The starting premise for discussions at this Meeting for the Friends of Aspen was that blockchain is much more than just the technology behind bitcoin. It is a public, decentralized, cryptographically-secured ledger shared by all parties operating within a computer network. These characteristics make it a paradigm destined to have significant impacts on the economic system, fundamentally changing our understanding of the concepts of transactions, ownership, and trust.
Indeed, the revolution that blockchain could usher in seems to have an even more game-changing potential than the advent of the web over 20 years ago. While the internet enables the exchange of information through the duplication of data, this new paradigm allows the creation, storage, and flow of digital value without duplication and, above all, without the need for trust certification by a third party. In short, not only can digital value be passed on without it being devalued by the possibility of duplication, but intermediaries are eliminated from the transaction. In this way, blockchains totally bypass well-entrenched real-world institutions, starting with those that regulate the exchange of money and the interbank market.
Moreover, this technology is finding applications beyond the realm of financial transactions, with smart contracts being one such example. In this case too, blockchain allows disintermediation of the relationship between different parties, no longer conferring the role of trust certification and regulation of contractual matters to physical institutions – namely, notaries, lawyers, judges, and so on – but to an algorithm.
It was noted that this technological change, which brings with it a new cultural and institutional paradigm, raises various questions of compatibility with the rule of law. Firstly, can an algorithm regulate all those aspects of contractual relations between parties that are currently governed by legal interpretation? Secondly, does a new code-based society not require new rules and a radically different approach to jurisprudence? For that matter, the transition from an oral society to one based on the written word also brought about radical changes at an institutional and regulatory level centuries ago.
The participants suggested that although these are unresolved philosophical questions, they nevertheless leave room for practical applications of blockchain within the situation as it currently stands, starting with its deployment in existing institutions, such as public authorities, to speed up and automate certain processes. For example, automatic and algorithmic certification of credits claimed against the state by small and medium-sized enterprises could have major economic impacts.
In this regard, it was felt that individual states still face a regulatory challenge. While Italy seems to have adopted a wait-and-see attitude, the position of countries such as Switzerland and Dubai is different. The latter has totally embraced the blockchain paradigm and aims to make it the cornerstone of its commercial transactions, beginning with real estate deals. Switzerland, on the other hand, has given the players involved in this technology leeway to experiment with and study what regulatory measures might be most appropriate in the future.
It was emphasized, at any rate, that the blockchain paradigm represents a change that Italy and Europe cannot afford to underestimate. The most constructive approach would be to maintain a receptive and watchful attitude pursuant to which the law keeps pace with technology, so as to avoid a retread of the critical issues that, over the past 20 years, have characterized the relationship between the internet and pre-existing economic, legal, and political institutions.