 So welcome to all of you and a special welcome to Primavera de Philippi. Primavera is a Birkman Fellow this year. She's been working on a ton of really awesome projects, everything from mesh networks to Ethereum. There's a couple of different pieces that we've posted to the event page for this that you can read what she's written about these issues on. She is a postdoc at the University of Paris in addition to being a Birkman Fellow and it's here to talk to us about Ethereum today, so welcome Primavera. Okay so today we're gonna talk about Ethereum and we will try and figure out what is the impact that this new technology could have on society. So whether it might actually lead to the establishment of Ansari? Okay so we will try to figure out whether this new technology at the end could lead to the establishment of a free and decentralized society or whether it might instead promote a more dystopian vision of society. So can I use this thing maybe? It doesn't work. Okay I will try and scream. Okay so just before I begin I would like to say that because of the technicality of this talk then I actually would really appreciate it if you can interrupt me at any moment just to make sure that no one actually gets lost before I reach to the really interesting legal part. So to begin with before we can actually understand anything about Ethereum then we first need to understand a little bit about Bitcoin and how it actually works. So it all begins in 2009 as Satoshi Nakamoto which is a pseudonymous entity which is supposedly the creator of Bitcoin released a white paper that described the implementation of what he defined as a decentralized currency based on a cryptographic ledger. So this sounds extremely interesting but exactly what does it mean? So first of all there is the concept of a decentralized database which in Bitcoin lingo it's called the blockchain and so the easiest way to explain what is the blockchain is to think of a public ledger which records every transaction that has ever been made and that will ever be made on the Bitcoin network and a copy of this public ledger is distributed to every single user connected to the network which all agree to abide to a certain set of rules or procedures basically the Bitcoin protocol which is such that once a transaction has been recorded on the blockchain then it can never be deleted. And then there is the idea of digital token which is essentially the basic unit of transaction and so when this is combined with a transaction system that operate on top of this decentralized database then we obtain something that is pretty much equivalent to a decentralized currency or a payment system. And then there is encryption which is basically there to ensure the integrity and the security of the overall system by preventing anyone from recording a transaction unless it actually has the proper authority to do so. And so when we combine all those three characteristics then we have Bitcoin which is essentially a decentralized cryptocurrency which is not regulated by any governmental institution or financial institution but that is regulated only and exclusively through its protocol. So I will actually not go into the technical details of the Bitcoin protocol which is quite complex but it is important to say that the code of Bitcoin is actually open source which means that anyone can actually take a look at it and try and figure out whether there are any flows in the implementation. And so after some years of struggles and testing and experimentation then Bitcoin actually went from being worth less than $1 in 2009 to over $1,000 just a few months ago. And nowadays Bitcoin is actually accepted by many online vendors such as Foodler or Overstock for instance. And there is also a growing number of Bitcoin ATMs that are actually being deployed all over the world and that the most recent one actually just opened in Harvard Square at Clover so if you want to check it out. And so Bitcoin basically proved that it is indeed possible to have a working decentralized currency system. Now the thing is that the actual really interesting thing about Bitcoin is not actually the currency itself but is rather the underlying technology the cryptographic ledger or the blockchain which could potentially be used and adapted to a variety of different applications that do not actually necessarily have to do anything with money. And so we come back to Ethereum which basically builds upon the technology of Bitcoin in order to create a next-generation smart contract and decentralized application platform. So again this sounds really interesting but what does it exactly mean? Well so if Bitcoin is a decentralized cryptocurrency then Ethereum can be regarded as the platform on which decentralized cryptocurrency can be built. And so it has been defined by some people as a cryptocurrency 2.0 which is slightly inaccurate in the sense that Ethereum actually can do so much more than being just a cryptocurrency. And so just like Bitcoin Ethereum actually implement a decentralized database, a system of digital tokens, an encryption scheme and in addition to this it also creates a touring complete scripting language which allows anyone to actually deploy their own application on top of the blockchain. And so instead of actually adding additional features on top of the Bitcoin protocol then Ethereum actually took a step back and it actually eliminated every feature from the Bitcoin blockchain in order to make it easier for people to create new application by implementing only those features that they actually need as an extra layer on top of the blockchain. And so well if Bitcoin actually allowed for the deployment of these decentralized cryptocurrency that operate independently of any centralized entity or government then Ethereum could potentially lead to the deployment of decentralized applications that operate autonomously on the blockchain. So of course Ethereum makes it really easy to implement new and alternative cryptocurrencies but it also allows to create much more sophisticated application such as for instance communication system like Bitmessage or decentralized social networks like Twister or even decentralized cloud storage like something like Dropbox. But the particularity is that all those applications are completely decentralized in the sense that they do not actually depend on any centralized entity or third party. Now because there is in fact no such third party to interact with then the interaction between the application and its user is completely determined by the underlying code of those applications which in Ethereum slang are called contract in fact smart contract which basically describe all the rules and the procedure that the user have to abide to in order to interact with those application. And so well what exactly is a smart contract? So a contract is an agreement between two or more parties to do something or not to do something in exchange of obtaining something else in return. Now the problem is that every party has actually to trust the other party that it will actually comply with its obligation in order to fulfill the contract. Now in the case of smart contract then the situation is slightly different because they actually remove the need for being any trust between the parties to the extent that they are self-enforcable. And so basically self-enforcable. So basically the idea is that the contract and the code are basically merged into one thing and so the contract is defined by the code and is also automatically being enforced by the code which defined it. And so the most common analogy for a smart contract in the physical world will be the case of a vending machine. So you put money into the vending machine and assuming that you have inserted the right amount of money then the machine will deliver the project that you've asked for. And so in this sense you don't need to trust the machine and at the same time the machine does not need to trust you. Assuming that the machine is actually open source and open hardware. I would say you often do need to trust these things and sometimes they don't work. Yeah of course but you don't need to trust the intention of the machine because basically the whole interaction is defined and enforced by the technical infrastructure of the machine. And so the interesting thing about Ethereum is that you can also have decentralized applications that interact directly with other decentralized applications basically eliminated the need for any kind of human interaction. And so this leads to the most interesting aspect of Ethereum which is the concept of decentralized autonomous organization, DIO, which basically are just a more sophisticated kind of smart contract which implement a constitution that basically stipulates the rules and the procedure for the governance of this organization and that also implement a system of equity which allows people to invest into this organization by purchasing some of their shares. And so as an example we can take the case of ICANN for the management of internal domain names. And so instead of entrusting an organization to operate according to a certain set of rules or principle, then it is possible to encode those principles directly into the code of a decentralized application like it has been done with Namecoin, or it is possible to incorporate those principles within the constitution of a decentralized autonomous organization that will then be bound to operate according to those principles because it simply has no choice to do otherwise. And so to come back to the legal issues, then what is actually so special about a distributed autonomous organization and why do they raise so many legal challenges? So first of all, they are autonomous in the sense that once they have been deployed on the blockchain, then they no longer need their creator and in fact they no longer need to listen to them. And then they are self-sufficient in the sense that they can actually charge users for the resources and the service that they provide in order to then be able to pay orders for the resources that they need such as processing power or bandwidth for instance. And then finally, they are decentralized in the sense that they do not subsist on a centralized server, but they are encoded directly on the blockchain which is distributed through the whole network. And so their code is actually being executed in a decentralized manner by every single node in the network. And so because of those three characteristics, then distributed autonomous organizations are actually really difficult to regulate because there is in fact no specific entity to regulate. And also because of the self-enforcing properties of their code, then distributed autonomous organization might actually challenge some of the most basic principle of our current legal system. And so there are in fact a lot of legal challenges which are raised by Ethereum and I will here focus on a few of them that I thought would be the most interesting, but I will actually be really happy to discuss anything that might come into your mind after us during the discussion. So to begin with contract law, as I said, smart contracts are specific because they are transparent in the sense that their code is publicly available on the blockchain. So everyone can actually take a look at those and understand exactly how they're going to work. And on the other hand, they are self-enforcible, which means that they remove the need for there being any trust between the parties because the contract will be executed no matter what, independently of the will of those parties. And so as opposed to traditional contracts where parties are actually free to decide whether or not to completely fulfill the contract or to only comply with certain obligations or whether to breach the contract and then just pay for compensations or damages, then in the case of smart contract, then the parties actually have no choice but to implement the contract because the contract has been incorporated into the code, then it is not possible to breach the contract unless one actually managed to break into the code. And so this raises some really interesting question with concern to the distinction between what is technically binding versus what is legally binding. So for instance, in contract law, there is a variety of situations that might either invalidate a contract. For instance, if it has been agreed upon under coercion or undue influence, or that might at least limit the enforceability of some of its provision to the extent that they go against the interest of consumer or consumer protection law. Now, smart contracts are actually not directly affected by those provision to the extent that they operate within their own closed technical framework that might not necessarily implement those kinds of legal safeguards. And so basically in this sense, it is potentially possible with smart contracts to bypass the actual legal framework of contract law. And now when we come into the context of property law, then the situation is actually quite similar in the sense that Ethereum implements its own technical framework that operate outside of the legal framework of property law. And in particular, Ethereum implements two important features that significantly differ from traditional property rights. So the first one is the concept of smart property, which basically relies on smart contracts and digital token in order to implement a decentralized, trust-free asset management system. So the idea here is that it becomes possible to transfer the ownership of something directly via the blockchain by transferring a particularly designed coin or a token which has been linked to that particular asset. And so this actually allows for the creation of so-called cryptographically activated assets, such as for instance a smartphone that can only be used with a particular set of coins or tokens or a smart car that can only be driven by the person who actually owns that particular token. And so instead of transferring the property of the car, then it becomes possible to just transfer that particular token in order to achieve pretty much the same result. And then the other one is the concept of crypto property, which is extremely interesting to the extent that it allows for cryptographic or algorithmic entity to own a particular set of resources or currency just as if it was their own property. And so as opposed to traditional property rights, which have been defined by the law and which therefore can also be taken away by the law, crypto property rights are different because they are both defined and automatically enforced by the code. And so this means on the one hand that they cannot be seized by the law, but it also means that once they have been stolen, for instance, then there is pretty much no possibility of recourse. And so to come back to Ethereum, this basically means that distributed autonomous organization have total and absolute sovereignty over their own resources, which cannot be seized by anyone unless this has been specifically provided for within the code of this organization. So this brings us back to what Lawrence Lessig had identified over 10 years ago, basically that on the cyberspace code is law. And so I think nowadays we all have understood that. But then the question is if code is law, then how can the law actually regulate the code so that it regulates our behavior in a way that is compliant with the law? And so, well, this brings up a much more fundamental question, which is how do we actually want to regulate distributed autonomous organization? So should they be regulated in the same way as traditional corporations or organizations, or do we actually need a distinct body of law that will better account for the specificities of those distributed organizations? And so this is actually really interesting because as I was researching the question, then most of the material that I found was actually related to the regulation of intelligent robots, which was actually quite surprising at first. But then I realized that it makes complete sense to the extent that they both share this commonality of being both autonomous and self-sufficient. And so this leads to the third critical legal point, which is the question of liability and responsibility. So let's take the example of a distributed autonomous organization, which delivers a copyrighted song to everyone who transfer the equivalent of $1 to it. And so the question here becomes who is actually in charge of and who is responsible for the activities of this distributed autonomous organization, assuming that, of course, the copyrighted song has not been cleared. So it is a copyright infringing song. So the most obvious answer will be that it should, of course, be the creator of this distributed organization. Now the problem with this is that it might actually be extremely difficult to identify the creator to the extent that the distributed autonomous organization has been deployed anonymously on the blockchain. And secondly, even though the creator could actually be identified, then there is the problem that the creator might no longer have any kind of control over that distributed organization, which will then continue to operate autonomously as long as it has sufficient funds for it to operate on its own. And so perhaps it should actually be the users that should be held vicariously liable for the services that they are paying for. Now the problem here is that this will only apply to the extent that users are actually new, or at least that good reason to believe that the distributed autonomous organization is actually doing something wrong, which in this case, my, for instance, not be the case if they are not aware that the copyrighted song that they are purchasing is actually an infringing song. And so perhaps it should then be the distributed autonomous organization itself that should be held liable for its own actions. Now the problem here is that we then encounter a much bigger problem in terms of law enforcement because it is virtually impossible to obtain an injunction or to recover damages from a distributed autonomous organization. And so well, we found ourselves into some kind of legal limbo in the sense that we cannot actually rely on traditional legal means in order to regulate the code of this new technology. And so the question then is, do we actually need to? And so the supporter of Ethereum will actually argue that we don't. Because if Bitcoin can be regarded as a decentralized alternative to counteract the corruption and the inefficiencies of the financial system, then Ethereum could actually constitute a decentralized alternative to the legal system as a whole. And so this relates to this kind of anarchic idea of decentralized law. Basically, where everyone is able to implement their own set of rules into a particular contract to create an interconnected system of contractual rule interacting with each other in a way that is transparent, that is always predictable, and that does not require any kind of trust between the parties. Now, the flip side of this is, of course, that Ethereum could actually be taken over by big corporations, by financial institutions, or even by governments, in order to try and recreate the same economic structure and political order that we have today, except that this time it will be actually much, much more harder to actually escape from this system. And so this could potentially lead to a really totalitarian society, which is almost exclusively regulated by self-enforcing contracts, which dictate the rules to which the society has to abide without any kind of constitutional constraints. And so I would like to conclude with this quote from your high banker, which basically says that there are no perfect freedoms, just different set of constraints. And so the question that we have to ask ourselves is would we rather be living in a world in which we are constrained by the rules of law, which we cannot really control, which are universally applicable, but which are also more flexible, which are issued from a democratic process, and which are not perfectly enforceable, or would we rather live in a society that is dictated by the rules of the code, which haven't thought they are consensus-based? Once they have been agreed upon, then they become automatically enforced without leaving people with any kind of recourse. And so this is my final question, and I will actually really enjoy hearing what you think about that. The DAOs remind me of the robot corporate, well, the AI corporations in Accelerando, which kick all humans out of the solar system because humans can't compete with them. This sounds like something extremely dangerous to me. However, I have to say at the same time that many of these terms sound grandiose, smart contracts that can enforce themselves. But what kind of enforcement could they really do? Could they seize money out of my bank account? Could they kick me out of my home? Or could they only say they won't do business with me anymore? I don't know, because I don't know the technical details. But it seems to make a very big difference. What kind of enforcement can smart property do? If a car is supposedly smart property because it can only be driven by whoever the blockchain says owns a certain token, well, if I'm the legal owner of that car, I can just remove that computer from it. I can put in some other computer that lets me drive it. And the blockchain can go hang itself because it'll never have anything to do with that car. And it won't be able to enforce anything on me because I haven't done anything to the token. So I don't know what concretely these concepts translate into. They're so abstract and grandiose that they could, if they mean what they sound like, they're tremendously powerful and scary. And if they don't really mean what they sound like, maybe they're harmless. Yeah, so I think there is this big issue when we start interacting with the physical world, obviously, because then you can have the smartest property as you want. But of course, if you actually break the system on the physical world, then the system cannot break up. So there is actually a lot of people that, so that was the title of my presentation. There's a lot of people that actually describe Ethereum as the potential initiator of a Skynet. What? A Skynet. Oh, yeah. And I was actually really curious. And I started exploring this. But to some extent, it's like the smart contract that we're talking about are essentially just mediator. So there is no kind of artificial intelligence in the course on the contractor, just really sharp pieces of code, which are basically just mediating the interaction between me and another person. So I don't think they can have any kind of one example. So most of them is really just contractual. So you can have futures, for instance. There is actually people that are starting to come up with really original ideas. And I actually have the list of interesting ideas. But yeah, so essentially, it's really just if I want to create a contract with you and I don't want to trust either you or a third party, then I'm going to create this smart contract on the blockchain. And so I'm going to say, so I'm going to give you this amount of money upon the completion of this contract. And then it basically act as an escrow, but which is a as an escrow. Escrow, yeah, which is a trustless escrow because it's basically just code. And I can see the code and I know exactly what's going on. Now, the thing is that Ethereum is actually still like in beta testing. So there is actually no real world application that is, sorry? Yeah, it doesn't yet exist. Yeah, I mean, there is like the testnet. So you can't test it. But there is nothing really like fundamentally useful. It could come up with a standard way of giving a court intervention control into their agreements so that they can go to court if they decide to. Yeah, so I mean, the interesting slash weird idea behind Ethereum is basically to create alternative frameworks, alternative contractual frameworks. So I want to contract with you and I'm going to issue or design a contract that is going to regulate our interaction. Now, of course, there is always the question that you cannot really codify everything into a piece of code. And there is always arbitration necessary. Or there is like things that are just you need human judgment. And so they have come up with the design of, actually, you can have, you can be, for instance, a judge. So we are an arbitrator and you incorporate your smart contract into the blockchain and you start so I can create a contract and say if there is some kind of disagreement or if we reach that point in the contract, then we have to interact with that other smart contract, which is going to ask that one judge to actually decide for one direction or the other. So you could design really complex and really sophisticated system of alternative dispute resolution system. Or you could, in fact, rely on a court system. The idea is instead of the underlying justification for those kind of contract is that so you have to trust, eventually, this judge. But you could have, for instance, different 10 or 100 different kind of judge which are specialized into a particular field and which are on reputation. So I, for instance, with my contract, I trust this judge and we both agree that this is a good judge. So we're going to apply our dispute resolution system to that judge. You could hope. You could hope. Well, you mentioned the term dispute resolution. This reminds me of a live political issue in the US today, which is that many companies require their employees or even their customers to agree to arbitration rather than legal judgment. And the companies demand this and they impose it simply by saying, I won't do business with you otherwise. So in some sense, the customers or employees are doing this voluntarily. But the result is they lose legal rights and so, obviously, laws are needed to forbid such requirements. And so that's the really interesting thing about Ethereum is that it is like, so I spoke with a lot of the people developing it. And it is mainly justified under this aspect of providing freedom and getting rid of those big corporations and government and things like this. And they really believe in the fact of decentralizing everything and asserting freedom through decentralization. Now, the problem is that, of course, because those contracts are self-enforcable and because they are so strict, you know, then once a person enters into that contract, then the freedom of the gray area or the freedom of actually just changing your mind is constrained. And so it's kind of like shifting. You provide much more freedom at the beginning because I can actually choose my legal framework. I can choose what kind of contractual framework I want to be subjected to. But then, of course, you have the issue of asymmetries of power. And then to that extent, even though I am theoretically free to choose the legal framework that I like the best, most likely if I want to interact with that big smart contractor, DIO, then that DIO will impose me from going through that contractual framework, which might actually not be the one I seriously agree to. So it's, yeah. I like to propose a different definition of freedom. Yes. Which is freedom is having control of your own life. And I find a lot of paradoxes come from other definitions of freedom, which this avoids. Well, so one, sorry, maybe I. Yes. Sorry to monopolize this. These contracts are enforced by code, but most code has bugs in it. If you can't revoke the contract to fix the bug, the bug is permanently embedded in the contract, isn't that a problem? There is one thing is that, in fact, those contracts are really, really, really simple. Those are really just like five lines, and you can have a contract. Of course, you can be in more complex. I can literally have a bug in a five-line contract. No, no, of course. But so, and they are also, so they are open state in the sense that you can pretty much look at the code. So most likely, if there is a bug, the contract is eventually completely going to be, and nobody's going to want to transact with that contract. Maybe the first person that actually enter into the contract and that will stop this. So there is, of course, this risk. Yeah. But theoretically, so under an ideal world in which everyone is actually looking at the code, and eventually they're going to build upon more sophisticated and like basically on the same concept of library. So you can have basic libraries and construct new contract based on those libraries. So eventually, theoretically, it's always, for sure, there will always be a bug. But theoretically, you can identify them and kind of sort them out. I think it's also important to realize that it's not really about Ethereum and their particular rhetoric, right? Bitcoin is a proven concept for decentralizing stuff that most people didn't think was very decentralized. And there are many, many projects out there that are doing things like Ethereum. So there's Mastercoin, which builds on the same blockchain as Bitcoin. It is purporting to build, provide an API on top of that. Ethereum folks, I think, say there's this more sophisticated than there's Ripple, which is another approach. So this is happening, kind of like Napster happened. And all kinds of things are going to change. We don't really know how. But the fact of the matter, the fact that we can even conceive of a contract that's completely autonomous, let alone a corporation is completely autonomous, really interesting, whether that's good or bad. I mean, I think it's just like, it's like Napster, right? So it created a new technology, which, well, not Napster itself, but like Bitcoin or whatever, you have this new decentralized technology, which can be used for fantastic things. On the other hand, of course, you can also use for massive copyright infringement. So I actually, again, I spoke with the people from Ethereum whether they were actually considering how what would be the implication of this technology if it's used for bad things or for a good thing. And I mean, of course, everything can be used for good things and bad things. So they are focusing kind of, so the technology is not really neutral in the sense that it is designed in such a way that will have an impact on what is the consequence on society. And the way they are, so from my understanding, the way that they are pushing this technology is that it's just like a really neutral platform which is, however, infrastructurally designed to be as decentralized as possible in order to try and avoid as much as possible concentration of powers. And they consider that if you actually manage to maintain this level of decentralization, then there will be more likely to be better usages of it or less monopolistic abuses on it. Well, what you're talking about is something that will like, if not significantly reduce the workload of some judges, eliminate the need for them. No, it's complaining about their workload, not that. So I mean, self-enforcement should have a major impact on it. So I just. There is also the problem that self-enforcement can also be so at the same, it's convenient in many ways. But it also has this risk that in fact, how can you really codify the complexity of the world into like 10 or 15 lins or as complex the software can be? It's extremely complex to really identify all the possible outcome that might come up. And so in some way, by creating something that is self-enforceable, you are creating this kind of restriction, which are excellent restriction as opposed to being exposed. And so as opposed to the standard legal system which allows you to do whatever, like doesn't constrain you in terms of capabilities, but will then punish you if you're actually infringing the boundaries of the law, by creating self-enforceable contract, then you're actually constraining beforehand the ability of people to do anything. And so if you codify the contract in such a way that is too constraining, then it means that you will be limited from doing things that might actually be legitimate to do, even before they can actually do it. So you're actually, in the sense of freedom, you're actually limiting the freedom beforehand, even though it's like a constant-based constraint. Right, but if someone volunteers to enter into a process, I mean, it's one, wow, that's crazy, a question. Then it's somewhat of benefit to one party or the other for the future prospects of the process to be as explicit as possible. Yeah, and because everything is up and state, so basically you can pretty much know everything you're getting into. And if you don't like it, you can add or remove or whatever. For example, a person goes from being fruitful in the world economically. And then one day they're on what they call food stamps or supplementary, whatever they call it now. And they have a problem. They're going to find a process that's completely foreign to them, and you can go and talk to your friend or the lawyer who have no idea what's going on. But because it's not explicit, I mean, you're not even handling fine print when you have a food stamp card, and you have a problem, you go to an ATM, you don't get the money, the machine mail functions. You have no idea what to do. No, now you get C code. Yeah, you go to something that's just not even what you're. And then you go to your attorney and you say, well, this is what happens. That's not the, you're not, the person you made the transaction with, which is the bank, is not the person accountable. Someone else says, or someone else says, or someone else says. And it makes no sense a person functioning in a normal economy, because it's not explicit. Yeah, in this case, every interaction is transparent, explicit, and predictable, or not predictable, but predeterminate. So you know exactly what will happen according to what you're going to do. Or maybe you don't know, but you have the potential to know. Right, yes, yes. Don't think Ethereum is actually an efficient alternative to the legal system, certainly not when you build in sort of these vents to lead out to arbitrators or judges or other trusted third parties, because when it comes down to it, contracts go to the legal system when people have a dispute about what the terms mean. So if you have a dispute about what the terms mean in Ethereum, you have to go to the court system again, or you're bound by this thing, and in that case, they would probably resort to the law anyways and say this was a contract with Deezion or this contract is unenforceable, and then you'd end up in the court system again. And then on top of it, it doesn't really, maybe you'd have fewer lawyers involved, but you'd certainly have specialized parties writing these contracts, because only a select few are capable of actually writing contracts that work. Just as is the case right now with the legal system. So it kind of leaves me thinking that the reason why there's two kinds of parties that would want to use Ethereum. One is, say, just a distributed group of people, and then the other would be like a corporation or a country or some other institution with centralized power, and institutions with centralized power would probably not want to be bound by something that has no flexibility or they can't control, a company would probably want to resort to a selected arbitration system like they do now, like Circuit City does or like Hooters does or any of those companies. But on the other hand, you might want, it might be useful for a group of basically anarchists to use Ethereum, that's the only reason why I can think people would want to adopt Ethereum as an alternative to the legal system. But as long as you're in a society where you can always opt out of Ethereum by claiming that the contract was unenforceable, it just doesn't seem like it has a place, except maybe as a supplement to the Bitcoin protocol as an escrow service, a distributed escrow service. So I guess, am I missing something in this picture? It seems almost like Ethereum is much smaller than it's intended to be. So I think Ethereum actually, it's just intended to be this technology. This is completely true in the sense that Ethereum as a platform could be subverted into something that becomes this really centralized power. So for instance, you could have the state actually deciding, so installing whatever state's DAO on Ethereum and saying that every contract has to go through there and then the state actually has complete control. The way in which it is justified by the Ethereum team is that you basically, so it's not necessarily like a complete outside system, but it's, so you have kind of a hierarchy of norms. So you have like the most basic norms and then you have like, which are general, which are applied to everyone, which are not really specific and those probably cannot really be codified into Ethereum because they just wouldn't make any sense. And then you have like more closed system and it becomes more and more specific and then it applied to a smaller group of people. And so the way to define it is the idea is for instance, let's take contract, the framework of contract law. So what they want to provide is to provide a choice between different legal framework for contract law. So this means that if I decide so if I abide to a really libertarian ideology of contract law, maybe I will not be willing to, so I will rather enter into a contract with you which doesn't have any kind of like special legal safeguards as opposed to another person that has a completely different vision of contract law which will decide to enter into this particular legal framework of contract law. Of course then there will always be the issue when you reach a higher level of norms, then you will always need some kind of either court or judge or some kind of arbitration which requires something that is either a human judgment or whatever. And so the idea is to, so right now we have the non-controllable part of legal norms which is quite wide and then you have like basically the contract that I enter in between you and me that are creating those specific rules. And they want to basically widen that and reduce the amount of norms that cannot be changed by providing alternative legal frameworks for property law, contract law, et cetera. And that's where it makes sense. But then, yes, in the end, it doesn't make sense to extend that of course you will always be a human, you will always need to interact with other humans and you will always need like a human judge or an arbitrator, of course. It seems to me that as far as self-inforcibility is concerned, you're somewhat limited in your exposure if you enter into a contract to what the system can accomplish in a nominating way. So if I place like 600 gifts coin in escrow and I fail to abide by the terms of my contract, then I'm in a very bad way. But otherwise it just seems like I've broken my internet agreement. Oh no, what's going to happen? And I can't think of any sort of system that people will care about. The reason Bitcoin matters now is because Bitcoin has real monetary value. And so you have that sanction to worry about. But is there any other distributed system that would automate an interface that Ethereum could interact with to affect any kind of real-world consequence? So et cetera means not necessary. It incorporates some kind of monetary system but it's really just like, in addition to this monetary system which is used to create shares and stuff, it's really just about the contract. So you can interface with anything that can interface with a blockchain-based technology. And that's where you have the idea of smart property that comes in. So you can have Bitcoin for currency, you can have smart property. And it's all the concept of tokens, transfer of tokens. And as much as you can come up with an idea of how the possession of a particular token might actually have an impact on, you just have to create an application that is dependent on this particular token. So as of now, there is not much in fact, because... So when those applications fail or are poorly mediated in some way, or you're just very unhappy with the outcome that the digital technology has been led to, it seems like by placing itself outside the legal framework, it also deprives itself of the lost protection, because of the lost power itself. So in terms of enforceability, it would really need to be into a room like something would have to break catastrophically. And like physical objects, that might be difficult. Like I don't see how I could have a Bitcoin house, for example, that I could no longer be able to do. I know it doesn't seem as scary, I don't think, when you think about the... So I think it's not scary. I mean, it is actually a bit scary, but... Yeah. I mean, so, for instance, with the house, they actually, it's really interesting if you go and you read the Ethereum forum, they come up with like all the most incredibly crazy idea. But so they actually come up also with the idea, you don't own a house anymore, you just own a token, and because of the Internet of Things, and you have every device in the house that is actually reacting to that particular token, so you could just transfer the token, and this means that, yeah, it becomes like having access. So if you give the key to the house, of course you're not giving the ownership to the house, but the more and more we are moving towards this kind of techno-solidism, whatever, a smart property, right, then it actually makes more and more sense. So right now it's not scary at all, of course. Like, right now... It does make debt, you have smart properties that seem rather stupid, too. And if you think about always sign off on when they click on your agreements without reading them, then it gets scary. If you imagine that the thing you're signing is saying, we're using Ethereum to do, we're using this sort of decentralized approach to do this, with regard to these assets and these conditions for the next 100 years, or something. No. But of course you could do that even without Ethereum, so. Yeah, I mean, the idea is not really it. So Ethereum is like one interesting application, but it's really just this idea of having those blockchain-based new technology that are being developed and to just think about what are the potential implications. Of course, of course. One difference is that if a certain kind of contract is exploitive, we might be able to change laws so as to rescue people from it, but it would be impossible to rescue them from these smart tyrants implemented on Ethereum. If you allow law to be... Well, the point is if Ethereum is self-enforcing, it might be hard for any political or legal decisions to override it. So the other one, there is also the possibility so the Distributed Autonomous Organization can implement this kind of constitution which implements a system of governance. And so for instance, you could have a system that says that there are these particular types of person or perhaps according to the stakeholders or according to many shares, you have your different kind of voting and therefore you can actually modify the code according to whatever mechanism of governance has been established. The problem of coming up with a good constitution is one that people have been working on for around 203 years or so. I agree with that, but this is actually a good point because in fact the one interesting aspect of Ethereum is in fact that it actually allows for experimentation like really easily. Today it's actually hard to experiment because you need to go through this really long legal process and you need to wait years to find out what's going on and then you have like a lot of various lobbies. Whereas on Ethereum, perhaps Ethereum is never gonna become anything actually relevant to our work, who knows. But it does provide this interesting platform where we can experiment with innovative model of governance and this I think is really interesting. And also because it also, so in terms of this governance system, it's a system that is completely transparent and doesn't allow for any kind of corruption. And so you can, well, I mean you cannot corrupt the DIO because the DIO is actually just following the rules. So if you design the rules in a way that it cannot be corrupted, then you create this DIO that people can trust because they can see how it's gonna operate. And so you move away, the human bias is moved on the age and the DIO is just this central structure that human interact with according to predefined rules. So on this aspect, I think it's actually quite interesting to see what kind of types of DIO and organization will be deployed on the blockchain to see whether they have any working mechanism or not. Simple example of some of the opportunities that are presented by this Bitcoin concept. Right now, of course, we're living in a world where we're getting more and more security surveillance with cameras everywhere. You can have a lens so small that you need a magnifying glass even though it's there. So my problem is I walk to the subway and there's a lot of snow in this part of the world. There's always lots of sidewalks that don't get shoveled. And I would be more than happy to get out there and shovel the walk. Somebody else's property, if I could document the fact that I would shovel in this walk and could then sue the owner for the cost of shoveling it. This would give me a certain amount of equity claim on the title of the property. And one of the things I'm working on is putting homeless people at work, bringing abandoned buildings up to code and exchange for, let's say, Bitcoins. And if that property was ever sold or you put in a claim for it, you would have equity claim on the title of that property. And when the money changes hand, you'd get a piece of the action. So I see this whole Bitcoin phenomenon coordinated with some of the other developments in society as converging in a way that's going to create a lot of economic injustice, but a lot of able-bodied people to work who are willing and able to, but not able to under the totally moneyed economy that we have right now, because there's never enough money to cover everything. I don't know if that makes any sense to people or not, but what am I thinking as it? I want to know why a state would pick, I guess, a distributed autonomous organization. It seems to me like there's blockchain like things that the state already does, like ledgers for property. There's a lot of, there's like recreation in the law already, and this all happens on a centralized basis because the state is that trusted third party that you give all your information to. So in that sense, we already have that, and it's more efficient for the state to do that as far as the state is concerned. We, blockchain technologies were created to circumvent the state, to get around the need for that central authority. So I'm curious as to why a state would adopt something like Ethereum? I personally don't think a state would ever adopt something like that. On the other hand, I think it's interesting to look at it by analogy with Bitcoin. So Bitcoin was in fact designed to avoid the financial system. Now, the question is, so if the state is unhappy with that technology, it has many ways in which it can try and react to it, or it can ban it, or try and regulate it in some way, or it can just accept it and then try and see what it can do with it, right? And so with Bitcoin, if you actually look at it, even though it's actually a really, theoretically a really decentralized platform, in fact you have the centralized cluster, which are the exchanges, right? And so the state doesn't actually need to regulate the Bitcoin network, it just have to regulate those intermediaries, right? Now, the scary thing about Bitcoin, and I do believe this might also be the scary thing about Ethereum, is that, so Bitcoin as whatever the ideology behind it was, could be this decentralized alternative to the financial system, but when you look at the current implementation of the system, so you have this series of exchange, you have the state that can actually regulate the exchange, and basically the transparency of Bitcoin become actually a powerful tool for the state to actually manage to control everything what's going on, you know? And so you can regulate the exchange to actually oblige, and that's actually the case, like in order to register to an exchange, you have to give various document of identity. So you pretty much know whatever, who is the person that owns this wallet on the exchange, and so by regulating the main act of, then you basically obtain this power of, it's not surveillance, but it's actually transparency, that you can trace back every kind of transaction that is done on the Bitcoin network, and the state can actually know exactly what's going on. With Ethereum, the flip side is the same, in the sense that of course you can look at it as if it's like this decentralized alternative to the legal system, but if the state actually step in into the system and create those centralized clusters which become the cluster to which everyone maybe don't have to, in the same way as with Bitcoin, you don't have to interact with any exchange, but the majority and the mainstream of the population eventually will interact with those, right? And so with Ethereum, you have the same risk. You create those cluster of power within this decentralized network, which is a completely transparent network, which means that there is a possibility for pretty much the state to control and to have, not to control, but to have knowledge of everything that is going on, and in fact also to control because if there is this centralized DAO that is regulated by the state and the state has power to change the rules because he has the government power over it, then you actually create a system that is like absolutely totalitarian and really repressive potentially, much worse than the current state. No, I'm not saying that the state wants Ethereum to flourish, but I think that if Ethereum does flourish, the most likely reaction of the state will be to step in and to actually control it. Because in spite of it being a decentralized platform, it is actually quite easy to control because the state has power over the citizen, over its own citizen, so it can force the citizen to actually interact with a particular DAO on the blockchain and therefore have control over all those people that interact with this DAO. The way that I see it is that there are decentralized alternatives to these decentralized platforms. With Bitcoin it's electronic money, it's credit cards and the way to coerce people into basically a transparent, electronic, surveillable system would be to basically eliminate cash slowly by slowly. And so it's not about forcing people to use and then co-opting a blockchain technology, it would be basically making it very difficult to use anything other than a centralized, electronic sort of system. Vance? Just to respond to that, it seems to me that all of these blockchain related technologies, it's not that they have to be decentralized, they're interesting things that they can be. You can have, I mean what you have right now in all the well adopted systems is a pretty centralized network of super nodes and moderators and intermediaries and service providers. What's interesting is that you can scale out and expand all of those services in a decentralized way if you want to. And among other things, I mean people can experiment more quickly. You can try to play around with new things without finding one of a dozen people and convincing them it's a good idea. And the transaction costs for Ethereum for contracts, just like transaction costs for other blockchain things can be extremely low. If I were a state, the reason I would be investing in implementing something like this is I would see part of my role as providing citizens with secure ways to carry out contracts to implement and realize contracts. And there is some future in which you can have much lower costs of confirming, securing and auditing transactions if you're using a crypto protocol like this. For me, I consider blockchains to be a relatively inefficient technology. In a good way, it's inefficient because you have to solve a really hard problem. It's the problem of centralization. But, so I think that it seems to me that there's always this downside and the upside just doesn't exist for the state because the state doesn't want that decentralization or the possibility of decentralization. They would rather just have it all on their servers and be the ones making the changes to the ledgers themselves. But in the same way as like, so there is some strange discussion going on about like what about we implement a cryptocurrency that is actually, you modify the platform that is actually completely government backed. So the government decide when to issue the currency, you get rid of like the creation of money by mining and then you can actually recreate a system that is pretty much the same as the system we have today in a cryptographically enforced way. Now, I think it's, I personally think it's really unlikely that the government will ever like reclaim a Bitcoin technology or a Ethereum technology. But the question is, so you have this, you have centralization, which is really useful for coordination and et cetera. But then you have the transparency of those blockchain technology, which are really attractive to people. And so when I interact with something, I want to know what's exactly going on. And the idea beyond all those blockchain based application is that you want to get rid of this trust within this centralized entity and you want to move this trust into this decentralized transparent and trust free technology, which is obviously something that a state doesn't really have any interest in. Now the question is the rest of the society might, in fact, because they want to escape from the centralization because they do not trust the state. And so you have those new technology that are being developed originally, the underlying ideology is often to actually escape from the centralization of the state. Now the question is, how can the state react to that? Because there are all those legal challenges that are in fact raised by those technology. And so it is really difficult to ban those technology because they are on the internet, they are decentralized, et cetera. And then you have this issue of distributed autonomous organization that I have no idea what the law can do about them. And so, but then you have the risk and this is a risk that is being discussed a lot in the Bitcoin community that in fact, we designed those decentralized platform, but they could be co-opted by centralized entity. And this co-optation, it doesn't mean that the decentralized entity actually see an advantage in that it would have created them to begin with, but because they are there, they need to somehow find a way to cope with it. So assuming that for whatever group the central aspect of this is really valuable, I've heard of a bunch of groups that might be. It seems like both Bitcoin and Ethereum come with a significant design class which is their irreversibility, which they seem to think is a feature, not a bug. But the reason why the legal system is investing as it is and contract law is as weird as it is, is because humans are really, really bad at predicting the future and really bad at understanding the consequences of decisions that we make, right? Entire range of human histories, a series of unexpected consequences to apparently transparent, clear decisions. Well, so what's happened on the internet is a series of unexpected consequences to very simple design decisions. So is there a way to have the ability to change your mind in a decentralized way? Or is the need with crypto for trust to be trustless, to be to lock yourself into the bad decisions that you made and the idiocies and lack of information that you had when you committed to, I think. So I think it's just a matter of whether you want to, so do you want to incorporate the human element in the system, which means you do now need to trust that human element? So whenever there is, like, if everything is on the computer, of course you can be, you don't need any trust because you see what the code is doing, but the code is by definition really limited, right? And so, I mean, you can imagine that, you know, maybe in like 10 years then people will have come up with like layers and layers of contract and basically recreating contract law into a theorem. Why not, right? But even then, like, contract law is like, even the whole contract law framework, which is extremely complex, it requires a judge at some point. It requires like some kind of human arbitration. Now, the thing is that, and then maybe the question becomes like, so what's the point with the theorem, right? So if you actually reincorporate all those same arbitrator and judges and whatever, then you're basically recreating the legal system into the theorem system, okay? Again, I think the, I think my most obvious answer I will give to that is like, I completely agree with you, but the one advantage I can see is that you can choose your system, okay? So you can have, let's say we reproduce the whole legal system, but we can reproduce a lot of variety of different legal system with different features, okay? Which always will involve a human, which always will involve some kind of trust or not, but you can experiment with new things. You can try a completely libertarian one, a completely communist one, and they can coexist. And I, for instance, could enter into a libertarian contract with you and enter into a communist contract with, okay? You know? So this allows, to some extent, it does allow beforehand more freedom of choice for the people, whether or not it actually is gonna lead to the same thing or not, I don't know.