Friday, February 15, 2019

Is Blockchain Technology Overhyped? | NYT

Excerpts from a review of two recent blockchain books
"For the John Perry Barlows of today, blockchain represents a new opportunity to free people from governments, corporations and other sources of centralized control. (Indeed, a few true believers, made rich during the recent digital currency boom, are spending millions of dollars on potential experimental communities where rights and contracts would be implemented using blockchain technology.) But for the legal scholars Primavera De Filippi and Aaron Wright, the innovative promise of blockchain, though real, has been exaggerated. As they argue in BLOCKCHAIN AND THE LAW: The Rule of Code (Harvard University, $35), the growth and evolution of this technology “will follow a similar path” to that of the internet itself: from anarchic potential to a more regulated and controlled reality. They also argue that this is desirable — that blockchain visionaries looking to free people from the hegemony of governments and corporations “could wind up surrendering themselves (and others) to the whims of a much more powerful enemy”: namely, the self-governing code of blockchain itself.
In THE BLOCKCHAIN AND THE NEW ARCHITECTURE OF TRUST (MIT, $27.95), the legal scholar Kevin Werbach stakes out a position similar to that of De Filippi and Wright, arguing that “like the internet the blockchain is mistakenly viewed as the final answer to the problem of intermediation” — the problem of inefficient, unwanted or unreliable go-betweens. The trouble with this view, he notes, is that intermediaries, when trustworthy, play many beneficial roles: pairing buyers with sellers, bundling demand to create economies of scale, correcting imbalances in bargaining power. Because there is no widespread desire to eliminate intermediaries, he predicts that blockchain technology will most often “supplement or complement conventional legal regimes, not replace them,” proving most useful when rigidity and automation are valuable. Blockchain might be used, for example, to mechanize the enforcement of reporting rules for banks, so that government agencies need not actively monitor every relevant bank transaction."
Is Blockchain Technology Overhyped? | NYT

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