Vlad’s got questions. IPDB’s got answers.
…and more questions.
Ethereum researcher Vlad Zamfir recently tweetstormed on the mushy human side of blockchain technology (collected into a single post by Simon de la Rouviere).
Vlad raises many important questions, including a bunch of things IPDB has been thinking about for a couple of years now.
This post is to give a rapid-fire response to some of Vlad’s thoughts and questions with some of our own thinking over the past two years, and to contribute some questions of our own that might push the discussion forward.
1. Law enforcement
Bitcoin was never truly anonymous, but there was a time when it was impenetrable and unintelligible to law enforcement. Anonymous drug markets! Money laundering! Terrorist financing! Panic!
The traditional financial system is tightly regulated with heavy KYC and monitoring for suspicious transactions, but regulation cuts both ways. It brings strong privacy protection. Warrants aren’t easy to get, and even when you get one you only get the information you ask for, and you can only ask for the specific information you have probable cause to need to see.
So despite the great Bitcoin freakout, blockchains can be a gift to law enforcement: a public blockchain is a warrantless surveillance machine. Blockchains can show entire criminal enterprises mapped out in a level of detail you could never get from a bank, even with a warrant, and with mathematical proofs built in. Once you find the one time your pseudonymous suspect screwed up, you’ve got ’em dead to rights.
2. Regulation & Jurisdiction
Picking up from the question of jurisdiction above, and adding in the question of regulation…
Around the world, we are seeing a trend toward greater internet regulation. This is especially true for the suppression of political dissent in repressive regimes, but also true in more liberal countries. Efforts to deal with “fake news”, cyberbullying, revenge porn, terrorist recruitment, and other difficult social problems have led to more intensive regulation of the online world.
At the same time, we are seeing a tendency for countries to try to export their rules to the rest of the world by extending their jurisdiction globally. The United States, France, and even a Canadian province have all attempted to enforce their internet laws around the world.
Combined, these two trends are resulting in what I call the lowest common denominator internet, with both regulation and jurisdictions expanding to capture everything, everywhere.
Blockchain projects will run head-on into the lowest common denominator internet. Decentralized technology is both a blessing and a curse in this kind of legal environment. We have tried to spread out our caretaker nodes on IPDB so that we have what we call jurisdictional diversity—a wide range of legal regimes so one set of bad laws can’t take down the entire network. But it also subjects us to more legal requirements.
To make regulatory compliance even trickier, blockchains are designed to resist takedowns, whether by hackers or lawful order. This solution to tampering creates major issues for complying with everything from DMCA takedowns to “right to erasure” requests under the new European GDPR.
So no answers here, but a bunch of new questions for the list:
- Does multi-jurisdictional decentralization create insurmountable legal problems?
- How can “immutable” data stores handle takedown requests?
- Is shredding a private key that is used to decrypt data written to a public blockchain enough to comply with an erasure request under the GDPR?
3. Governance
Blockchain governance should include the ability to make changes to consensus when extreme circumstances require it. As we move more of the workings of society onto blockchain networks (banking, ownership records, insurance, public services, voting…), it will become increasingly clear that we should treat a blockchain as a constitution—difficult to change, but also responsive as society evolves and our values evolve with it.
Right now blockchain governance is a crypto-plutocracy. Proof-of-work and proof-of-stake both put decision-making power in the hands of the rich. They create powerful incentives to maintain the status quo, even if the status quo is deeply unjust (or not quo). Bitcoin scaling is perhaps the clearest example of the crypto-plutocracy at work—miners voting against technological upgrades to ensure their ASIC investments pay off.
Proper blockchain governance requires that, at very least, the protocol be decoupled from financial incentive, whether that is in the form of hashing power or how much you hodl. But as we move more and more of society onto the blockchain, we will want the constitutional amendments to be decoupled from financial incentive as well.
4. Disclaimer: So many questions! So few answers!
These aren’t definitive answers to the questions Vlad raised. This is me thinking in public, something I’m going to try to do more of in the coming months. I’m open to questions, critiques, and complaints, as long as they’re respectful. Let’s figure this out.
*Edited 2017–06–08 to clarify key shredding.
