Contracts Ex Machina

Smart contracts are self-executing digital transactions using decentralized cryptographic mechanisms for enforcement. They were theorized more than twenty years ago, but the recent development of Bitcoin and blockchain technologies has rekindled excitement about their potential among technologists and industry. Startup companies and major enterprises alike are now developing smart contract solutions for an array of markets, purporting to offer a digital bypass around traditional contract law. For legal scholars, smart contracts pose a significant question: Do smart contracts offer a superior solution to the problems that contract law addresses? In this article, we aim to understand both the potential and the limitations of smart contracts. We conclude that smart contracts offer novel possibilities, may significantly alter the commercial world, and will demand new legal responses. But smart contracts will not displace contract law. Understanding why not brings into focus the essential role of contract law as a remedial institution. In this way, smart contracts actually illuminate the role of contract law more than they obviate it

Castle in the Air: A Domain Name System for Spectrum

This article envisions the foundational infrastructure for a true wireless Internet. The domain name system (DNS) for addressing allowed the Internet to scale as a decentralized, loosely-coupled system. A similar system for the wireless communication would allow devices to negotiate frequently assignments and other attributes dynamically. The traditional, static approach to spectrum allocation creates massive inefficiencies, which will become increasingly problematic as wireless demand grows. A DNS for spectrum could be based on the database the Federal Communications Commission recently mandated for devices operating in the “White Spaces” around broadcast television channels. Such an infrastructure would enable rapid growth and innovation in next-generation mobile devices and applications

Lessons for Policymakers and Regulators on the (Predictable) Future of the Digital Economy

The next stage in the evolution of the digital economy involves the creation of what can be called the “Internet of the World”—an expanding web of transactions, anticipated today by on-demand platforms such as Uber and Airbnb, that eventually will occur across trillions of networked devices and penetrate every sphere of human activity. This brief looks at the many legal questions raised by these novel services, in particular, at the regulatory classification of on-demand services, as well as the application of antitrust provisions, the imposition of taxes and fees, and the assignment of liability to these new platforms.https://repository.upenn.edu/pennwhartonppi/1043/thumbnail.jp

Digital Asset Regulation: Peering into the Past, Peering into the Future

Blockchain is often compared to the internet as a disruptive technology that will realign economic structures across the world. This analogy extends to law and regulation. Similar to internet-based services, digital assets raise a host of challenges for policymakers. They also pose general questions regarding the desirability and practicality of regulating decentralized systems. Such debates play out against a backdrop of concerns that regulatory action will chill innovation or push market activity to more tolerant jurisdictions. The story of internet policy in the late 1990s and early 2000s therefore provides important lessons for policymakers today when confronting digital assets. Two incidents are of particular significance: the Clinton administration’s 1997 Framework for Global Electronic Commerce and the judicial effort to address peer-to-peer (P2P) file sharing. The early internet regulatory debates demonstrated that action by all three branches of government was important to resolve uncertainties and distinguish legitimate from illegitimate market activity. The history illustrates that policymakers have many tools at their disposal beyond direct prohibitions or exclusions from requirements. Claims that regulation is inherently impossible or damaging to market development are generally overblown. Focusing on policy objectives, rather than starting from traditional categories that were historically developed based on those objectives, will help policymakers develop appropriate rules for novel digital asset markets such as decentralized finance (DeFi)

The Centripetal Network: How the Internet Holds Itself Together, and the Forces Tearing It Apart

Two forces are in tension as the Internet evolves. One pushes toward interconnected common platforms; the other pulls toward fragmentation and proprietary alternatives. Their interplay drives many of the contentious issues in cyberlaw, intellectual property, and telecommunications policy, including the fight over network neutrality for broadband providers, debates over global Internet governance, and battles over copyright online. These are more than just conflicts between incumbents and innovators, or between openness and deregulation. Their roots lie in the fundamental dynamics of interconnected networks. Fortunately, there is an interdisciplinary literature on network properties, albeit one virtually unknown to legal scholars. The emerging field of network formation theory explains the pressures threatening to pull the Internet apart, and suggests responses. The Internet as we know it is surprisingly fragile. To continue the extraordinary outpouring of creativity and innovation that the Internet fosters, policy-makers must protect its composite structure against both fragmentation and excessive concentration of power. This paper, the first to apply network formation models to Internet law, shows how the Internet pulls itself together as a coherent whole. This very process, however, creates and magnifies imbalances that encourage balkanization. By understanding how networks behave, governments and other legal decision-makers can avoid unintended consequences and target their actions appropriately. A network-theoretic perspective holds great promise to inform the law and policy of the information economy

The Song Remains the Same: What Cyberlaw Might Teach the Next Internet Economy

The next stage of the digital economy will involve trillions of networked devices across every industry and sphere of human activity: The Internet of the World. Early manifestations of this evolution through on-demand services such as Uber and Airbnb raise a host of serious legal questions. The stage seems set for a decisive battle between regulation and innovation. Yet this perception is mistaken. In the end, the emerging businesses will welcome government engagement, and regulatory actors will accept creative solutions to achieve their goals. Why expect such a resolution? Because the same story played out twenty years ago, in the early days of the commercial internet. Contemporary debates recapitulate a familiar error: the artificial division of virtual and real-space activity. Now, as in the past, this “digital dichotomy” feeds both excessive skepticism about legal protections and excessive concern about the threats from technology-based innovations. The history of cyberlaw shows the importance of overcoming such perceptions and recognizing the potential of government as an enabler of innovation