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  • Writer's pictureRosie Burbidge

What is blockchain? Find out in this book...

Updated: Oct 25, 2020

Blockchain and the Law: The rule of code by Primavera De Filippi and Aaron Wright - review by Emily Long.

Blockchain is a term often used, rarely explained and usually over complicated. If you’re unsure what exactly it is and why it’s significant Primavera de Filippi and Aaron Wright present a clear, comprehensive overview of what blockchain does and how it fits in with general legal instruments.

They describe blockchain as ‘decentralised databases, maintained by a distributed network of computers.’ These databases are formed of code containing information capable of specific activity, such as moving money from one account to another. Some of the main concepts explored in the book are summarised below.

The authors point to a future where government intervention is less necessary, the stored code can make activity that circumvents the law simply impossible. However, this is not without its potential pitfalls; a world controlled by code rather than the law means that when a problem does arise there is less means of recourse.

What is blockchain and what can it do?

Before looking at the book, it's first important to understand: what is blockchain?

Blockchain is a ‘secure’ network. This means that its code cannot be falsely altered by anyone, it is constantly being verified by others on the network. This is useful in the context of contracts, where the initial agreement needs to be retained and then implemented. Where the code is contrary to the law of a particular territory (e.g. it enables criminal activity) it becomes very difficult to stop (although there is at least an immutable record of its progress).

The security also doesn’t provide total protection, there have of course been major hacks involving bitcoin, which utilises blockchain technology. This has mostly been of the digital wallets and due to individual human error rather than network error but it does nevertheless show the potential fallibility of blockchain technology.

Blockchain utilising ‘smart contracts’ can make contractual agreements simpler and with less likelihood of non-performance, meaning (in theory) less litigation. One party cannot breach the contract by lack of performance; the contract, when implemented, will be automatically performed through previously agreed code. There will of course still be situations that will need court intervention and resolution, for instance, where the contract is performed but after there is disagreement as to terms or where a contract simply cannot be performed because, for example, there is not enough cash in the bank account.

Currently, copyright laws can protect artists, creators and businesses by (in some circumstances) holding intermediaries such as eBay and Google liable for breaches. Currently when right holders identify infringing works online they can pressure the platforms themselves into removing the damaging items. When such products are being touted on blockchain there may not be intermediaries so to speak of and the individuals responsible may not be traceable, presenting difficulties in removing the infringing material.

How does the book fit in?

On the whole this book is a good introduction to blockchain and its uses. However, it presents nothing new in addition to the current commentary from technology writers.

To summarise: blockchain is able to strengthen laws by writing them into performative code, but where the code conflicts with the law it becomes difficult to stop the activity and hold those responsible accountable.

The authors conclude that some sort of balance between the freedoms and protections that blockchain affords and the risks of an instrument unmediated by governments will need to be found, but what that will look like is unclear. Like all technology, blockchain has great potential to benefit and harm, what this book does make clear is that legal intervention will be still necessary in order to restrict this technology being used in contravention of the law.

How can blockchain be used in practice?

The fashion industry has been quick to embrace the potential for blockchain technology in tracking the supply chain of goods. This has huge potential to both prevent counterfeit goods from being easily sold/resold and identify gaps in the distribution chain through which parallel or grey goods can fall. For a more detailed analysis of the opportunities associated with blockchain and the fashion industry, see Rosie Burbidge's article in The Trademark Reporter here.


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