Bitcoin's Irreversibility Challenges Int'l Private Law: Legal Scholar

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A German law professor has argued that permissionless networks such as Bitcoin pose the greatest challenge when it comes to applying private law to the blockchain.

In an Oct. 18 article entitled "Who Owns Bitcoin? Private Law Facing the Blockchain," Professor Matthias Lehmann, chair of the Institute for International Private Law and Comparative Law at the University of Bonn, argued against the role of property law concepts for the blockchain in most scenarios.

"Neither does it provide a mechanism to reverse faulty transfers, nor does it allow for a transfer of title outside the blockchain. DLT was designed to avoid the risk of double-spending, yet it does not solve other problems that are standard in private law."

Two particular properties of the blockchain make imposing the ordinary rules of private law onto the blockchain particularly tricky, he claims: first, the irreversibility of the ledger and second, the a-nationality of the technology.

Private international law holds that the state legal system with the closest connection applies to a given case, yet given that the blockchain is not connected to any particular state, identifying this connection is complex.

Steering clear of an overly assertive role of the law.

Professor Lehmann's solution is to argue for the application of different national laws in order to correct blockchain records where necessary.

He proposes, specifically, the use of a transfer obligation under a given applicable national law in most instances so as to deal with the matter of irreversibility.

Property law concepts should be avoided, he argues, unless a choice of law has been embodied in the code of the ledger.

"He also claims that it dispenses with the need to identify"one national law governing the blockchain by distributing the applicable rules among the various affected legal systems.

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