Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Lukas Abegg: Smart Contracts and the Law

Episode Date: September 19, 2016

That blockchains represents a fundamental technological revolution has become widely accepted. What is still more nebulous, but could turn out just as disruptive is how smart contracts while transform the legal system and our understanding of what contracts are and how they work. Legal researcher Lukas Abegg who is currently finishing his PhD on copyright issues around 3d printing and has been researching smart contracts as well joined us to discuss the question whether code is law and what blockchain can learn form 3d printing. Topics covered in this episode: The copyright questions around 3d printing How legal issues around 3d printing are like issues around smart contracts How information theory can help us conceptualize smart contracts The thesis of Lessig’s book ‘Code is Law’ The case for law regulating code Why Alternative Dispute Resolution has big potential for blockchain applications Episode links: Code is Law? Not Quite Yet Lessig's Code Lawrence Lessig Talk 'Thinking Through Law and Code' EB125 - Florian Glatz A Legal Framework for DAOs This episode is hosted by Brian Fabian Crain. Show notes and listening options: epicenter.tv/149

This is Epicenter Episode 149 with guest Lucas Abeck. This episode of Epicenter Bitcoin is brought to by Jax. Jacks is the user-friendly wallet that works across all your devices and handles both Bitcoin and Ether. Go to JAAWX.io and embrace the future of cryptocurrency wallets. And by Ledger, makers of the best hardware security devices. Half peace of mind and knowing your private keys are protected by industry standard physical security. Go to ledgerWallet.com to see the full range of products. and use the code Epicenter at checkout to get 10% off your first order.

And by the Bitfinity Conference taking place in Miami Beach from October 30th to November 2nd, join industry thought leaders, investors, and leading blockchain companies to discuss and showcase how they use blockchains in a wide range of industries. Go to Bitfinity.com slash Epicenter for discounts on registrations and exhibitor packages. Hello and welcome to Epicenter, the show which talks about the technologies, projects, and startups grabbing decentralization and the global blockchain revolution. Today, Meher is at DefCon. Sebastian is somewhere else, so I'm all by myself, but fortunately, not quite by myself, since Lucas Abeck joins me today. He is a visiting researcher at

Humboldt University here in Berlin, and he's also a lawyer and doing his PhD in law, particular patent law, and he's been doing a lot of research around 3D printing, where his main thesis is on, but also sort of the intersection between 3D printing blockchain and smart contracts and the kind of legal side of smart contracts. There was recently an interesting article by his on CoinDesk, which of course will link to in the show notes. And yeah, so thanks so much for joining us today, Lucas. Thanks for having me.

So this seems to be a topic we keep coming back to and coming back to and coming back to. I don't know how many episodes you've already done that have fully or partially focused on this idea and question of smart contracts and are they legal, how do they interact with legal contracts, what are they legal implications? It's certainly a big topic. When did you become interested in that? I started off as a lawyer in IP law, general IP law, copyright. trademark and licensing and more and more got into IT law, meaning outsourcing contracts and software development contracts and stuff like that. And that really got me interested in this digital realm.

And I did a master in IP law in... Washington DC in 2009 and I attended a copyright, cyber copyright law class and there was one talk about 3D printing. And ever since I'm thinking about 3D printing and how the digital and analog world collide at some times or or intersect and depend on each other. And after year, I decided to write a PhD and really get into that scientifically. And so I came up with the topic of 3D printing and pattern infringement. So I imagine in 2009 the must have seen like 3D printing. What is that?

I mean, that must have been it is extremely. fringe technology, is that right? Absolutely, absolutely. It was not very well known in the wider public. I mean, 3D printing or additive manufacturing, as some like it to call it, it's been around for some decades, but it was always a very sort of niche for some prototype applications. But with the elapse of some patents in the early 90s and with increased computer power, so better software, the additive manufacturing process got a wider public.

And so it came along, I guess, in the early... How do you call that tenor years? It got just wider public. 2010s, I guess. I'm not sure. It just became more, it was not actually not new then. It just became more publicly known. And with having the experience of copyright being disrupted by digital technology,

The lawyers were quite alert about new technology disrupting maybe other IP rights, patent rights, in my case, because the patent area is not really touched or disrupted by the digital technology yet. I mean, there is some question about whether or not software should be patentable subject matter, but that's pretty much it. Most of the patents are still mechanical devices or biotech devices that are not interfered with by digital means and software. and I think that might change with 3D printing. Can you explain that a little bit? So what changes with 3D printing when it comes to patents?

3D printing sits very neatly into intersection between the analog and the digital world, I'd say. Because what you can achieve with 3D printing is for instance, if you just imagine you have a physical object, an analog object, that is patented. There's a patent on it, it's a device, and it can hold something, maybe. And you can scan that device with a scanner and make a digital file of it. and that file, if you prepared for a 3D printer, a 3D printer can print exactly the same device that you previously scanned. So, in essence, that allows you to go back and forth from the analog world, into the digital world, back to the analog world,

in any way, in any direction you won't. It's not like with the copyright where copying is frictionless, more or less and free. 3D printing is costly and it takes time and some effort. But still, you can change analog things with quite easy devices. Scanners are available for general public at low costs, 3D printers also. They improve almost daily. And you can make your own copy of analog device. And that calls for some concerns, I guess, from an IP law perspective.

So it seems to me the implications of that, right? if you can just scan a device and then printed yourself, and these printers will be everywhere, I mean, then doesn't that mean that copyright as it pertains to those kind of objects just is obsolete? Doesn't make sense anymore? It's not going to survive? A bunch of questions.

Makes it obsolete? There are actually some lawyers who say, yes, yes, it is obsolete. We lose control. All IP laws, copyright and patent laws, to a certain extent, are based on the concept that you have at least certain control over the copyrighted work, like a book, or the patented device, like a machine. And by exercising that control, you can exercise your right. You can exercise your right to not sell you a book or so.

And in the digital world, you have no control over files. I mean, maybe a little, but basically you can send files to anywhere in the world, instantly at no cost, no friction, no quality loss, and that makes you lose the control over your device or over your work. Therefore, one might think that IP right has no point, there's no point anymore because it just broke, it doesn't work anymore. Let's get rid of it. There are people who think that way. Maybe. I try to stick to to the IP law until we found something better and that hasn't happened yet. Okay, interesting.

And what are the big similarities between 3D printing and in blockchain? How I came about thinking about blockchain and smart contracts is it also sits in the intersection, between digital and analog world. I've read there are various definitions of a smart contract. And I once read one that says a smart contract makes sense if you can digitalize an analog asset and then put that on a blockchain and make commerce with it. in some way, trade it, sell it, etc.

And that kind of struck me that with blockchain technology, people try to bridge this gap between digital and analog world. So you studied 3D printing a lot and, you know, understand the issues in that area. With there being these similarities to blockchain, do you feel like you've learned something from looking at 3D printing that really makes you understand

blockchain in a different way and makes you kind of see, okay, what these people are doing in blockchain, there are some big things that they are seeing in the wrong way and that they need to change their mind about. Are there things like that? I guess so. It's a little bit pretentious to say

that I see big things that other people should see too. But what I found out about 3D printing is this notion of information, the definition of information, how we understand information seems to me quite crucial. And what I found out in about 3D printing and patent infringement is that how the how the transformation from digital into analog and back, how is that, how to describe that, how to capture that in words.

And I could do that because I found some definitions of information that quite suitable to describe that process. And for 3D printing, it would be three aspects of information that are important. Structural information,

syntactic information and semantic information. Structural information would be the form, the shape of a thing. Syntactic information would be the information between, for instance, between letters or numbers or other variables and semantic information would be the content that we as a human, we as human give to words or to things and how we think about. And a certain device or a certain piece item can have several or one layer of, or one aspect of this information. For instance, a chair has, of course, structural

information. You see the shape, but it has also semantic information. If I see a chair, I know I can sit on it. Or if I write a letter, then I see syntactic information. That is different letters. I see it's a long, it's a long letter. It's a It's a lot of different variables on it. And I can also read it. And when I read it, I get the semantic information. Maybe we can take that a little bit further and make an example to understand how it works with the smart contract.

The point where I saw this similarity was when this whole Tao heist happened. We all remember that the DAO was a smart contract put on the blockchain that got hacked and someone used the code in a way that it was not intended to use or the creators of the DAO didn't intend to use. And then I looked at the... So it talks about what happened. And how the DAO was created was it was pure code. And the idea was actually that everything in the code should be what there is. There's no further legal framework. There's no one that interferes except those to curators.

but they had a very small role, the curators. And the idea was that everything that should rule this Tao is in the language of the code. And after the hack, people said, well, that's not how it meant to go. we had other intentions for that. And then I realized that the semantic information, the intent, that wasn't in the code at all.

Because if it were, it would have worked, right? But it wasn't. So then I realized that it is important to deal with the notion of information very carefully, to be aware what you're actually doing. Let's take a short break to talk about Jax. Jacks is a multi-coin wallet created by the people at the Central. Now, in the past, if he had a whole bunch of cryptocurrencies, it was a pain to handle them.

You either had to leave the money on an exchange, which was insecure, or you had to have all these different wallets, which was a hassle. Fortunately, now with Jax, those medieval days of darkness, misery and suffering are over. Jack supports multiple cryptocurrencies and new ones are being added. But it's not just storing cryptocurrencies you can do with Jacks, but you can also exchange them directly from within side the wallet thanks to their shape shift integration. And since there's only one seed, Jacks makes it super easy to back up and sync to the other devices. Jacks works with Windows, MacOS, Linux, Android, iOS,

and has browser extensions for Firefox and Chrome. So go to jacks.io, that's j-a-doublex.io, to download the wallet and get started today. We'd like to thank Jax for the support of Epicenter. So the intent wasn't in the code that's certainly true. Do you think there would be potentially a way to do that? Or is that just generally the nature of computers that, you know, one programs them and one wants to do a certain thing, but sometimes that doesn't work out that way and the program ends up doing something else. Isn't that just inevitable part of using

computers and technology and code? That is a good question, and actually it's a question that even philosophers are pondering about, and I'm not sure if there is actually an answer. There's a professor at MIT, Noamski, who is actually a linguist, who thinks about these kinds of questions. Is it possible to have a program that uses natural language that can process language and thinking processes like human beings? He is of opinion that's not possible, not in the near future. Other, like, the proponents of the singularity say, it will be, it will be a day where it is entirely possible to have intent in a computer program, and maybe a computer program may have, has even the ability to have,

is its own intent. And there's a wide, widespread about what could happen in the future. One of the things that people use, one of the arguments that people use when it came to this Dow hack, but also kind of Ethereum in general, is this idea that, you know, code is law, right? So whatever's written in these smart contracts, that's written what's in these smart contracts, you know, if there's a bug, then there's a... a buck, right? But that's really what counts. I mean, after all, that's what was written in the

Dow website as well. I mean, they wrote some stuff about what it's supposed to do. It didn't end up doing what it was supposed to do. But then they also wrote in there, you know, if there's any discrepancy, there's no recourse, right? The code is what counts. You said, I mean, an interesting talk that I watched before by a guy named Lawrence Lessig, who's a well-known legal. scholar and it's always about this idea that code is law so he wrote this book with that title in a long time ago in 1999 can you talk about what was this idea of code is law back then what does that term mean sure sure um i think it code is law it was coined uh by lawrence lesseg in in this book 1999 and his idea was to look at how we are pushed and pulled in our actions.

Why do we do certain things? And he identified more or less four factors that control or guide our actions. And these four factors would be the law. market, architecture and norms. The law was, in that view, was statutory law, criminal law. You should not kill someone. And the market was, of course, economic incentives. If I make a buck, I do something.

And norms are, with norms, he meant social norms. If I do something peculiar, maybe people look at me in a weird way and I don't want to have that so I don't do it. And architecture, he meant that in a quite literal way. Like, if there's a road, you drive on the road. If there's a fence, you don't go over the fence. You go around it. And those factors influence our behavior, how we do stuff. And what he saw is with the emergence and the advent of the internet and more sophisticated software,

that architecture could also be code. I think the example is a little bit older, but he used this vending machine example. So there's a wending machine, you put a quarter in it and you get a Coke. And that's not really, really, really a code. But code becomes part of architecture, how we use software. In software, for example, you can give a user a selection of possibilities. And you can just choose from what's there. You cannot choose anything else.

And that is also kind of architecture, in the sense lessing meant. And so he saw that architecture can be changed very easily by using code. So he realized that code becomes part of architecture. I think it's a very interesting point, and where it's also an interesting point, notice, if you have code back then, or, you know, the structure of the internet, whether that's through hardware and routers and stuff like that, or through, I guess, things like web standards and all of those, that they kind of shape behavior, right?

That makes sense. But what's interesting, you know, is that today, if you think of it that way, about the structure of a website, kind of steering your behavior in a certain way, when companies are able to, you know, in real time, kind of mold the architecture around you to steer your behavior in a certain way, right, with maybe changing, recommending different products,

giving one an offer, like, as one is on the website, depending on where one moves the mouse and all things like that. It's interesting how that power seems to have become, bigger and bigger and bigger. Did you see that the same way? Absolutely, absolutely. It used to be the case that the law shaped the market, law-shaped norms, law-shaped architecture,

and now it seems to be other way around. It's not the governments that make a law and enact a statute and the architecture is built accordingly, it's more the other way around. Architecture is built, and then we have to find a law that tries to capture what's happening if it captures that at all. So is that just because things are changing quicker

and it's hard for law and regulation to keep up with that change? because, you know, the speed of that changing hasn't increased in the same amount, or is there something else going on here? That is a crucial part, I guess, yes. Building software is very, very easy and can be done quite quickly, and enacting a bill is very cumbersome and takes a lot of time. And that is a discrepancy that certainly propelled that shift from, from law to architecture.

And if there was, you know, if code was law back then, and then they kind of, I think it makes sense to sort of understand how that's the case in terms that it created certain constraints and moving behavior. Is there anything different about smart contract code? Is that law in a different way? Well, what I've seen when I read articles or post- about smart contracts is that the notion of code of code is law changed somewhat in the direction that code is everything.

And that was certainly not what Lessing meant back in 1999 in his book. I'm a little bit under the impression that it is just used in a very exaggerated way that people think we have even so much power that with software, everything is possible. And the code is law is all there is, and it's almost almighty. And that is certainly not the case, I'd say. What I thought was very interesting about Lessig's talk is that he talked about this code is law in this descriptive way, right? He said, okay, that's just a factor that has to be taken into account when it comes to understanding what shapes human behavior.

But then he also made the argument, really, more of a moral ethical argument, that law should be shaping code and architecture. And essentially, I think if I understood this argument correctly, it was that a law is in a way sort of at the top. right? And then law directly shapes behavior by saying, for example, murder is illegal, you're going to go to jail, but also by having property law and things like that, and those shape, like the economic environment that creates the markets that then shape behavior. And then to some extent shaping social norms, although of course there's maybe a discussion whether it's more social long shaping law than the other way around, but to some extent laws can shape social norms. I think the example Lessig made was in smoking, smoking bands that have certainly played a part in making this stigmatized activity.

And then his point being like, but you need the same kind of effect on architecture and on code, and if that's kind of not possible anymore, because code becomes bigger and bigger and laws, aren't able to shape that area and influence that area, it becomes this space where there's no influence of law, which he seems to view as a very negative thing. Do you share his view on this? I do share his view on this in the sense that it creates a certain void that needs to be filled. I do agree with the large picture of Lessig. And what I also think is that code cannot escape the law.

It's not something that is outside the law outside the world. I mean, we can go back to the advent of the internet and the declaration of independence. that Gary Barlow famously wrote one of the founders of the Electronic Founder Foundation, he said, well, we are in the cyber, I'm paraphrasing, we're in the cyberspace, and no one can reach us here in the cyberspace. And as we have seen, this is not true. Cyberspace and law and law enforcement and people are very much intertwined. And that's actually the reason why I think regulation and code should still interact.

And code should not, at least for now, should not be completely separate from regulation. And we should, as developers of such technology, we should embrace the the legal world and try to shape the architecture of code with the legal world. Let's take a break to talk about the Ledger NanoS, the new flagship hardware wallet by Ledger. I'll let Ledger's CEO, Eric Larchavec, tell you all about how simple the NanoS makes it to securely store all your private keys. The Ledger NanoS is our latest generation hardware wallet. This is a multi-currency hardware wallet.

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With the nanoS, all your Bitcoin and Ethereum addresses are derived from one unique seed. With one seed you can have in the same time Bitcoin, Ethereum, Iceum Classic Balances. And also if you restore your seed, you will also recover all the keys associated to other apps such as FidoU2F, SSH, GPG. So it's very simple, just one seed and multiple applications. The NanoS sets the new standard in hardware wallet security and usability. You can get yours today at ledgerWallet.com. And when you do, be sure to use the offer code Epicenter to get 10% off your first order. We'd like to thank Ledger for their support of Epicenter. What I found striking about that statement, that, you know,

cyberspace declaration of independence, and I only just watched a little bit of that that was shown as part of Lessig's talk, but maybe we'll also link to the whole thing. This is a long time ago that this was done. And it seems like there's this idea there, this vision, that you're going to have this kind of libertarian dream of space, freedom where, you know, people can do what they want and there's no infringement and there's no reach for the government, for power and for those kind of, you know, current

institutions. And that, if you look at it from today's perspective, obviously didn't happen. You know, I think the Snowden cases illustrate that, but, that way well, that that didn't happen at all. And then if you look at it today, we have a little bit of a similar thing again, right, where you have people into crypto space, right, where a lot of people think that what blockchain is going to reach, and I think in Ethereum it's very prevalent, right, this idea that we're going to have this space where people can run their application, do their thing, enter their smart contracts, et cetera.

and there's no reach, there's no ability for anybody or for the government to interview there. And I wonder if that's going to turn out the same again, right? If we're going to look back and it was like, oh no, that didn't happen at all. It really didn't turn out that way. I fear a little that it's going to happen over again, all over again. Same way it happened with the Internet and Declaration of Independence. One reason why I think that's going to happen is, from my perspective, as a lawyer, I think it's very interesting that people think, for instance, a smart contract should be the same as a contract. I mean, it begins with smart contracts very often, let's say, with smart contracts we can reach this independence.

But when we look at what a smart contract is and compare that to a classic legal contract, they may seem similar, but actually from a legal point of view, there's a whole lot more to a legal contract than what you get with a smart contract. For instance, if I want to make an example, I have a legal contract with you, I say I sell you X for the price of Z. That is not all there is to that contract, because if I don't sell you, the item or the item is defective, you can go to a court and you have rights according to a sales statute. And all that, that there is a court and the sale statutes, that's all not in the contract. You don't write that up in a contract, right? But it is still there.

And with smart contracts, that's somehow lacking. That's one reason why I think the code cannot escape law or the world and be completely independent. couldn't you say that the actual protocol rules themselves take on a little bit that role so in and then you know the rules of how transactions get added what's valid who can it can absolutely take a little bit of the control in in particular i think it it can take control of the execution of a contract when we think about let's say financial derivatives That's very common for a smart contract. If it just have to buy, sell you some digital asset and that needs to be deducted from my book and added to your book, etc.

That can be done with code very easily and very successfully and that's really good. Code can take that part of a contract. But what code cannot do is judging something, for instance. That's what a court would do. Like, code cannot judge if a certain item is defective or not, or hardly. For that, you still need a human to look at it. And here we come full circle with my idea about the information. having several aspects of defectiveness of an item, for instance,

it is really, really hard to capture that in code, if not impossible at all. And as long as that is not possible, code cannot escape the analog world and therefore cannot escape the law. I think the point you're making is a very interesting one from another. perspective as well. Because if you make this contract today, right, we make a simple contract saying, yeah, I sell you a certain thing. And then there's all this back stuff to rely on, right? So first of all, we probably both have some understanding of contracts. We've signed various

contracts before. I mean, I'm sure you have a much better understanding, but I still have some understanding of what the contract is. And then there are these existing, you know, police to go to lawyers to call on who understand it. There's like common agreed norms around this, even social norms, but then of course there's also the court where one can enforce it. And then one goes away and goes into the smart contract world. And then there's nothing of that. All of that is basically gone. And so if I wanted to make an employment contract using smart contracts, in a way it almost would require you to recreate all of this stuff. that all of a sudden you can't rely on anymore, which seems like an extremely hard task,

and which would kind of imply that you really shouldn't even try for any complex contract, like, for example, let's say an employment contract, maybe at least for a while until you have, you know, there is some tools and experience and norms around that. Absolutely, absolutely. and I would consider an employment contract as a rather simple contract, and even that is difficult, as you mentioned. But the thing is, it is a really big task to incorporate the whole law into code. And I'm not sure if that's even possible or even desirable.

I think there's two things about that. One would be that you can change the law, make it more simple, and then it's easier to capture contracts in code. For instance, don't mention things about material breach because nobody knows what the material breaches is. just use it for simple contracts that have no element of judgment or no difficulties. A little bit like Bitcoin, in itself, it's not a smart contract, but what they do is just adding and subtracting.

That's basically the simplest of all tasks, I guess. it can't get any less simple than having or not having. And with that, it works brilliantly. It works absolutely brilliantly. And you want to have the judgment element on a other technology or another way. That's an interesting point. And maybe that is part of the reason why Bitcoin is the one still, you know, the one blockchain application that actually, you know, has some usage.

Today's magic word is intention. That's I-N-T-E-N-T-I-O-N. Head over to let's-talk Bitcoin.com to sign in, enter the magic word, and claim your part of the listener reward. Another point that I find interesting here, and that's less, talk, it really, I thought, was quite striking in some ways. And so if we, if we think of now smart contracts happening and we have the space where people can really sort of directly enter contracts with each other and there's no restrictions, then what does that mean? Right. So first

of all, of course it will be less restrictions on what people can do, right? The same regulations that they don't have their effect anymore, you know, to give an example, if you're going to have some sort of a, you know, I'm going to sell my time for some money or something like that, essentially employment thing, right? So children could, you know, sell their labor. Nobody would know, right? There's no way to enforce that. Or you could have contracts that are very, very one side. That might not be enforceable. But if it's in smart contracts, well, you know, like you cannot, the Ethereum blockchain is not going to say this isn't fair. Like, it is an interesting point. To what extent is that a good thing and to what extent is a bad thing?

I mean, I think certainly the vast majority of people in the blockchain space and especially traditionally in the blockchain space and Bitcoin space really viewed this as a positive thing. They viewed the decreased ability of governments to regulate as a great thing, as increasing freedom, as really the whole point of this technology. And then there is a question, right? With less six things, like, well, but that's actually a negative thing. And I'm not sure. I'm probably somewhere in the middle. I think it's mostly a good thing that the government can't, but then obviously it can also be a bad thing. So I think it's an interesting, it's an interesting point. It will be interesting to see how this turns out. It is absolutely,

regulation is a sword that cuts both ways, right? We've made some experience with bad regulations. Everybody has somehow experienced that, that some laws or some regulation interfered with your personal intentions or what you think that your freedom should be. and so we perceive regulation as something bad generally, but we take sort of granted that regulation can be good as well,

and sometimes we forget about that. And what's important, I guess, is that we recall that regulation can be a good thing. And another aspect about regulation, that I would like to mention is that if you don't want to be regulated, there's several ways

you can go about it. I mean, why does a government regulate something? That one reason would be because terrible things happened, then the government thinks, no, that should be happening. I regulate.

or a big player does some lobbying about regulation. So the first part, there is a lot we can do about from a technology perspective. If we try to make blockchain secure and come up with our own regulations in the sense of best practice, for instance. What we've seen recently is tools that prove your code of this whole Dow experience. There's a great concern about security. It's a great concern about government, how to, or the governance, how to govern blockchain applications, blockchains in general, how to run a blockchain. And if we take that in our own hands and try to not mess up things and not produce failures

where people lose money or even worse, then the authorities and the governments, they are inclined to regulate less. No, that's an interesting point. I mean, it seems to me like today, at this point, they're not regulating primarily because they don't understand what's going on. And things seem to be changing too quickly. So they're like, we don't know what to do. Absolutely. And that might not change so quickly, right?

I mean, with Bitcoin, of course, they try to do some regulation. I mean, even with Bitcoin, that didn't seem to get very far. And Bitcoin, of course, is vastly simpler to understand and try to regulate than. something like smart contracts, which is a very general concept that can be applied in all kinds of different ways. And there is not even an agreed upon definition of what a smart contract is. To that question, there's interesting that a lot of, let's call big players like banks are involved in blockchain technology. And I would assume that governments don't want to interfere you're too much with big banks because they're taxpayers and they have good lobbyists who

look out for their clients and we can maybe take a little bit advantage of that and try to come up with best practices and maybe even self-regulation tools and and and and use that fact that big players are interested in blockchain and keep the government a little bit off our test. Let's take a short break to talk about Bitfinity, the Miami blockchain conference to be held this year from October 30th until November 2nd. Blockchain technology has been exiting the world of nerds and hackers and entering the mainstream. We're at the beginning of a big revolution

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factum consensus, Everledger, and Stellar. Visit them at Bitfinity.com slash Epicenter and find out how you can get 10% off the company presenter package or your $200 discount code to attend. We'd like to thank Bitfinity for their support of Epicenter. So let's briefly talk about a last topic here. You mentioned I think also in the article, alternative dispute resolution. My understanding is basically have a contract and there's some sort of clause in there, if there's disagreement, it goes to some sort of little special tribunal that's going to give a decision as opposed to going through a regular court, which presumably can be much faster and maybe there's more certainty than with a regular court and stuff. Is that roughly an accurate description of what those are?

Roughly saying yes. It is. It's constantly. It's a... alternative dispute resolution and the alternative is meant quite literally. It is alternative to the traditional court system. And what you can do is if you sign a contract, for instance, you can insert a clause that says if a dispute arises out of this contract, I don't want to go I don't want to resort to a civil court or whatever court that would have jurisdiction over that contract. I want to have a arbitration panel that judges the happening,

judges the contract and judges what the parties performed or not performed. I agree on a set of rules how we deal about. And those rules can be defined pretty much freely. There's not a lot of constraints to how those rules need to be shaped. And maybe a good example to understand the concept is if you register a domain name with your local registrar. you are subjected to the arbitration rules of that registrar. That sets forth how it is dealt with a domain name if it is infringing trademark, for instance.

For instance, that says that if there's a trademark infringing claim about a domain name, it goes to a panelist and the panelists, the panelist judges the case, and if the panelist says there is an infringement, I'll take back that domain name and delete it, for instance. That's something the registrars came up with to deal with domain name, hacking or squatting or whatever you call that. And what I envisioned that could be useful for smart contracts too. If you have smart contract that says, I sell you X and you pay me Y,

and then this whole transaction performs, and you think X is defective, then we need a panelist who is arbiter about whether or not something is defective. and executes the judgment that we've been talking before. And you can set up that in more or less simple rules, and you can say what it is that is disputed. You can say what parts of the contract should be subjected to,

what are not subjected to those rules, and you have a whole lot of freedom to decide that. And I think that would be a wonderful tool to explore and to add to smart contracts. That's a very interesting point, particularly also because today, right, people, if there's some sort of smart contracts being created, and then if there's a possibility that it would go to court, one of the problems today would be that they would go in front of some lawyers who wouldn't have a clue. what on earth is going on, and it would be very unpredictable, like, what kind of, what would they do with that, with that kind of evidence or with what's going on in a smart contract.

So if one could have some of these alternative dispute resolution courts that really are focused and specialized in smart contracts and blockchain technology that really understand this, then that could, and that maybe can develop some kind of standards in terms of how do you handle disputes in this world, then I, that does sound like a very very, you know, but that does sound like a very interesting and intriguing approach? I think so too, yeah. I think it would be worthwhile to have a closer look if the details play out the way that this thought has started. I've not written rules down or explored anything of that in greater detail. but I think it should be possible

and details could be sorted out. One of the beautiful aspects of that would be that is actually legally binding if you have a judgment from such a panel, if you do it correctly and the rules are good enough to meet the rule of law, standard or whatever is mandatory for the jurisdiction you're in, then it is an actual judgment that can be enforced by police if necessary, and that would help to not become a digital

wild west. And that would be an effort towards what I've mentioned before, this regulation and self-relixt. self-regulation theme where you put up your own regulations and so you make sure that the governments don't interfere in a way that destroys the whole innovation and the whole new technology and also what's what's interesting is there's a lot of concepts technology-wise concepts around about how decisions should be taken. For instance, we've seen prediction markets, a podcast about that on Epicenter TV. There's other efforts that I've read about.

It's called Backfeed, and that's about value creation and also reputation. For instance, if you have to decide who should sit on a panel, who should be panelist, you can use technology. And people who interact in a positive way in the environment of blockchain may get some reputation, and you can use technology to create that reputation and handle that reputation.

and then you already have a use of, or you can use that to define who should be a panelist. And that's a wonderful playing field for those ideas and approaches, I guess. Absolutely. Well, thanks so much for coming on today, Lucas. Now, one last question. What kind of research questions around blockchain and smart contracts? most interested in and are you planning to explore in the next year or a few years? Well, first of all, I have to finish my PhD.

There's still a lot of work to do. But I think being a lawyer, the idea of dispute resolution rules for smart contracts, that would be very interesting to go into more details if that's actually feasible, if that's actually achievable, and how it could be intertwined with smart contracts. And I would be happy to do more research in that direction. Excellent. Well, thanks so much for coming on. It was a pleasure talking to you.

And I look forward to some of that research, particularly also around that concept, that's certainly an interesting one and one that could be very, very important. And where I actually haven't seen a lot about this idea, so that would be fantastic. So thanks so much for joining us today. Thanks for having me. Yeah, so with that we're at our end. Epicenter is part of the LTV network. You can find this show and many others on let's talk Bitcoin.com.

And yeah, so we put out the episodes every Monday. You can subscribe to the show both on. YouTube on YouTube.com slash Epicenter Bitcoin or you can download it and subscribe to it in any of the favorite podcast apps there are. So thanks so much and we look forward to being back next week.