EIP 867. Should blockchain communities act like courts, from the libertarian perspective?

Tl;dr It’s complicated.

Parity’s recent proposal to enact a change to the Ethereum protocol that would create a standard procedure for retrieving funds has created a lot of controversy. What I would like to say here as a libertarian is that both the pro and contra viewpoints are reasonable and should perhaps even be implemented simultaneously by different blockchain communities.

On the pro side, many libertarians are tempted by the idea that it is possible for humanity to self-organize in all kinds of domains without the state, including the resolution of disputes and protection of property. In this sense, a major blockchain having a mechanism allowing to rectify thefts and hacks provides an opportunity to put this hope-inspiring idea to a serious test and potentially provide a spectacular demonstration to the sceptics of stateless societies that the latter might actually work.

Despite what many “code is law” maximalists would say, this position is far from absurd, especially if the potential interference of the existing governments is taken out of consideration. Moreover, believing that blockchain communities will themselves tend to massively abuse their capacity to undo thefts and hacks through ledger changes is in a way tantamount to casting a severe doubt on the capacity of humans for stateless self-organization.

At the same time, given the present existence, of big governments willing to intervene in all kinds of peaceful human interactions, the opponents of EIP 867 are right to worry that it can be used by the former as a precedent for taming blockchains.

Even if other blockchain communities refuse to follow the example of the one that adopts the ledger-modification mechanism, governments can use such adoption as a precedent for imposing it on them by law.

However, at some point, this question may still be raised at the regulatory level regardless of what blockchain communities do. It may be politically very difficult for governments to just accept the reality in which blockchain communities do not have procedures for reverting innocent value losses.

If we set the legal precedent worry aside, however, the natural solution to this problem is to have both blockchains that have ledger modification mechanisms and those that do not. The use cases and users may then gravitate to either of those depending on how important immutability guarantees are to them.