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I can't imagine blockchains ever satisfying all legal requirements. At some point I expect some court to say "X shares were illegally transferred from person A

I can't imagine blockchains ever satisfying all legal requirements. At some point I expect some court to say "X shares were illegally transferred from person A, give them back". If we don't know where they went, it's impossible on block-chain to give them back, unless we assume the existence of someone who has the rights to make arbitrary changes, at which point there is no point having a blockchain.

lallysingh 9y ago
Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. But I think really the statement of interest is here: > ... at which point there is no point having a blockchain. Lots of people have different reasons for liking block chains. Their reasons may disagree with yours.
- abakker 9y ago
  Financial transactions between real legal entities probably have no expectation that the transaction should be completely anonymous or trustless. Instead, they probably have expectations that the transaction mechanism can be trusted, and that they have legal recourse to make up the difference. Blockchains probably have very relevant uses, but using them to approximate our existing financial system doesn't seem to be that useful. All of our laws and the current system exist for a reason. I'd bet on supply chain as the corporate/real world workload that makes the most sense. the distribution of the chain actually provides a relevant service in those cases.
- wyldfire 9y ago
  > Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. And what if they refuse [despite consequences]? > Lots of people have different reasons for liking block chains. Their reasons may disagree with yours. I'd say the common/paramount feature is "decentralized, trustless ledger w/distributed consensus." Dillinger talks at length here about how "...the Trustless nature of Bitcoin was the main thing that convinced me Satoshi wasn't scamming." Yes, lots of private things calling themselves a "blockchain" exist. But those all submit themselves to some sort of authority/trust system. And it's likely the case that they do that in order to avoid the problem described. IMO it's anarchy [good connotation] vs rule-of-law. Crypto-coin/asset systems can be ruled by distributed consensus but this feature is mutually exclusive with state-managed systems. When they intersect or when they're forced to intersect, we end up with an imbalance/mismatch.
  - carlisle_ 9y ago
    > And what if they refuse [despite consequences]? I feel like this is a problem that is pretty commonly exercised in our legal system and incarceration is usually a strong last resort motivator.
    - wyldfire 9y ago
      That's why I added "despite consequences". Ok, now they're in jail and they still refuse. Now what? Ugh, lets go convince the peers contributing to consensus that we need to fork the chain and delete this transaction (like Ethereal). This is just the tip of the iceberg BTW. What if they die or have a brain injury? Their password securing the wallet is now lost to the world. Now there's no way to reverse this transaction. We accept this risk with the trustless system of currency. But real estate, equities, this kinda stuff -- it just doesn't map well at all.
      - wakamoleguy 9y ago
        Forking the chain or otherwise building consensus may be necessary to recover the coins from those particular transactions, but it's not clear that we would need to do that. As an analogy from traditional currency, consider what happens if somebody dies while in debt. Their estate can be used to settle the debt, but if the money isn't there, creditors will go unpaid. There's no guarantee that all of the transactions that occurred with that money can be reversed. One other potential problem is that if an owner of some Bitcoin dies, there may not be access to their wallet at all. However, if there is considerable wealth in that wallet, they should have incentive to pass that on to their heirs, in which case they may have set up a will or otherwise passed on instructions for how to recover the money. Whoever that money is recovered to can then be approached for settling the estate or what-have-you. In the end, though, laws and the consequences for breaking them are (in principle) set up to incentivize behavior that is good for society. If you break laws, you face consequences. If you avoid those (e.g. court orders you to pay and you refuse), you face other/worse consequences (e.g. garnished wages, contempt of court). If the consequences still aren't strong enough or enforceable enough to maintain the peace, then society has a problem and new laws can be passed.
- qyv 9y ago
  I think the point is if you have to trust someone then using a blockchain is no better than using centralized ledgers.
sp527 9y ago
This happens surprisingly often when reasoning about blockchains: you start with some concern and follow the trail of logic to some form of necessary centralization. For example, when someone on Twitter raised the problem of collaterizing smart contracts (no one is going to lock capital away in extended escrow, which creates an obvious enforceability problem), Naval Ravikant argued in response that a third party guarantor would be necessary. As far as I can tell, he didn't recognize the irony in his own statement.
- klank 9y ago
  A third party guarantor is different from THE third party guarantor though, no? I only follow blockchain/ICO events from the peripheries so I'm sorry if I'm grossly misunderstanding.
  - sp527 9y ago
    The problem is trust: why would anyone trust anything other than THE third party guarantor, who has enough available capital and an established reputation for providing recourse? Would you ever trust some random, small-time agent to collaterize a smart contract you're involved in? That's obviously foolish. Even trusting a mid-size agent is foolish. You don't know how these people are operating, and whether they might go insolvent the very next day. This is one of the primary reasons we have large, regulated, centralized institutions in the first place.
nhaehnle 9y ago
It's easy to add a special party to a block-chain which does have the power to make arbitrary transactions. Can that be abused? Yes. But all such abuse will be evident in the public record, and then the usual legal system can easily get involved -- which it already did anyway, if you're doing a proper IPO just with stocks tracked on a "block chain".
mrb 9y ago
«If we don't know where they went, it's impossible on block-chain to give them back» And how do you think theft of stock certificates is handled (they are a piece of paper)? Stock certificates do satisfy legal requirements...

lallysingh 9y ago

Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. But I think really the statement of interest is here: > ... at which point there is no point having a blockchain. Lots of people have different reasons for liking block chains. Their reasons may disagree with yours.

abakker 9y ago
Financial transactions between real legal entities probably have no expectation that the transaction should be completely anonymous or trustless. Instead, they probably have expectations that the transaction mechanism can be trusted, and that they have legal recourse to make up the difference. Blockchains probably have very relevant uses, but using them to approximate our existing financial system doesn't seem to be that useful. All of our laws and the current system exist for a reason. I'd bet on supply chain as the corporate/real world workload that makes the most sense. the distribution of the chain actually provides a relevant service in those cases.
wyldfire 9y ago
> Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. And what if they refuse [despite consequences]? > Lots of people have different reasons for liking block chains. Their reasons may disagree with yours. I'd say the common/paramount feature is "decentralized, trustless ledger w/distributed consensus." Dillinger talks at length here about how "...the Trustless nature of Bitcoin was the main thing that convinced me Satoshi wasn't scamming." Yes, lots of private things calling themselves a "blockchain" exist. But those all submit themselves to some sort of authority/trust system. And it's likely the case that they do that in order to avoid the problem described. IMO it's anarchy [good connotation] vs rule-of-law. Crypto-coin/asset systems can be ruled by distributed consensus but this feature is mutually exclusive with state-managed systems. When they intersect or when they're forced to intersect, we end up with an imbalance/mismatch.
- carlisle_ 9y ago
  > And what if they refuse [despite consequences]? I feel like this is a problem that is pretty commonly exercised in our legal system and incarceration is usually a strong last resort motivator.
  - wyldfire 9y ago
    That's why I added "despite consequences". Ok, now they're in jail and they still refuse. Now what? Ugh, lets go convince the peers contributing to consensus that we need to fork the chain and delete this transaction (like Ethereal). This is just the tip of the iceberg BTW. What if they die or have a brain injury? Their password securing the wallet is now lost to the world. Now there's no way to reverse this transaction. We accept this risk with the trustless system of currency. But real estate, equities, this kinda stuff -- it just doesn't map well at all.
    - wakamoleguy 9y ago
      Forking the chain or otherwise building consensus may be necessary to recover the coins from those particular transactions, but it's not clear that we would need to do that. As an analogy from traditional currency, consider what happens if somebody dies while in debt. Their estate can be used to settle the debt, but if the money isn't there, creditors will go unpaid. There's no guarantee that all of the transactions that occurred with that money can be reversed. One other potential problem is that if an owner of some Bitcoin dies, there may not be access to their wallet at all. However, if there is considerable wealth in that wallet, they should have incentive to pass that on to their heirs, in which case they may have set up a will or otherwise passed on instructions for how to recover the money. Whoever that money is recovered to can then be approached for settling the estate or what-have-you. In the end, though, laws and the consequences for breaking them are (in principle) set up to incentivize behavior that is good for society. If you break laws, you face consequences. If you avoid those (e.g. court orders you to pay and you refuse), you face other/worse consequences (e.g. garnished wages, contempt of court). If the consequences still aren't strong enough or enforceable enough to maintain the peace, then society has a problem and new laws can be passed.
qyv 9y ago
I think the point is if you have to trust someone then using a blockchain is no better than using centralized ledgers.

sp527 9y ago

This happens surprisingly often when reasoning about blockchains: you start with some concern and follow the trail of logic to some form of necessary centralization. For example, when someone on Twitter raised the problem of collaterizing smart contracts (no one is going to lock capital away in extended escrow, which creates an obvious enforceability problem), Naval Ravikant argued in response that a third party guarantor would be necessary. As far as I can tell, he didn't recognize the irony in his own statement.

klank 9y ago
A third party guarantor is different from THE third party guarantor though, no? I only follow blockchain/ICO events from the peripheries so I'm sorry if I'm grossly misunderstanding.
- sp527 9y ago
  The problem is trust: why would anyone trust anything other than THE third party guarantor, who has enough available capital and an established reputation for providing recourse? Would you ever trust some random, small-time agent to collaterize a smart contract you're involved in? That's obviously foolish. Even trusting a mid-size agent is foolish. You don't know how these people are operating, and whether they might go insolvent the very next day. This is one of the primary reasons we have large, regulated, centralized institutions in the first place.

nhaehnle 9y ago

It's easy to add a special party to a block-chain which does have the power to make arbitrary transactions. Can that be abused? Yes. But all such abuse will be evident in the public record, and then the usual legal system can easily get involved -- which it already did anyway, if you're doing a proper IPO just with stocks tracked on a "block chain".

mrb 9y ago

«If we don't know where they went, it's impossible on block-chain to give them back» And how do you think theft of stock certificates is handled (they are a piece of paper)? Stock certificates do satisfy legal requirements...