Chapter 4 Allocation of liability on distributed ledgers

Question 1

Describe 4 situations where challenges occur regarding rights and obligations among blockchain participants

Answer 1

1. Uncertainty over contractual relationships - between miners, administrators and end-users.
2. Uncertainty as to tortious/delictual liability.
3. Uncertainty over the correct defendant - pseudonymously
4. Uncertainty regarding trust boundaries

Question 2

Explain the likelihood of rights and obligations arising on a permissionless blockchain.

Answer 2

Unlikely to arise because they operate on the basis of informal consensus and miners and end-users are pseudonymous.

Question 3

Explain the likelihood of rights and obligations arising on a permissioned blockchain.

Answer 3

Might be tortious liability on the basis of duty if care, depending on how close of a relationship there exists between the parties and if the risk is foreseeable.

Question 4

Explain the 3 common types of disputes arising in the blockchain system + Examples.

Answer 4

1. Miner and administrator/super-user dispute risks in a permissioned blockchain. For example, administrators who fail to perform their role, could result in a breach of AML and KYC rules. Forking is another topic likely to cause a dispute.
2. Technological disputes. For example, bugs.
3. Oracle dispute risks and trust boundaries, for example inaccurate data.