Lesson 9 – Decentralized Law Defined

On the journey towards Decentralized Law, we enter new terrain. Before we can continue with practical applications, a clear definition needed. Since there isn’t an existing definition, one must be created.

The information in the last few lessons can help us with what Decentralized Law can and cannot be. And we need to look at the words “law” and “decentralized.”

Definition of “law?”

In 2010 Tom Bingham published his book The Rule of Law.¹⁾Tom Bingham, “The Rule of Law,” (Penguin UK, Reprint edition, London, 2011): Chapter 1 – The Importance of the Rule of Law, accessed on Amazon Kindle. One of the most distinguished judges in the UK, in the book he makes some humbling statements in the book when defining its title. He states: “everyone is for it, but have contrasting convictions about what it is.” And even while judges refer to the term in their rulings and in their speeches, there is no universally accepted definition of the rule of law. However, he adds that: “there is a strong international consensus that the rule of law is a meaningful concept, and a rather important one at that.”

When this man is not able to come up with an exact definition of the rule of law, this is certainly not the place to come up with one. Let us stick with something more broad, as for example from the Merriam-Webster dictionary:

a binding custom or practice of a community:
a rule of conduct or action prescribed or formally recognized as binding or enforced by a controlling authority.²⁾“law,” Merriam-Webster Dictionary, accessed at December 27, 2019, https://www.merriam-webster.com/dictionary/law

Key here is that law apparently is either recognized or enforced. In short, law doesn’t have to be enforced by a controlling authority.

Sources of Law

Now that we have some direction, we can narrow the scope. In the lesson on the sources of law we learned that there are four main sources: natural law, positive (government) law, international law, and private law.

We also learned that of these four sources, private law offers the opportunity for the creation of private legal systems that are even enforceable through government controlled national legal systems due to the New York Convention.

Moreover, we learned that as a result private parties can organize themselves in Consensus Jurisdictions with unique set of custom made rules. Since this is not a top-down enforced system, the way for it to become law is for participants to explicitly recognize it as binding.

Definition of “Decentralized?”

The word decentralized is popular. However, it is rarely defined. The Cambridge dictionary says:

To move the control of an organization or government from a single place to several smaller ones.³⁾“decentralize,” Merriam-Webster Dictionary, accessed at December 27, 2019, https://dictionary.cambridge.org/dictionary/english/decentralize

According to this definition, decentralization concerns the distribution of “control.” And it can apply to both the government and (private) organizations.

The Merriam-Webster’ definition of decentralization is the following:

The dispersion or distribution of functions and powers;
specifically, government: the delegation of power from a central authority to regional and local authorities ⁴⁾“decentralization,” Merriam-Webster Dictionary, accessed at December 27, 2019, https://www.merriam-webster.com/dictionary/decentralize

This definition appears similar to the first one when you assume that the words and control and power are synonymous. But are they?

Power vs Control

The first definition solely discusses the distribution of control of an organization or government, not its power. If for example the European Union restructures and delegates more decision making control to the parliament, this doesn’t change the overall power of the European Union―just how this power is yielded.

The second definition discusses the distribution of power, rather than control. But when referring to law, can its power really be distributed? The general idea of law is that it is above everybody in society―as Thomas Paine said, the law is king.⁵⁾Thomas Paine, “Common Sense,” (1776):
…let a crown be placed thereon, by which the world may know, that so far as we approve as monarchy, that in America THE LAW IS KING. And if the power of law is absolute, the question would rather by who gets to direct its powers. For our definition, we should concern ourselves with control over law-making powers.

Practical Decentralization

Satoshi Nakamoto introduced a working form of decentralized money. It resulted in widespread efforts to create a functional payment system outside of the control of one single actor.

This level of decentralization goes much further then an organization or government delegating its control; it replaces it with the governance of a swarm of actors all cooperating towards one single goal. This provides many practical lessons that go further than abstract words.

From a practical point of view we can look at an article of Vitalik Buterin, who introduced three types of decentralization: ⁶⁾Buterin, V., “The Meaning of Decentralization,” (Medium, February 6, 2017), accessed on December 27, 2019, https://medium.com/@VitalikButerin/the-meaning-of-decentralization-a0c92b76a274

• Architectural
• Political
• Logical

Architectural Decentralization

Architectural (de)centralization — how many physical computers is a system made up of? How many of those computers can it tolerate breaking down at any single time?

During its first ten years, Bitcoin has provided ample examples of why for a decentralized system it is important to not have one single point of failure. The most famous example is Mt Gox. On this makeshift exchange, 70% of all Bitcoin trading took place in 2013. The system was unstable and lacked security measures, and a total of 750.000 Bitcoins were “lost,” or 6% of all the Bitcoins in existence at the time.⁷⁾Frankenfield, J., “Mt. Gox,” (Investopedia, June 25, 2019), access on December 27, 2019, https://www.investopedia.com/terms/m/mt-gox.asp It must be said that the blockchain itself remained operating as usual, and as such the system proved decentralized. However, centralization of architecture results in enormous security and usability issues.

Fortunately, laws are not money. There are no immutable transactions to secure, no double spending issues to prevent, nor massive price fluctuations to consider. A law can be a static document. The main function of decentralized law infrastructure will just be to document what the rules are and what is agreed upon. This does not even require a blockchain.

Decentralized Law infrastructure can be anything: an open source protocol uploaded on a private server, a private social media group, or an existing forum. To integrate more advanced features, such as Smart Contract Blocks, a blockchain is likely required. But in this case, an existing blockchain (such as Ethereum) could be used.

Political

Political (de)centralization — how many individuals or organizations ultimately control the computers that the system is made up of?

Even a decentralized blockchain, such as Bitcoin, eventually becomes a breeding ground for strive and politics. Various actors invested massively in mining and trading platforms and as such have incentives to try to influence the direction of the project.

We learned that for example Consensus Jurisdictions can be created by any group that wishes to cooperate. There could be thousands of groups, as compared to a dozen or so truly decentralized blockchains. Moreover, these system are voluntary. This means that anyone is free to leave or join a system with more transparent forms of law creation.

This make the organization and self-government possible for people across borders, cultures and ethnic backgrounds, similar as to what was described in the science fiction novel The Diamond Age of Neil Stephenson as a Phyle.⁸⁾Casey, D., “Doug Casey on Phyles,” (Casey Research, April 13, 2011, https://www.caseyresearch.com/daily-dispatch/doug-casey-phyles/,
“a phyle is a group of people that’s self-defined by whatever values they share. A phyle is not limited by race or language or geography – or, most importantly, by borders on maps or other such fictions – although it could be, if its members chose to be so limited. The word phyle was coined by science fiction author Neal Stephenson in his masterwork, The Diamond Age. It comes from the Greek, φυλή which means ‘tribe’ or ‘clan.’ ”

There is only one potential political bottleneck. Enforcement of private law in the real words hinges on the New York Convention. Individual nation states, even though unlikely, could withdraw their support for this instrument.

Logical

Logical (de)centralization— does the interface and data structures that the system presents and maintains look more like a single monolithic object, or an amorphous swarm? One simple heuristic is: if you cut the system in half, including both providers and users, will both halves continue to fully operate as independent units?

Here the contradiction becomes apparent. The ideas presented here on Decentralized Law are based on agreement―participants agree to be bound by a certain set of rules.

The idea behind an agreement is that it binds people over time, especially when they are not cooperating any longer. Whenever participants of any private law system are in a dispute, they cannot decide the rules no longer apply to them.

Other than that, there is no reason why participants of for example a Consensus Jurisdiction couldn’t “fork off” and create their own system.

Decentralized Law Definition

In this article we summarized a number of criteria that together define decentralized law.

We first of all accepted law in the broadest sense of the word. Having said that, only private law allows for practical decentralization. As a result, decentralized laws must be recognized by the participants since there is no central authority to enforce it. And finally, we learned that it has to be build on decentralized infrastructure and be controlled by distributed political structures.

The definition of decentralized law is as follows:

Decentralized Law:

A set of voluntarily accepted private law systems of which the control is distributed both politically and technologically.

Now that we covered all theory, we can start with the practical applications of decentralized law. This is done with the introduction of the decentralized legal system in the next lesson.

This article is part of a series of lessons on Decentralized Law (view summary).

Cite this article

Thysse W., “Lesson 9 – Decentralized Law Defined” (Decentralized Law Lessons, December 28, 2019), available on: https://decentralizedlegalsystem.com/law/definition/

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