Babbitt Column | Digital Economy and Digital Rule of Law

The application of blockchain technology is undoubtedly rapidly changing economic and social development and is profoundly affecting the future. The key and fundamental role of the blockchain in building a digital economy has now reached a consensus in principle. The impact of this process on the legal system is obvious. More and more questions are put before people, such as how should decentralized applications be monitored? Will business models based on decentralized applications and traditional business models generate regulatory arbitrage? What legal problems exist in data transactions and data security, copyright, payment settlement, taxation, etc. in blockchain-based applications? How to grasp the benefits and risks of digital assets and digital finance? Compared with big data, cloud computing, and artificial intelligence, the problems brought by blockchain are more basic, global, and complex, and the governance issues they bring have a deeper and wider impact. If digital assets are the core of the digital economy and digital finance is the blood of the digital economy, then the digital rule of law is the guarantee of the digital economy.

I. From a strategic position, the digital economy necessarily requires the protection of the digital rule of law

The application of blockchain technology is constantly breaking the interest pattern formed by the old model, which requires laws to ensure a fair and just order . As a trusted infrastructure of the new generation of the Internet, blockchain can be used in almost all fields and industries, and it is likely to reshape the entire economic model. And in this process, it will inevitably be accompanied by the break of the old model and the reconstruction of the new model. In other words, the process of transformation and development of the digital economy model is a process of reforming the relationship of interest adjustment. For example, the existing asset securitization operation requires the participation of many intermediary agencies to ensure the credibility, transparency, and supervision of the entire securitization operation, but this also causes relatively high costs. For some relatively small-value scenarios, although it can be said that combined asset pools can be used, it does not fundamentally solve the problem. The intervention and application of blockchain technology may fundamentally change the mode and structure of traditional securitization operations, which will inevitably bring about remodeling of operation modes, supervision modes and distribution of benefits, and this process will not happen overnight This inevitably requires the careful, meticulous and inclusive participation of law, including supervision and legal services.

The new blockchain-based digital economy requires the protection of the rule of law. The application of blockchain technology has the characteristics of open source, openness, transparency, and participation, and many projects have a considerable degree of decentralization. Objectively, a certain degree of decentralized governance practice has been formed. The governance rules of these practices are currently being explored and accumulated, but what can be agreed is that the development of the open source, open and transparent participation of the digital economy itself must necessarily be guaranteed by law. These new models are essentially new ones that build a credible foundation. Generation Network, but it is still essentially a new type of economic production and lifestyle, a new type of interest relationship, which means that the development of the digital economy requires laws to protect the interests of decentralized communities. For example, the "constitution" and dispute resolution mechanism formed by EOS is a valuable practice. Although the huge centralization mechanism formed by itself has been criticized, certain new governance models have indeed been formed in the operation of specific mechanisms. specialty. Another example is the Elastos community. In principle, a community co-governance committee is formed based on community elections. Based on community code development, ecological promotion, brand building, etc., community affairs are decided and implemented in the form of submission and review of proposals. And supervision, and the entire process from election to decision-making, implementation, and supervision will be recorded on the blockchain based on the blockchain, taking a relatively advanced step in decentralized community governance.

Under the conditions of the digital economy , the digital rule of law itself requires innovative adjustment of regulatory and legal service models . Since the advent of blockchain technology, its various dazzling and various innovations have raised brand-new topics for regulators around the world. The application of blockchain has produced some new legal relationships, many of which cannot be explained by traditional legal concepts, legal principles, and legal regulations, and even under conditions that meet the traditional regulatory connotation, how can they be more effectively, timely and scientifically regulated, It is also an increasingly complex issue. Regulatory authorities, legal practitioners, and academics are increasingly recognizing that regulation is likely to need to be combined with science and technology to integrate law with technology and improve the reliability and accuracy of legal supervision. For example, in a blockchain network, because it has certain decentralized characteristics and may not be controlled by a single entity, the traditional supervision model is a bit weak. So some people proposed the concept of setting a supervision node in the blockchain network. It has some regulatory authority at the beginning of the pattern design. Of course, some people think that this may violate the law of blockchain technology application, but the problem may not be so simple, and the relationship between regulatory logic and business logic needs to be further studied.

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Second, from the perspective of development, the digital rule of law includes the digitalization of the rule of law and the digital rule of law.

Since the digital rule of law is a foreseeable future, what is its development context? Blockchain is undoubtedly not technology for technology, chain for chain, but should serve the industry, and it should be combined with specific application scenarios to create value, that is, the so-called open innovation chain, application chain and value chain. Even Bitcoin, its generation and development are inseparable from world economic and financial development. Therefore, it can be said that the process of the close integration of blockchain technology and industry is the process of digital rule of law generation and continuous development and improvement.

The core of the digital economy is digital assets. Therefore, it can be considered that the two major directions of digital assets are asset digitization and digital assetization. Therefore, it can be logically considered that the two major directions of digital rule of law are digital rule of law and digital rule of law, that is, digital activities require the rule of law, and the rule of law itself needs to be digitized.

Digital rule of law , that is to say, applying the rule of law network to the field of blockchain. We need to govern some activities based on the blockchain network against legal norms, legal principles, and legal concepts. Combining the application and amendment of traditional legal systems to relevant issues in the application of blockchain, combining the exploration and practice of some community autonomy in the field of blockchain, combining the basic requirements and principles of modern governance laws and the governance system with the organic nature of blockchain technology Combining, adhering to the principles of controlling risks, encouraging innovation, and promoting development, so that the digital economy and digital life have a fair, just and healthy order. Of course, the application of the rule of law network to the field of blockchain includes technical innovation and industrial innovation.

The digitalization of the rule of law means that technological innovation and industrial innovation promote the innovation and improvement of the rule of law system. With the development of the digital economy and intelligent society, more and more transactions and social life will be carried out through the new generation of Internet based on the blockchain. The formation of evidence materials and dispute settlement may cross the technical field, cross industries, and cross borders. Addressing new requirements for efficient and convenient judicial procedures, all of this objectively requires that the rule of law system, including supervision and legal services, be continuously innovated and improved, and that the requirements of digitalization be applied. For example, the judicial blockchain and blockchain electronic certificate practice that are constantly being explored in various places are good examples.

Third, from the internal structure, the digital rule of law has a scientific element system

The foundation of the digital rule of law is digital behavior, digital credit that characterizes digital behavior to a certain extent, and digital rules of behavior rules between subjects. It can be said that digital justice is the key social infrastructure of the digital economy and digital society. In terms of internal structure, the basic structure of digital rule of law includes digital identity and digital contracts, digital governance and digital justice.

( 1 ) Digital identity and smart contract

Many people believe that digital identity is the cornerstone of the digital economy. Digital identity includes identity based on centralization and decentralization. In the future digital economy system based on blockchain, decentralized digital identity will be the mainstream. Both Microsoft and IBM are laying out a decentralized digital identity project. Facebook will not let it go. The Libra project it initiated must first solve its own problems, but the starting point is to propose a blockchain-based digital identity that will have its own data. There are also many projects, such as the well-known uport and civic, which are solutions for blockchain digital identity.

Digital contracts mainly refer to smart contracts. It is also believed that smart contracts are the cornerstone of the digital economy. In fact, digital identity and smart contracts are inseparable . Smart contracts can be said to be the external form of the basic transaction model of the digital economy. The smart contract concept was first proposed by Nick Szabo in 1995. Smart contracts allow trusted transactions to be made without third parties, which are traceable and irreversible. From a contract perspective, all external internal regulations and business operations, government management, and judicial processes are a kind of contract, and if these guarantees have become smart contracts, then all these involved may be intelligentized . But smart contracts need to work in conjunction with digital identities, otherwise they may be out of order. Of course, the technical legal review and supervision of the smart contract itself is also necessary.

( II ) Digital Governance and Digital Justice

In the traditional Internet environment, China's digital rule of law and smart justice have reached a high degree of consensus and achieved leapfrog development. The level of informatization of China's judicial system has been quite high. The system's network security and informatization work have developed by leaps and bounds, providing strong cybersecurity and informatization guarantees for the further advancement of the comprehensive rule of law.

In the future, more and more activities will be generated based on digital identities and smart contracts, so objectively it is necessary to establish a suitable judicial model. At present, China has begun to establish a blockchain network between traditional judicial institutions, and has started to implement some blockchain-based transfer and docking of data, reducing the cost of information sharing and improving the credit system. In the future, the dispute resolution process, settlement model and settlement system will be more applicable to the socio-economic and life based on a new generation of trusted networks. In the future, the digital justice process will be more transparent and the rules more fair. At present, the registration and registration of blockchain information services by the China Cyberspace Office is the beginning of blockchain content supervision.

( 3 ) Legal service industry

In the long run, many activities may be completed more and more through smart contracts, so a large number of traditional legal businesses are likely to decline. According to media reports, Anna Donovan, dean of the University of London School of Law, said that blockchain will bring cheaper legal services. "The heated debate surrounding distributed ledger technologies, including blockchain, is far more than hype. This technology will eventually revolutionize property transfer and probate. Its advantages of fast, reliable and difficult to tamper will bring cheaper laws. Services. "Some people say that distributed ledger technology is" absolutely immutable, "but she said," Despite this, the technology has huge potential for automation, transparency, and efficiency. "

But this requires a process. We can be sure that the combination of technology and law is getting closer. In this process, we are in the transition and transition of the traditional legal system to the future digital rule of law legal system. Legal services combining industry and blockchain applications are definitely necessary, but no doubt the future code will more reflect the legal logic, and Legal logic is also implemented more in code. If it is said that the application of blockchain technology is more and more closely integrated with the industry, the way for lawyers to provide legal services is likely to be involved in code architecture and design.

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