BANKEX Smart Justice: When Irrefutable Judgment Gets Real
BANKEX announces the launch of Smart Justice, a blockchain based arbitration service for dispute resolution and reputation management in the crypto sphere. Decentralized transactions rely on math, and immutable ledgers and Smart Justice arbitration are fully aligned with this concept and technology. Using the Law of Large Numbers, independent arbitrators from all over the world are randomly selected to review cases of disputed blockchain based transactions presented by aggrieved parties and provide fair arbitration for conflict resolution.
The Smart Justice system will be the first truly effective blockchain arbitration service available for parties subscribed to the BANKEX Trust Service, an Ethereum module embedded in smart contracts. The combined power of BANKEX Smart Justice and the Trust Service will offer a business resource that will further establish the viability of decentralized marketplaces of all kinds by promoting standards equitable dispute resolution, incentives for ethical behavior and reputation management.
Trust me; I’m Anonymous
Reaffirming the Promise of Trust on Blockchain
While single-event transactions and contractual relationships on the blockchain are recorded and tracked, the factors that determine the success or failure of a given transaction are far more complicated.
Parties on either side of the technology are still human and can fail to meet obligations so securely registered on blockchain as in any other ordinary transaction. Failure to deliver, partial fulfilment, poor quality or inadequate compliance with agreed conditions are inevitable. The lack of a centralized authority for judicial appeal or universal mechanisms for conflict resolution threatens to undermine the viability of blockchain technology as a medium for commerce, despite its many advantages for fast, decentralized and cost-effective transactions.
The BANKEX team is introducing Smart Justice to fill the gap in dispute settlement on blockchain for the whole crypto world.
Thanks to decision path mechanisms based on the Law of Large Numbers and the solid logic game theory, BANKEX Smart Justice will not only settle disputes, but aid in preventing fraud, collusion and other business risks that are often glossed over when obtaining justice for a miscarriage of trust is too expensive or time consuming to pursue.
BANKEX Trust Service — a Safeguard for Transactions
The ability to settle disputes on blockchain requires a mutual desire of all parties in a given transaction to want to trust and be trusted by counterparties. Ordinary contracts between parties often contain stipulations for dispute resolution as part of the agreement in offline transactions. The BANKEX Trust Service is an ethereum module designed by BANKEX that can be attached to any smart contract to serve as a testament to any transaction-enabling parties to create and access a decentralized receipt for transfers of monetary instruments and additional information critical to a resolving a potentially disputed transaction. This ensures a bilateral confirmation of the transition that can be used as information for 3rd parties reviewing the transaction.
Once the testament contract has been created with Trust Service users are bound to abide by the terms of the contract. Parties who fail to comply will be sent notifications to informing them of their liability. Users will then be required to respond by either accepting or editing the addendum to the contract and supplying their information to affirm or deny the validity of their liability. Once a user confirms a notification, their response cannot be deleted or changed. If one party considers has not properly met the conditions of the original contract or a response to a notification of liability for breach of trust to be unsatisfactory, they can initiate a case for arbitration using BANKEX Smart Justice.
Initiating Dispute Resolution
To initiate a case for dispute resolution, a complaining party needs to submit a request for arbitrage using the online form on the BANKEX Smart Justice site.
The case request will automatically be given a unique identification tag. The complaining party will add a link to the original transaction registered with the BANKEX Trust service, complete with their own and their counterparty’s wallet identification number. Then the complaining party describes the nature of the dispute and defines the damages or actions they are seeking from the other party. Also, the complaining party determines the fees for arbitrations, called Decision Maker, in BKX. The fee is a remuneration solely to the arbitrators voting in the majority and represents a deposit to secure the interest of the majority of Decision Makers irrespective of the conclusions they arrive at — for or against the complaining party.
After the Decision Maker’s fees have been deducted from the complaining party’s wallet, the counterparty will receive a notification informing them that an action has been launched against them. Following the notification link, the counterparty can access the details of the submitted case and has the option to add comments in the online form for a limited period. The counterparty is given a chance to respond and present their side of the case — either agreeing to reach a solution without arbitrage or contesting the complaining party’s claims with evidence or information that might invalidate a claim — just like in offline arbitration. This information is added to the case file and what follows is the finest hour of the BANKEX Smart Justice system — the smart contract will randomly appoint 51 arbitrators to review and vote on a resolution for the dispute.
Leveraging the Law of Large Numbers
In a coin toss, there is a 50% chance that the coin will be either heads or tails.
The outcomes of flipping a coin a half a dozen times, however, will not provide proof of this statistical fact.
This doesn’t mean that statistics are unreliable and have nothing to do with real life. The coin toss has to be carried out many more times to reflect the true statistical average. This perspective is particularly important when making a decision, for example, about how many people should be included in a scientific study to exclude the impact anomalies. It is also critical in a logic path when an unequivocal ‘correct’ outcome is required to validate probability. The more people asked to resolve a dispute predicated on immutable conditions in smart contracts and actions taken by the parties involved to fulfill those conditions, the lower it the probability of arriving at an incorrect resolution about what actually transpired. The Law of Large Numbers is a principle of statistical probability that stipulates when, given enough trials or decision-making outcomes, the frequency of similar outcomes with same likelihood of occurrence even out.
In the case of arbitration, a minimum quorum of 29 out of 51 voting Decision Makers is a sufficient volume of votes to approach the theoretical, or expected, the ratio of outcomes. Because of the technological opportunity to assemble a large number of independent Decision Makers to vote nearly simultaneously in real time, the BANKEX Smart Justice system takes advantage of the Law of Large Numbers for consistently trustworthy outcomes in this form of decision making. In this way, the BANKEX Smart Justice system quickly and effectively settles disputes arising from transactions in the blockchain community.
Selection of Decision Makers
Anyone who purchases a vote token for BKX can become a Decision Maker in the BANKEX Smart Justice system.
For outcomes to be fair and computationally the most reliable, there needs to be a majority of at least 29 of 51 independent and randomly selected Decision Makers from an arbitration panel. Only those Decision Makers who are among the majority will receive the fee in BKX compensating them for participating in the BANKEX Smart Justice arbitration. This fee will include the expense of a vote token and an additional sum that will motivate Decision Makers to make a fair, that is correct, resolution to a given dispute regardless of the outcome. Those in the minority will neither earn a fee or be compensated for their vote token. This arrangement makes it possible to select Decision Makers at random without regard to their understanding of a particular case. The logic path of the smart contract requires no special education for a vote token holder to qualify as a Decision Makers and no special incentive to take the side of either party in a dispute.
Reducing the outcome of a dispute in favor of either the complaining party or the counterparty and the large and unequal number of Decision Makers presents a situation objectively similarly to the coin toss except for a weighted majority. This arrangement is sufficient to ensure arbitration is both fair and just.
Starting a New Case
When a complaining party initiates a new case, 51 unacquainted vote token holders are randomly assigned to settle the dispute.
As soon as they get a notification of the case and click the Make a Decision button, they will see the details of the dispute presented by the parties involved: the original contract and the claims of the complaining party and the response of the counterparty. After considering the details of the case, Decision Makers have the option to either vote for the party they consider to be in the right or to abstain. When a Decision Maker chooses to abstain, their vote token is reimbursed after the verdict is reached.
When the votes of all Decision Makers are complete, the conflict will be resolved and all parties notified of the results and any claims will be awarded as per conditions of the smart contract in the BANKEX Trust Service module. In addition, fees in BKX for the majority Decision Makers will be calculated and automatically transferred to their wallets.
It is possible that a dispute may not be resolved for several reasons:
· The dispute may be too complex for a panel of arbiters to reach an equitable solution over a given period
· The Decision Maker’s fee proposed by the complaining party may be insufficient to cover the cost of a vote token
· The compensation required by the complaining party might be disproportionate with the claim or otherwise unfounded
In the event a resolution cannot be reached in the prescribed period, the Decision Maker fees fixed by the complaining party in BKX will revert to that party’s wallet, vote tokens will be returned to the Decision Makers and the case will be closed without a resolution with all parties receiving notification of the causes. The complaining party may wish to initiate a new case repeating the process, taking into account the reasons why decision-makers decided to abstain from voting.
Reputation. Is. Everything.
The legal mechanisms to enforce compliance with blockchain based dispute resolution do not yet exist and will likely remain speculative for some time.
The most actionable lever for blockchain dispute resolution, then, is a user’s reputation. Reputation is a highly valued quality in today’s world of brand consciousness and networking for global commerce, and it is even more critical in the decentralized sphere where it is impossible to conceal essential actions performed on the blockchain. What’s more, the relative size and status of any entity are leveled on the blockchain. Smaller, less well-known entities are on the same footing in terms of reputation as larger, more well-established entities.
In our powered media era of instantaneous, global information, many companies are aware the power of publicly recognizing mistakes as a means of saving or even enhancing brand reputation in an atmosphere overshadowed by cover-ups and denials. Many global brands have faced crisis resulting from errors and overcome them with public recognition of guilt and timely response to address consequences.
When multiple fatalities resulted in the Chicago area as a result of taking extra-strength Tylenol capsules that had been tampered with in 1982, Johnson & Johnson promptly recalled all Tylenol capsules and other capsules sold under different brand names. The company quickly launched a campaign to distribute warnings to avoid certain drug types. Even though the crisis cost the company more than $100 million, Tylenol regained 100% of its market share from before the crisis when Johnson & Johnson reintroduced Tylenol with new tamper-resistant packaging which we now see on all bottles today. They also offered a $100,000 reward for the perpetrator, though no suspect was ever charged or convicted.
Other global brands have handled responsibility for their actions with fewer fines. Whether by reacting too slowly, casting blame on others or by trying to stifle information and cover up problems, brands that don’t openly and honestly acknowledge problems invariably suffer from dropping share prices, costly damage control campaigns and other tactics resulting in permanent damage to their brands and reputations.
Because the Smart Justice system is on the blockchain, the outcome of any arbitration will be public. The heightened sensitivity of reputation compensates the lack of centralized powers of enforcement in the blockchain world. Those who fail to fulfill agreements, keep promises or deliver will not be able to avoid becoming well known for such behavior. This will damage their reputation and potential for conducting business in the future. Likewise, those falsely accused of error or intentional breach of contract will have a mechanism to defend and secure their reputation.
The aspect of the BANKEX Trust System that is perhaps most powerful and promising is its ability to make blockchain transactions more attractive, however, is the potential for parties to acknowledge errors or failings in contracts and to address them through post contract modifications or speedy reparations that might satisfy the complaining party before arbitration begins. In the event of a resolved dispute, the conclusion of an equitable settlement in a timely and honest fashion will also go a long way to preserving a party’s reputation as a reliable partner who is ready and willing to acknowledge an error and make restitution. This last opportunity for displaying good will and reconciliation has been shown to be critical in protecting reputation in offline transactions and will undoubtedly be even more essential to managing reputation in the future.
Smart Justice of The Future?
In a word, the BANKEX Smart Justice system is a solution with tremendous implications not only for blockchain dispute resolution but for a better world where a more proactive, open and honest approach to transactional behavior makes for better business, less chaos and greater possibilities for cooperation.
While it is clear that replacing existing centralized judicial systems with decentralized arbitration is not possible, BANKEX proposes to minimize legal errors and corruption in as many disputes as possible. Having proven the effectiveness of this technology, BANKEX plans to bring blockchain arbitration to everyday offline disagreements in the cases which could be decided unequivocally in favor of one of the sides and don’t need a legal review of professional judges.
