Blockchain technologies rose to fame as the underpinning of the Bitcoin cryptocurrency. Though many at first dismissed Bitcoin, it’s become increasingly accepted as a financial instrument and used as a springboard to launch many newer cryptocurrencies.
However, currency is far from blockchain’s only application. Indeed, the rate of development of new blockchain-based applications has only accelerated in the last few years, and we can expect disruptive and transformational products to emerge in the near future. In particular, the ability to build smart contracts on top of a blockchain platform has the potential to revolutionize contract management.
Two Camps of Thought
The vast majority of this recent innovation has focused on the question, “What can we achieve using this technology?” Yet, we should step back and ask the more fundamental question, “What do we, as a society, want to achieve with this technology?”
Recent events in the Ethereum blockchain community have highlighted the need to answer such questions. In short, a lot of investors put money toward a group whose contractual foundation was flawed. After one investor exploited a loophole in the contract to extract millions of dollars’ worth of currency, the entire community split, leaving behind two camps:
“Ethereum Classic,” in which contractual loopholes and predatory contracts must be upheld no matter the consequences
“Ethereum,” in which investors with enough influence, or enough money invested in the currency, can dictate which loopholes are closed and which transactions are voided
Although the traditional financial market contains many instances of both practices, neither is codified into law as an absolute standard. The ultimate arbiter is a human judge, who has the authority (and hopefully wisdom) to determine the specific resolution for individual cases. The process for electing or appointing judges varies by country, but a robust and independent judiciary is an essential part of modern society throughout the world.
The Future of Blockchains
As blockchains continue to gain in market share and financial power, the lack of any separation of powers will initially increase existing inequality and inequity. However, blockchains are fueled by distributed consensus, and this consensus could disappear unless blockchains adopt mechanisms to enable judicial intervention.
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