WHAT IS ENABLED? HOW “BLOCKCHAIN ENABLING” LEGISLATION FAILS COMMERCIAL CONTRACTS

Author: 

Lucy Kelly

An option contract limits the power of acceptance and is a promise not to revoke an offer, in exchange for consideration.  Without the enforceability of option contracts, parties would not be able to trust that the other party would not revoke the offer whenever it sees fit.  Even with the myriad of ways contract law alleviates the need for blind trust, contracting carries with it an innate requirement that a party either trusts the system in its entirety, or trusts the other party to honor the contract.  But, with the advent of online exchanges, how can anyone be sure their online activities are secure, or of  the identity of a contracting party?  What if there was a way to eliminate the need to trust people or institutions to carry out commercial contracting?
The emergence of blockchain, through the advent of Bitcoin, initially created societal distrust for the new technologies.  Yet, while Bitcoin made waves in the financial sector, the most innovative aspect of Bitcoin is the underlying technology: blockchain.  Blockchain mitigates the inherent risk involved in transacting with unknown parties and is therefore the closest thing to a trustless system created thus far.  In fact, most proponents of blockchain technology define blockchain implementations (hereinafter “protocols”) as “trustless.”  Understandably, the discussion of “trust” is confusing because trust is inherent in blockchain protocols in that they are incredibly transparent and secure, which eliminates the need for trust.  Somewhat paradoxically, the Economist wrote that blockchain technology is “the greatest chain of being sure about things.” View More.