Bitcoin is changing our relationship to money.
It's also changing our relationship with the court system. ⚖️
Many thanks to @BitcoinMagazine for publishing my article exploring Bitcoin's disintermediation of the civil justice system.
A summary thread:
bitcoinmagazine.com/culture/how-ci…
1/ How is #Bitcoin disintermediating the civil justice system? By limiting the effectiveness of *money judgments.*
2/ Civil justice systems remedy wrongs through money judgments. To satisfy money judgments, third-party intermediaries (banks or custodians) are served with “writs of garnishment” forcing turnover of the judgment-debtor’s assets to the judgment-creditor.
3/ Thus, by facilitating the transfer of assets from judgment-debtors to judgment-creditors to satisfy money judgments, third-party financial intermediaries have become the *linchpin of the civil justice system*
4/ Bitcoin’s self-custodial and seizure resistant nature obsoletes financial intermediaries. As Bitcoin adoption increases (true adoption, with users holding their own cryptographic keys), reliance on intermediaries will decrease.
The linchpin of the civil justice system slips.
5/ To countervail Bitcoin’s seizure resistance, therefore, money judgments must be secured through
(i) decreased due process, and
(ii) increased coercion
6/ Decreased Due Process means pre-judgment asset freezes and seizures like the "Nuclear Weapon of the Law," the Mareva Injunction.
Recall, this was issued against the Ottawa Freedom Truckers in Canada:
7/ The Mareva injunction is issued before the defendant even knows they have been sued. It compels financial intermediaries to freeze defendants’ known assets before they can be shielded. And it even forces banks to assist in asset tracing.
8/ Once all defendant's assets are frozen, they can ask for permission to receive a living expense from the court (out of their own money). All this happens before the defendant has been adjudicated liable!!
9/ Increased Coercion means holding defendants in contempt of court for failure to disclose assets or turn over access. Defendants and judgment-debtors can be incarcerated until they comply with collections orders, forcing them to choose liberty or poverty.
10/ The organizer of the Ottawa Freedom Truckers #Bitcoin fundraiser faced this choice when targeted by a Mareva injunction. Ultimately, he turned over the private keys to the fundraiser's bitcoin to law enforcement.
11/ How do we restore due process and limit the court system's use of coercive force?
Acquire, hold, and use bitcoin as privately as possible. Plaintiffs cannot prematurely freeze defendants’ assets if they don’t know about them.
#privacymatters @ODELL @stephanlivera
12/ Compare the Freedom Truckers' experience with that of the alleged #IndexedFinance attacker, who has also been targeted by a Mareva injunction, but whose assets cannot be located, nor his whereabouts.
calgaryherald.com/the-logic/why-…
13/ To further protect privacy and reestablish due process, the #Bitcoin community must promote and develop the peer-to-peer circular economy to avoid third-parties that can be co-opted against users by courts (banks, custodians, exchanges).
@nic__carter @AlyseKilleen
14/ And #Bitcoin offers dispute resolution alternatives to coercive justice. The @bisq_network DOA is built on bitcoin and provides a voluntary system of dispute resolution for traders. It uses bitcoin security bonds that are forfeited if traders are found liable.
15/ As Bisq describes the process: “This dynamic essentially makes bitcoin confiscatable, enabling a sort of mutually assured destruction to drive dispute resolution on Bisq without trusted third parties.”
bisq.wiki/Dispute_resolu…
16/ Perhaps "bitcoin bonds" could be scaled and integrated into @FreePrivateCity s as part of a voluntary social contract signed by all residents, thereby removing state coercion altogether from liability enforcement and retaining due process. @scholarium_at @saifedean
17/ In addition to basic fees charged by operators of such @FreePrivateCity s, new residents could be required to post bitcoin bonds, which would be forfeited upon a finding of liability by an arbitrator.
18/ Thus, while Bitcoin will have a destabilizing effect on the civil justice system in the short-term as it continues to disintermediate the system’s financial linchpins, it is possible to leverage Bitcoin to replace this system with improved conflict resolution paradigms.
19/ Please feel free to comment/critique. And if you are interested in learning more about Bitcoin's affect on the law, subscribe to my legal research newsletter: The Bitcoin Brief
bitcoinbrief.io/p/about?r=bw6a…
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