Thread by @KnutKarnapp

Over the weekend I read „How Bitcoin functions as property law“ by Eric D. Chason. Eric says that all national and supranational attempts to regulate Bitcoin are going to prove very difficult. Here is why garnered with some of my own comments as a lawyer:

scholarship.shu.edu/shlr/vol49/iss…

1/ It is 43 pages long but to me the main message (that gets explained in great detail) is very simple: „Since Bitcoin was created outside of the law, the law will struggle to regulate it.“ (p. 171)

2/ „No court can obtain jurisdiction over Bitcoin, as it resides on computers throughout the world. No regulator can control the actions of Bitcoin.“ Bitcoin is the first global property and we should try to understand it like that.

medium.com/coinmonks/what…

3/ Whenever we encounter publications of any kind repeating the 'make public blockchains compliant at the protocol level' argument. We should politely point to this article. What may work in pre-permissioned systems is bound to fail for their public permissionless counter-parts.

4/ Public funding is spend way better on looking for ways the law could potentially establish a workable framework for public blockchains rather than trying to make technology compliant with laws that were simply not written for it.

5/ The article establishes Bitcoin as a legal institution comparing it to transfers of real property by replicating main features like signatures, chain of title, and title assurance.

6/ Before going into great details as to „What Bitcoin is“ the author is providing us with his attempt at a „lawyerly“ definition of Bitcoin (p. 139):

7/ The article then goes into comparing the Double Spending problem that Satoshi solved with his proof-of work chain to the world of real estate transfers (p. 140)

8/ „In order to prevent similar frauds, the law requires transferors to sign and sometimes notarize written instruments. Real estate deeds are signed and acknowledged (generally before a notary public)...

9/ Bitcoin relies on cryptographic functions known as digital signatures that replace handwritten signatures and acknowledgments.“ (p. 147)

10/ On „Decentralized Identity management“ (p. 145):

„the Bitcoin system does not recognize humans, corporations, or other legal actors. It only recognizes Bitcoin addresses, which legal actors control via associated private keys.“

11/ This an example where the „real world“ (civil law) and the Bitcoin network have disagreed in the past and will do so in the future. The law may dictate that the key itself and the UTXOs accessed by it are still “yours”...

12/ As far as the Bitcoin network is concerned though the private key grants power of disposition to whomever is in possession of said key. The article then goes into digital fingerprinting by using a very colorful example.

13/ „Suppose that Satoshi Nakamoto wants to write a will that leaves his entire estate to Alice. Satoshi goes to his lawyer, who has him execute the following document:“ Just entertaining the thought of Satoshi and his lawyer brewing over his will for a minute…

14/ Anyways, it then goes into explaining the use of the nonce, ordering, timestamping and mining in general (comparing it to title assurance, p. 157).

15/ The explanations are comprehensive in their entirety (building on @aantonop ’s Mastering Bitcoin) but expecting anyone who hasn´t read up on Bitcoin in general and proof-of-work specifically to get it on a first read is probably still wishful thinking.

16/ On consensus and the longest chain (p. 163):

17/ Why do miners generally build on the longest chain? (p. 165)

/18 „The main goal of this Article is to describe Bitcoin as a legal institution. No one knows if Satoshi Nakamoto has any legal training, but his work can be viewed as clever lawyering.“ (p. 170) /fin