Blockchains are the technology underpinning the bitcoin cryptocurrency. While bitcoin’s popularity seems to be declining due to its limited uptake as a payment system in mainstream commerce, the hype surrounding blockchains is on the raise. The grand theory behind blockchains is that their inherently “trustless” and incorruptible protocol establishes a single source of truth – a truth based on the strength of the underlying cryptographic algorithm and not on the authority of a state or on the financial strength of an intermediary. The blockchain narrative revives the “cyberlaw-theories,” popularized in the 90s, that technological progress is inherently tied to decentralization and an abandonment of traditional legal institutions.

The presentation is purposefully structured as a high-level introduction to the legal implications of blockchain technologies. Although the assertion that blockchains will revolutionize commerce (and the legal system!) may be unjustified, the technology does in fact raise some interesting legal issues that transcend the simple question whether it is technically and legally possible to automate the entire transacting process and whether contractual performance should be relegated to a decentralized network of computers. The potential practical applications of blockchains – and their legal implications, if any, – require a thorough understanding of their relevant technological aspects. In particular, lawyers must gain an understanding of what blockchains can and cannot do.