Sydney Blockchain Workshop: Lawrence Lessig on the law and the net

By on 18 Dec 2015

Category: Tech matters

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Photo: BTC Keychain, Flickr

In a very well presented, showcase talk, Lawrence Lessig came to the Sydney Blockchain Workshop— held at the Powerhouse Museum from 10 to 11 December — to remind us that we only get the network we want if we fight for it.

He logically argued for constructive engagement with the field of law, rather than the usual geek-sneer of confrontation, to get where we think we need to be.

Taking John Perry Barlow’s ‘A Declaration of the Independence of Cyberspace’ as a starting point, Lessig defended the role of law in creating a just online society.

Blockchains and trust

The Sydney Blockchain Workshop was the fifth occasion worldwide that proponents of blockchain technologies have met to discuss the concept, and its qualities and future direction.

Blockchains are a concept rooted in digital cryptography, and take individual events, or transactions, and encode them into a sequence of events (the chains) where the relationship of one transaction to another cannot be faked, if the cryptography has not been broken. This is a mathematically strong test, which relates to our belief that: complex “hash” functions work and are not easy to fake; and that this kind of cryptographic proof is robust — quantum computing might change that belief, but for now, it’s a reasonable belief amongst computer scientists and mathematicians.

When something is added to a blockchain, it is fixed. If the blockchain is widely distributed, anyone can see that it’s fixed in time.

Digital cryptography is now widely accepted as legally representative of intent — a signature is a binding event for instance, when used to digitally sign something — so this cryptographic property neatly intersects with decisions we’ve already made in banking, finance and legal domains, to accept digitally signed materials. Imagine if we had widespread trust in events, because of public views of the event? Can we use that socially?

To put this in context, blockchains are interesting because they are a mechanism that potentially provides pseudonymous interactions at a distance between people who otherwise have no basis for trust, and they derive trusted outcomes.

The primary use-case of a blockchain we have right now is Bitcoin, which is a specific instance of the blockchain model aimed at a single outcome: the transfer of value between parties. Bitcoin is a ‘proof of work’ based model, where expensive to compute mathematical values (hashes) are found by ‘miners’ and then used to construct the chains, which represent transfers.

More general blockchain models include:

  • Proof of stake  In this case parties involved may have to lodge a bond against the risk that they perform badly, but in doing so, set a limit to their exposure of risk and then enable transfers within that ceiling.
  • Smart contracts – These fully generalized blockchain models — which encode properties as programs running ubiquitously in the participants in the chain; and so not subject to revision, revocation or repudiation by the parties to the code — have the potential to present considerably more than just transfer of value.

Smart contacts can remove exposure to risk

Smart contacts were a buzz-phrase of the workshop. In their simplest form, they might be as simple as the transfers Bitcoin provides. But, speakers at the workshop pointed to how they could be used to calculate predetermined yields on financial derivatives, which were not subject to change.

They displayed this by encoding them as a function in code, of the values expressed in the block chain, with a time specific run to completion. Or, to derive the long tail of payments to originators of content, through the transfer of art, music by owners and intermediaries — consider the art world, where original artists are now often entitled to a percentage of subsequent resale of their original works, and certainly, to income from reproduction.

A beautiful instance of this was presented in the work of Primavera De Filippi, and discussed in The Conversation article, ‘Do Plantoids Dream of Electric Arts Council Grants?’.  The example describes works of art assigned with their own Bitcoin account, which allow future artists to recreate the work with their own interpretation of the base work with a tail of payments.

The potential here is that blockchains can provide the trusted fabric for transactions in a world where many people in emerging economies have low or no trust in either government or financial institutions. They are effectively trapped in debt, because they cannot participate in low-cost financial activity without the extreme risk of being robbed or defrauded. In the west, we have the luxury of high-cost financial regulation and a low corruption rate. But in these economies, there is either none, or ineffective regulation and all money transactions carry a far higher risk.

Blockchains reproduce the history of transactions in a way that makes financial processes publicly auditable. They can remove exposure to the risk. They could help ‘bootstrap’ developing industry and society around their problem to participate in an online economy as equals — all worthy goals!

What to consider when advocating blockchains

Lessig reviewed his own writing on Internet and law, and took the theme of ‘something old, something new, something borrowed, something blue’ to explore what advocates of blockchains have to consider in their positioning against the legal minefield.

Something old was Lessig’s view from the early 2000s, in which he managed to critique his own naïveté, but also recognized essential qualities he felt have to be carried forward into the network.

One such quality he called ‘architecture’, is one of four limbs of constraint in the world — the law itself, the societal norms which we self-police, the markets we trade in and the architecture we model this inside. He went to some lengths to suggest that architecture informs the other behaviours in fundamental ways; a plea to consider the architecture we seek, in building online systems.

Something new was the quality blockchains bring to the online world — the dis-intermediation of trusted third parties, which is fine in a financially regulated model, but inappropriate in a world without adequate safeguards; and the impact this has on the architecture of discourse and transactions online.

Lessig wanted us to understand that we had opportunities to use the blockchain to provide architecturally enforced behaviours in contracts and exchanges for trade, which usefully replace the distrusted intermediaries.

He also sought to undermine the ‘geek sneer’ at the arbitrary application of law — an earlier comment in the meeting was that a judge is god in his own court, something which sits poorly in a technical mind used to one compiler — same code everywhere. His argument went from the proscriptive penny-in-the-slot model of a vending machine, which can be presented as an amoral, no-law technical device: you give it money, it emits a coke bottle. But he observed at least three qualities of law were needed to make this work at scale:

  1. Contract law, the implied contract that for money, I either get my drink or my money back;
  2. Public liability law, the drink isn’t poisoned; and
  3. Property law, the vending machine belongs to somebody, and shouldn’t be vandalized or stolen.

In this sense, the law(s) are baked into the architecture of the vending machine as a social construct.

Something borrowed and Something Blue formed a sadder story. Lessig reminded us of a quote from Thoreau:

“There are a thousand hacking at the branches of evil to one who is striking at the root.” 

This was his bridge to explain why he has ceased focusing on the application of law to online digital rights management—the creative commons—and now focuses his time on the systemic corruption in the political process of the ‘SuperPAC’.

His long and abiding working relationship with Aaron Swartz is the backbone of his motivations, because Aaron posed questions about the effectiveness of his work in the upper layers of the problem (the branches) looking at Digital Rights Management, when the systemic problem lies deeper. He pointed to one of Aaron’s writings on this problem, and its relationship to the blockchain concept—Squaring the Triangle: Secure, Decentralized, Human-Readable Names.

As a call to arms, and a timely reminder of the social utility of the rule of law, rather than libertarian fantasies of independence, I think Lessig succeeded. This was an entertaining and erudite presentation. I am less hopeful that we can avoid the kind of regulatory capture he worries about, as I suspect we may in fact already be too late. But, it pays to think about what kind of network we want, and rather than passively accept what we get, fight for it.

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