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David Friedman: "Producing laws is not an easier problem than producing cars or food, so if the government's incompetent to produce cars or food, why do you expect it to do a good job producing the legal system within which you are then going to produce the cars and the food?"

Wait! But in this system anybody can easily corrupt private legal agency or private decentralized court!

This is much more likely in the current legal system where is no risk of reputation loss and bankruptcy and no competition at all!

(example "Harabin's legal system in Slovakia: Why pay expensive lawyers, when you can buy cheap courts?")

And what about laws?

  • Every legal agency will have their own subset of rules derived from legal industry "best practice" standards
  • Legal decision will be a mutually agreed compromise of both affected parties / their legal agencies

We already have technologies to achieve fully

decentralized society.

Decentralization can ...

  • cope with complex relations in our society much better
  • be immune against misuse of the central control (SPOF)
  • be economically effective
  • means a bright future!

Who we are

  • Professional lawyer and IT security guy
  • Voluntaryists and freedom lovers
  • Bitcoin enthusiasts

Centralized vs. decentralized law

Decentralized freemarket legal systems

Being fair makes economic sense

For legal agencies:

  • have to protect rights of their customers otherwise they would lose them
  • but also have to be able to cooperate with other legal agencies and accept decisions of chosen courts, otherwise they lose their reputation (and consequently customers)

For courts:

  • they have to do fair decisions, otherwise they lose their customers (=legal agencies)

People vs. Legal agencies

Legal protection in the decentralized society

  • People prefer legal agencies with good reputation and history that protects their rights

  • Any case of corruption / bribe can cause a significant loss of their reputation and possible bankruptcy
  • People vs Legal agencies vs. Courts
  • Completely based on mutual contracts and legal-agency / court reputation

Decentralized courts

Legal agencies dispute process

Government's legal systems

  • Legal agencies are motivated to solve most conflicts without courts if it is possible, otherwise they have to pay court costs
  • Legal agencies prefer courts with good reputation and history (because their direct customers also require fair decisions)
  • They can decide on arbitrary number of courts, but this can be a very expensive and time-consuming process (and can lead to loss of reputation)

Current legal systems problems

  • The most critical business value of courts is its fairness, otherwise they can lose their reputation and all customers -> legal agencies that require fair decisions
  • No risk of reputation loss
  • No risk of bankruptcy
  • Funding is involuntary and enforced by coercion
  • No terrestrial competition
  • Laws are enforced by majority against minority

Decentralized Internet

References & credits

Decentralized law - David Friedman, Hans Hermann Hoppe, Stephen Kinsella

Bitcoin/contracts - Mike Hearn, Nick Szabó, Alexander Tabarrok

Bitcoin friends & inspiration - Juraj Bednár, Marek Palatinus, Pavol Rusnák, Alex Howard, Frank Braun, Amir Taaki, Peter Šurda, Mike Gogulski and many others

Stay in touch with us....

  • FunkFeuer - wifi-based mesh decentralized network
  • The Serval Mesh - mobile mesh decentralized network
  • Anonymization networks (like I2P)
  • IPv6 based decentralized network (cjdns)
  • Decentralized DNS system (namecoin, ODDNS)

Decentralized Society

and Bitcoin Contracts

Bitcoin contracts

Escrow and dispute mediation

  • Bitcoin blockchain supports escrow, so it is not necessary to use 3rd-party web application (like Silk Road market)
  • Escrow is voluntarily chosen by both parties
  • No dispute: buyer and seller signs
  • Dispute: buyer/mediator signs and the seller loses
  • Dispute: seller/mediator signs and the seller wins
  • Mediator can't steal or move money by themselves

Assurance contracts

  • Kickstarter style funding model where supporters pledge money that is only taken if enough pledges are gathered
  • Can be combined with dispute mediation
  • Suitable for provision of ANY public goods (e.g. building bridges, localization of web/tools, etc)
  • Providing a deposit
  • Escrow and dispute mediation
  • Assurance contracts
  • Using external state
  • Trading accross chains
  • Micropayments

External agents

  • "Oracles" to lock money - a special program to run external agents (programs) and then sign or not sign
  • Suitable for bets, heritage agreements, some insurance against loss of business due to your website getting hacked -> special conditions have to be met to release money

Bitcoin as a framework for multiple, independent currencies

  • "Coloured satoshi" - multiple currency issuers with their reputations, history and reserves (e.g. backed up currency)
  • Bitcoin is used a transaction medium, suitable for regional / local currencies
  • Implementation of the free banking system (people can freely and voluntarily choose what currency is the best one for them)

Micropayments using bitcoin micropayment channel

  • Bitcoin transactions are cheap, but not free
  • Bitcoin transactions are relatively slow
  • Using micropayments it can be possible to pay e.g. for wifi access

Bitcoin as a fully decentralized register

Car trade in the decentralized world

  • Bitcoin blockchain can be used as a decentralized register of any property (cars, houses, phones, ..)
  • It can include references / pointers to another distributed decentralized databases with a lot of data (e.g. cadaster)
  • Sale is done using two connected transactions - the first one moves money from the buyer to seller, the second one moves the ownership from the seller to the buyer

1. Car is produced with a newly created ownership key with deposit of T coins (e.g. 0.00001 BTC) - car computer / special immobilizer requires authentication using this ownership key

2. The buyer generates and sends a random number to the seller to obtain the valid car data

3. The car returns a digitally signed structure (by car's private key) that contains this random number, the cars public cert, all technical data, the public key of the current owner / ownership, so the buyer can verify properly what he wants to buy and if the seller really owns this car

4. The buyer creates a transaction with two inputs and two outputs. The first input signs for P coins (car price), the second input is connected to the output holding T coins for the ownership address. The first output sends P coins (car price) to the seller address and the second output sends T coins (ownership) to the buyer. This partially valid transaction is passed to the seller who signs the second input with the car's current ownership key and broadcasts this transaction

5. They wait for some confirmations, after that the car recognizes the new owner/ownership

Welcome to the era of the central control - government crisis

Law is not evil ! =

it saves us from chaos

Problem is WHO should create law and WHAT should be regulated?

WHO: Law is basically created by a small group of people

WHAT: Regulation in order to help society reduces number of free choices, often it means more regulation = over-regulation

If something does not work/or it is against our economic interests, more regulation is created.

  • Our current society is too complex to control / manage centrally
  • Law as a normative system
  • Governments are trying to regulate complexity through generally binding rules (laws)
  • Over-regulation limits economic freedom and therefore innovations and kills competition
  • The solution is to respect mutually agreed decentralized relations and embrace all technologies that make it possible!
  • Consumer over-protection limits innovations and always increases price
  • Employee protection limits employees inability to find another better job
  • Marriage regulation prevents long term relationships
  • If the state does not have money, it simply creates new taxes and new regulations

The state as a monopoly for economic regulations and laws

  • Law is misused as a monopoly tool to achieve specific economic interests
  • Law regulates situations where other normative systems would work more effectively
  • This may result in corporativism

Friedrich Hayek (The Road to Serfdom): "The economy is too complicated for politicians to avert recessions and unemployment without unintended consequences that may well be worse."

Decentralized currency

  • Bitcoin is the first example of massively used decentralized currency
  • But there are a lot of other alternatives Namecoin, Litecoin, Tonal Bitcoin, lxCoin, Devcoin, PPCoin, Freicoin, l0coin, Terracoin, Liquidcoin...
  • We are just at the beginning of a completely new decentralized bank system!
  • Be prepared for more secure and better implementations!

Contents

  • Decentralized Legal system
  • Decentralized Internet
  • Decentralized Currency
  • Decentralized Contracts
  • Decentralized Registers
  • Trade in decentralized world
  • Decentralized future?!
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