Slaying the Crypto Dragons: Towards a CryptoSure Trust Model for Crypto-economics

Abstract

AbstractIn order to move towards a CryptoSure regime, systems based on blockchain and distributed ledger technology have to give up the fiction of ‘consensus trustless mechanisms’, and, if they are to provide socially and legally acceptable security, privacy and trust, within the Rule of Law, have to accept the necessity of a Trusted Third Party. For example, the General Data Protection Regulation (GDPR) includes in its provisions Article 17, the Right to be Forgotten, which could potentially be a formidable barrier to the ubiquitous introduction of cryptographic blockchain software and technology outside of a CryptoSure regime. The investment mania that there has been for blockchain technology, with much money having gone into bitcoin and other cryptocurrencies, blockchain, smart contracts and distributed ledger technology, has been significantly fuelled by the ‘black cash’ of drug-dealers, money-launders, traffickers and the like. Crypto Dragons, the many and varied Financial Disputes over Crypto Assets, have arrived, with legal actions mounted by those defrauded increasing. This is not surprising, given that in Q2 2019 alone, misappropriation of cryptocurrency funds netted criminals some $4.26 billion. The foundations of global digital currencies go back well before the Satoshi bitcoin paper of 2008, and those early digital e-commerce visions did not require a cryptographic blockchain ‘mining’, or ‘distributed consensus’, existential model and were not intentioned of being so readily riven with the criminal black market profiteering of money-launders, scammers and fraudsters that bedevil much current cryptocurrency activity. Looking ahead, Facebook’s Libra digital currency could establish a new global e-commerce paradigm much closer to the pre-bitcoin electronic cash visions, and one more compliant with the existing norms and customs of the Rule of Law, where a responsible Trusted Third Party, in this case, Facebook, is fundamental. Cryptocurrencies apart, some blockchain applications more generally are likely here to stay, and the majority will be robust implementations by established major corporations, with most of us, as consumers, hardly needing to know any of the details. For the properly cautious ICT expert and professional, when considering the use of blockchain for any proposed use case, the ‘fundamental things apply’. There is always the need for Trusted Third Parties, and for probative Electronic Evidence. A key point in any court trial will be examination of the Digital Evidence and, although a Crypto Asset may essentially be ‘decentralised digital vapour’, a Court of Law can make a binding order to get forensic traction on it, because of the legally well-established Obligation of Disclosure. This article concludes with a Checklist giving practical, generally applicable wording for an effective Digital Asset Disclosure exercise.