Smart Contracts and the Limits of Computerized Commerce

Smart contracts and cryptocurrencies have sparked considerable interest among legal scholars in recent years, and a growing body of scholarship focuses on whether smart contracts and cryptocurrencies can sidestep law and regulation altogether. Bitcoin is famously decentralized, without any central actor controlling the system. Its users remain largely anonymous, using alphanumeric addresses instead of legal names. Ethereum shares these traits and also supports smart contracts that can automate the transfer of the Ethereum cryptocurrency (known as ether). Ethereum also supports specialized tokens that can be tied to the ownership of assets, goods, and services that exist completely outside of the Ethereum blockchain. The goal of this Article is to evaluate the degree to which cryptocurrencies and smart contracts can operate outside the reach of law and regulation. By some accounts, cryptocurrencies and smart contracts will revolutionize private law. Some argue they have the potential to displace contract and property law. For example, in a previous article, I argued that Bitcoin represents a system of private property that exists wholly outside of traditional legal structures. In this Article, I will argue that a complete revolution is not inexorable. Facing the technical and complicated nature of this subject, we should keep in mind a simple fact: cryptocurrencies and smart contracts are computer data and computer programs. To a large extent, they will have legal force only if given force by judges, regulators, and legislators