrencies are based on cryptography-based asset disposals broadcasted peer-to-peer to be validated decentrally according to consensus mechanisms in compliance with consented protocols. The consensus mechanisms are crucial for reaching a consistent state of a cryptocurrency ledger in a decentralized manner. However, there are several ways to attack consensus. The technical aspects of such attacks have been well explored in the literature, but the legal consequences of such attacks have been less explored. This paper discusses possible legal bases for liability for attacks on consensus and the limits of liability in deterring attacks and providing victim compensation.

Keywords: Blockchain, Consensus, Cryptocurrencies, Liability, Open Source

JEL Classification: E42, K13, K24, L17