New Legal Regime for Blockchain-based Smart Property and Smart Contracts?

Beyond the already wide-ranging digital currency and financial transaction applications for blockchain technology, there is another class of applications that could allow a complete reconfiguration of law and government. Blockchains are a new form of decentralized information technology, the trustless cryptographic public ledger system that underlies digital currencies like Bitcoin. Some of these potential application in law and government are that in the future, all property (hard and soft assets, and intellectual property) could be registered and transacted via blockchains as smart property. Likewise, all forms of legal agreements, contractual relationships, and governance could be enacted through code-based smart contracts.

An important consideration raised by the possibility of smart contracts and systems of cryptographically-activated assets is whether a new body of law and regulation is required to distinguish between technically-binding code contracts, and more flexible legally-binding human contracts. Contract compliance or breach is at the discretion of human agents in a way that it is not with blockchain-based or any kind of code-based contracts. Since it could be nearly impossible to enforce smart contracts with law as currently enacted (for example, a decentralized program already launched and running is difficult to control, regulate, or sue for damages), the legal framework is essentially pushed down to the level of the contract. It is not that lawlessness and anarchy would ensue with smart contracts, but the implication is that legal frameworks would become more granular and customized to the situation. Parties agreeing to a contract could choose a legal framework just as jurisdiction is selected as a parameter now. Thus smart contracts impact not just property law and contract law, but more broadly the notion of the social contract within society.

Blockchains as a Granular Universal Transaction System

Blockchain technology is a new concept in large-scale coordination due to a number of key features. First, a blockchain is an open universal transaction system. Every transaction worldwide is processed the same way and posted and made available for viewing on the blockchain. The transaction ledger is publicly-inspectable on-demand at any future moment.

Second, blockchains are trustless in the sense of not having to find or trust any of the other parties in the transaction; it is just necessary to trust the system. This suggests that orders-of-magnitude more transactions may be possible in trustless systems since the architecture is a mechanism allowing anyone to transact with anyone anywhere; geographical proximity, personal knowledge, and the search problem are all reduced or resolved. This is conceptually a next step in the progression of how Amazon (a global system) opens up trading in a way that Craigslist (geographically-local) does not.

Third, blockchains are a universal tracking system that might be able to accommodate infinitely more granularity than has been feasible and cost-effective to monitor previously. The optimality of what level of transaction detail is best to post directly to the blockchain (thus invoking the expensive mining operation for their recording) is being sorted out in different ecosystem tiers. The overall blockchain ecosystem is developing to avoid bloating the blockchain with too many micro-transactions by making use of special-purpose sidechains, decentralized off-chain storage (for example with MaidSafe, batched transactions (like batched notary sidechains to register large groups of legal documents), and Merkle trees (confirming and storing a whole corpus of data with one meta-hash).

Blockchains are a Supercomputer for Reality, a Mechanism for Orchestrating Quanta

The key idea of blockchains as a universal transaction system is that they are an automated computational mode, a seamless universal infrastructural element for the coordinated activity of granularity. Blockchains could be a universal transaction system on an order never before imagined that could possibly be used to coordinate the whole of human and machine activity. In this sense, blockchain technology is a supercomputer for reality. Any and all phenomena that can be quantized (defined in discrete units or packages) can be denoted this way and encoded and transacted in an automated fashion on the blockchain. As big data seeks to perhaps eventually model and predict all phenomena, natural and otherwise, so too might blockchains accompany big data for the tracking and administration of all phenomena.

One summary and prognostication of this dynamic and the potential universal applicability of blockchains is that anything that can be decentralized will be. This has an implied assumption about the inherent efficiency, benefit, and potential superiority in certain situations of the blockchain model. Decentralization is ‘where water goes’ (where water flows naturally, along the path of least resistance and least effort). The blockchain is an Occam’s razor, a natural efficiency process.

Blockchains are thus an intriguing model for coordinating the full transactional load of any large-scale system, whether the whole of different forms of human activity (social systems) or any other system too like a brain. In a brain there are quadrillions of transactions that could perhaps be handled in the universal transactional system architecture of a blockchain, like with Blockchain Thinking models.

Further, it is not just the transaction-handling capability of the blockchain as a universal coordination system but other properties that can also be applied through-out such as demurrage incitory stimulation for dynamic resource redistribution across the system. In Blockchain Thinking, this could be redistributing brain currencies like ideas and potentiation. Thus, it is not the mere orchestration features of universal blockchain systems but their enhancement possibilities that is perhaps the more interesting point. Not only can we better organize larger-scale existing activity with blockchains, but we can also possibly open up new classes of as-yet unimagined functionality and potentiality.

More information: Swan, M. (2015). Blockchain: Blueprint for a New Economy. O'Reilly Media.

Blockchain Consensus Models Increase the Information Resolution of the Universe

There is ample opportunity to explore blockchains as a new form of information technology, including what consensus models as a core feature might mean and enable. A key question is “What is consensus-derived information?” that is, what are its properties and benefits vis-à-vis other kinds of information? Is consensus-derived information a different kind or form of information? One way of conceiving of reality and the universe is as information flows, where blockchain technology helps to delineate three distinct levels of information:

1. Level one: Dumb, unenhanced, unmodulated data
2. Level two: Socially-recommended data. These are data elements enriched by social network peer recommendation, which has been made possible by networked Internet models. The quality of the information is denser because it has been recommended by social peers. 
3. Level three: Blockchain consensus-validated data. Now a third level of data has been exposed, blockchain consensus-validated data, data’s highest yet recommendation level based on group consensus-supported accuracy and quality. Not just peer recommendations, but a formal structure of intelligent agent experts, have formed a consensus about the quality and accuracy of these data. Blockchain technology thus produces a consensus-derived third tier of information that is higher resolution in that it is more densely modulated with quality attributes, and simultaneously is more global, more egalitarian, and freer-flowing. The blockchain as an information technology provides high-resolution modulation regarding the quality, authenticity, and derivation of information.

Consensus data is thus data that comes with a crowd-voted confirmation of quality, a seal of approval, the vote of a populace standing behind the quality, accuracy, and truth value of the data, in its current incarnation effectuated by a seamless automated mining mechanism. The bigger questions are “What can a society do with this kind of quality of data?” or more realistically, “What can a society do with this kind of widespread mechanism for confirming data quality?”

Thinking of the benefits of consensus-derived information only helps to underline that blockchain technology might be precisely the kind of core infrastructural element, and scalable information authentication and validation mechanism, necessary to scale human progress and to expand into a global and eventually beyond-planetary society. Further, blockchains are a system of checks and balances that might help to effectuate not only friendly Blockchain AI, but also the transition to a future world of multipsecies intelligence. The speculative endgame vision is that the universe is information, where the vector of progress means transitioning toward higher-resolution information flows. Information may be conserved, but its density is not. Even beyond conceiving of blockchain technology as a core infrastructural element to scale the future of human progress, ultimately it might be a tool for increasing the information resolution of the universe.

Blockchain AI: Consensus as the Mechanism to foster ‘Friendly’ AI

The blockchain is the decentralized public ledger upon which cryptocurrencies like Bitcoin run; the blockchain is possibly the next Internet; the blockchain is an information technology; the blockchain is a trustless network; the blockchain is an M2M/IOT payment network for the machine economy; and the blockchain is a consensus model at scale, the mechanism we have been waiting for that could help to usher in an era of friendly machine intelligence. The blockchain’s consensus mechanism could be instrumental in the connected world of Bitcoin which necessarily accommodates communication between humans and machines, and the possibility of increasingly autonomous machine actions and entities which could lead to artificial intelligence and a technological singularity (a moment when machine intelligence supersedes human intelligence).

Large Possibility Space for Intelligence
Speculatively looking towards the longer term, there may be a large possibility space of intelligence that includes humans, enhanced humans, different forms of human-machine hybrids, digital mind uploads, and different forms of artificial intelligence like simulated brains and advanced machine learning algorithms. These intelligences would likely not be operating in isolation, but would be connected to communications networks. To achieve their goals, digital intelligences will want to conduct certain transactions over the network, many of which could be managed by blockchain and other consensus mechanisms.

Only Friendly AIs are able to get their Transactions Executed
One of the real benefits of consensus models is that they could possibly enforce friendly AI, which is to say cooperative, moral players within a society. In decentralized trust networks, an agent’s reputation (where agents themselves remain pseudonymous) could be an important factor in whether its transactions could be executed, such that malicious players cannot get their transactions executed or recognized on the network. (It does not matter if malicious players masquerade as bonafide players since the reputation requirement and network incentives elicit good behavior from all players, malicious and bonafide alike). Some of the key smartnetwork operations that any digital intelligence may want executed are secure resource access, identity authentication and validation, and economic exchange. Effectively, any network transaction that an intelligent agent needs to fulfill their goals could require some form of access or authentication that is consensus-signed, and which cannot be obtained unless the agent has a good (benevolent) reputational standing in the smartnetwork. This is how Friendly AI could be effectuated in a blockchain consensus-based model.

The Blockchain Consensus-Recommended Data is a High-Resolution Information Technology
The blockchain is an information technology, a consensus-derived third tier of modulated, denser, freer-flowing information. Level one is dumb, unenhanced, unmodulated data; level two is socially-recommended data, data elements enriched by social network peer recommendation, and now, level three is blockchain consensus-recommended data, data’s highest-yet recommendation level per group consensus-supported accuracy and quality. Consensus data is data that comes with crowd-voted confirmation of quality, the vote of a populace standing behind the data quality, effectuated by a seamless automated nonce-mining mechanism. Possibly, the blockchain is precisely the kind of scalable information authentication and validation mechanism necessary to expand to a global and eventually beyond-planetary society. The blockchain as an information technology provides high-resolution modulation regarding the quality and authenticity of information.