Blockchain’s Struggle to Deliver Impersonal Exchange Forthcoming, Minn Blockchain’s Struggle to Deliver Impersonal Exchange Forthcoming, Minn. J. L. Sci. & Tech. Benito ARRUÑADA Pompeu Fabra University Annual World Bank Conference on Land and Poverty Washington DC, March 22, 2017

Outline Introduction: The nature of blockchain & smart contracts Blockchain & in personam rights Central enforcement Contract completion Blockchain & in rem rights Interfaces bwn personal & real Public intervention Assessing blockchain applications in property Private blockchains in private ordering Conveyancing Property recordation and company registration Property registration Consequences for firms, contracts & property

Blockchain & rights in personam Inevitable presence of central enforcers Ex ante: Write code (rules), run system, store data Ex post: Change rules  relational element w.r.t. central agent & curators (i.e., trust) DAO hard fork  blockchain not immutable Even Ethereum Classic relies on legal recourse Verifiability of contract content / performance Smart contracts: Inevitable to complete contracts ex post but for the simplest contracts (e.g., VOD) Role of “oracles”  trust Tradeoffs bwn (Automatism + Security) & (Adaptability + Complexity)  need for human judgment

Blockchain & rights in rem Needs interfaces bwn personal & real rights Even bitcoin relies on exchanges and “wallets” Insights from the theory of property rights Effects limited to participants Public interventions needed: First registration Set the status of the blockchain as legal evidence

Prospects of blockchain applications in decreasing order Private blockchains in “private ordering” systems Contract manufacturing, VI, et al. Advantage in verifiability of “contractual” content Conveyancing Electronic conveyancing: e.g., Sweden project < NZ? Notarization, but for ID and legal capacity? Recordation, company registration, corp. actions Date stamping and archiving–but only after public intervention & in private blockchain Property registration Little scope: contract incompletion + legal review

Consequences Difficulties  New specialists to bridge these gaps To reach contract completion  trust & judgment To transform personal rights into real rights  Interfaces & pubic enforcement  New specialists to bridge these gaps  Conventional (?) public action Enforcement, esp. in rem Setting requirements for legal evidence

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