behaviour is not possible within its framework, how will the negative implications
be mitigated when this assumption does not hold true, when suddenly unacceptable behaviour is proved possible? In short, how is redress organised?
In the wake of the DAO hack, the developers of the whole Ethereum network
deliberated between two reactions to the event: either freezing the stolen money and
thus preventing the hacker from benefiting from the theft, or reversing all transactions
in the blockchain and thus removing the negative effects of the hack. The first option,
called ‘soft fork’, would have meant some people losing their investments for good,
whereas the second option, called ‘hard fork’ would restore the transactions made to
the smart contract. In July 2016, the hard fork solution was implemented, thus
constituting a human intervention against the irreversibility of the code, breaking the
neoliberal ideal of smart contracts as beyond external influence, beyond subsequent
redress. Ultimately, the hard fork solution underlined the inadequacy of the ‘code is
law’ approach in providing redress in unexpected conflict situations. Nevertheless, the
DAO hack, alongside the recent blunder concerning Ethereum-based Parity multisignature wallets that led to the supposedly accidental destruction of US$300 million
worth of digital funds and speculations of yet another hard fork,
15 indicate that the
blockchain architecture itself is not conflict-averse, and not as independent as claimed.
Despite the potential of smart contracts in conflict prevention and private enforcement, distributed ledger technologies have not been able to remove the need for
conflict management, but on the contrary have given rise to new types of conflicts that
cannot rely on existing state-bound redress mechanisms.
In addition to not seeming to hold true in reality, the ‘code as law’ approach
disguises a troubling neoliberal ideology, described by the blockchain scholar
Primavera de Filippi as the libertarian dream advocated by blockchain enthusiasts
16
and by lecturer Alan Cunningham as the combination of decentralisation and
distrust. In his analysis, the blockchain technology is seen to emphasise a political
ideology that aims at the elimination of the state for increased agency of individuals, an ideology built on a computationalist belief, ‘a complete faith in the ability
of mathematics and technology to eradicate problems emerging from human
behaviour’.
17 The danger of such ideology lies in its mechanic understanding of
societal interaction: any gained agency and independence in the decentralised
network is individual only and, as human interaction loses its collective dimension,
the concept of public interest is eradicated. Despite their neoliberal promise,
blockchain organisations and smart contracts cannot operate independently of all
external control but instead require governance, ex post redress mechanisms, the
safety valve of human intervention.
18 For Cunningham, this means that attention
should be on developing new ways of building up trust in public society instead of
outsourcing it to code.
If it is not sufficient to use code as a regulatory concept to steer behaviour, this
raises the question to what extent code architecture can assume the place of the
normative provided by law, to what extent code can be law. As the continuously
increasing interest in distributed ledger technologies shows, in the majority of
transactions the code can provide a sufficient framework for interactions. Code
continues to do so until a vulnerability, an unexpected error, takes place, at which
New bases for justification 185
be mitigated when this assumption does not hold true, when suddenly unacceptable behaviour is proved possible? In short, how is redress organised?
In the wake of the DAO hack, the developers of the whole Ethereum network
deliberated between two reactions to the event: either freezing the stolen money and
thus preventing the hacker from benefiting from the theft, or reversing all transactions
in the blockchain and thus removing the negative effects of the hack. The first option,
called ‘soft fork’, would have meant some people losing their investments for good,
whereas the second option, called ‘hard fork’ would restore the transactions made to
the smart contract. In July 2016, the hard fork solution was implemented, thus
constituting a human intervention against the irreversibility of the code, breaking the
neoliberal ideal of smart contracts as beyond external influence, beyond subsequent
redress. Ultimately, the hard fork solution underlined the inadequacy of the ‘code is
law’ approach in providing redress in unexpected conflict situations. Nevertheless, the
DAO hack, alongside the recent blunder concerning Ethereum-based Parity multisignature wallets that led to the supposedly accidental destruction of US$300 million
worth of digital funds and speculations of yet another hard fork,
15 indicate that the
blockchain architecture itself is not conflict-averse, and not as independent as claimed.
Despite the potential of smart contracts in conflict prevention and private enforcement, distributed ledger technologies have not been able to remove the need for
conflict management, but on the contrary have given rise to new types of conflicts that
cannot rely on existing state-bound redress mechanisms.
In addition to not seeming to hold true in reality, the ‘code as law’ approach
disguises a troubling neoliberal ideology, described by the blockchain scholar
Primavera de Filippi as the libertarian dream advocated by blockchain enthusiasts
16
and by lecturer Alan Cunningham as the combination of decentralisation and
distrust. In his analysis, the blockchain technology is seen to emphasise a political
ideology that aims at the elimination of the state for increased agency of individuals, an ideology built on a computationalist belief, ‘a complete faith in the ability
of mathematics and technology to eradicate problems emerging from human
behaviour’.
17 The danger of such ideology lies in its mechanic understanding of
societal interaction: any gained agency and independence in the decentralised
network is individual only and, as human interaction loses its collective dimension,
the concept of public interest is eradicated. Despite their neoliberal promise,
blockchain organisations and smart contracts cannot operate independently of all
external control but instead require governance, ex post redress mechanisms, the
safety valve of human intervention.
18 For Cunningham, this means that attention
should be on developing new ways of building up trust in public society instead of
outsourcing it to code.
If it is not sufficient to use code as a regulatory concept to steer behaviour, this
raises the question to what extent code architecture can assume the place of the
normative provided by law, to what extent code can be law. As the continuously
increasing interest in distributed ledger technologies shows, in the majority of
transactions the code can provide a sufficient framework for interactions. Code
continues to do so until a vulnerability, an unexpected error, takes place, at which
New bases for justification 185