Since the beginning of Bitcoin, in the newly formed decentralized space, the need to resolve disputes began to emerge. The rapid development of Ethereum and the active development of smart contracts only increased the community’s need for a legal structure capable of providing answers to various types of legal inquiries.
A few years ago, a group of bitcoin enthusiasts, inspired by technology, advanced the
thesis that “Code is law”.
At the same time, right now we are witnessing how governments of different countries are striving to turn this principle inside out, trying to dictate their laws for the functioning of program code.
However, laws imposed from above are not the only possible way to resolve conflicts in a decentralized financial environment. Gradually, new conflict resolution strategies began to crystallize in its expanses.
The blockchain code can be the basis for the formation of a new digital jurisdiction, and not a subject of regulation within the framework of existing legal systems.
The growth of blockchain spheres suggests that Cryptoeconomics deserves its own dispute resolution system, which can be decentralized arbitration.
During the development of a decentralized financial system, Satoshi Nakamoto paid special attention to the problem of protection against double spending. This problem was resolved through the creation of a peer-to-peer network, with the participation of independent nodes capable of finding a consensus. Part of the bitcoin community believes that in this way Satoshi Nakamoto provided the prerequisites for the formation of decentralized arbitration in the blockchain system.
How exactly would a structure capable of resolving a dispute look like within a digital jurisdiction? Vitalik Buterin, the co-founder of the Ethereum network, believes that this tool should provide the user with the opportunity to form a request and address it to a decentralized structure capable of solving the problem.
Within the corporate landscape, any interactions require a preliminary contract. In the event of a dispute, the subject of the proceedings is always not the transaction itself, but the contract on the basis of which it was carried out. Outside the blockchain space, the parties involved in the dispute, in a similar situation, send their request to the arbitral tribunal.
However, in the event that companies use a smart contract, as a way to enter into a transaction, it would be reasonable for each side to consider the possibility of resolving disputes in the event of a dispute. Regardless of the method of making a deal, disputes can arise both in the digital world and in the material world. For this reason, the presence of a trusting environment is a key element for the operation of any business company.
However, the traditional arbitration system cannot fully function within the digital cryptocurrency space. This situation leads us to realize the need to study the possibilities of the blockchain to replace the existing procedural, organizational and technological infrastructure of traditional arbitration, with a view to decentralized dispute resolution. The process of building a trust system within a cross-border blockchain space may be difficult, but the expected result is quite capable of justifying the effort.
In order for a decentralized environment to become reliable and safe, smart contracts of various nature (labor, property and others) should be fixed in the unchanging, genuine blockchain, independent of various political structures.
In the event that one of the parties is not satisfied with the outcome of the implementation of the contract, it may use the option of decentralized arbitration, within the framework of digital jurisdiction. In other words, in an ecosystem where companies and organizations can safely interact using smart contracts and cryptocurrency operations, the option of decentralized arbitration should be present.
Among other things, the ability of the blockchain to exclude intermediaries from the process using mathematical algorithms is the key property that is necessary for the formation of jurisdiction of a new formation.
How will this work?
Further, in this article we describe the concept of a decentralized arbitration court, which will be embodied in the framework of the blockchain-ecosystem Jincor.
- In order to exclude the corrupt component and the possibility of a biased attitude on the part of the arbitrators, the judges must remain unknown to the respondent and the plaintiff.
- An anonymous digital room will be the operating environment for the hearing, where the defendant and the plaintiff will be able to bring charges and demands, bring evidence and witness testimony.
- Following the principles of a decentralized society, the arbitrators will be chosen by mathematical algorithms based on an analysis of the judges ’digital reputation, their areas of competence, involvement in a particular jurisdiction and economic sphere, as well as on the basis of empirical experience (ie, legal practice in real life). Compensation due to the judges will be determined in advance and, subsequently, paid by the losing party. However, at the initial stage of the formation of the system, arbitrators can offer their services free of charge to form a digital reputation.
- After completion of the proceedings, the court determines a number of binding obligations for the losing party. Failure to comply with the ruling of the arbitral tribunal will be equated with the loss of digital reputation and connections tied to the digital identity of the participant. As an additional motivation to execute court orders, an open database containing information on all previous arbitration processes will be available to participants in the ecosystem. Thus, before concluding any transaction, the parties will be able to analyze previous actions of counterparties.
- Within the framework of digital jurisdiction, smart contracting will be available only to identified users. In the blockchain world, as well as in the space of material reality, a spoiled reputation will be able to close many doors and harm the future development of unscrupulous counterparties.
- In accordance with the text of the New York Convention on Arbitration , the parties can choose not only the arbitrators, but also the jurisdiction within which the proceedings will take place. Until most countries formulate universal rules for regulating the use of smart contracts, participants of the blockchain-ecosystem will also have the right to choose the jurisdiction of a particular state to resolve arbitration disputes.
The concept of a decentralized arbitration system will be implemented on the basis of the Jincor
blockchain platform, which will be a digital jurisdiction for secure inter-corporate interactions.
While others are discussing the advantages and disadvantages of applying smart contracts, Jincor is
already building a decentralized ecosystem for reliable intercorporate collaboration. In order to accelerate progress, investors are invited to participate in the upcoming pre-ICO and subsequent ICO JCR tokens
, which are a custom Jincor cryptocurrency platform.
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