This paper examines the question of whether and why distributed ledger token should be legally encompassed. To ensure a fundamental understanding, it first describes the basic features of the distributed ledger technology and the main characteristics of token. This is followed by a look at the function of law in general as well as with regard to property and technology in particular. From these considerations, the necessity of recognizing token as legal goods is derived, coming to the concluding section where it will be addressed whether property law can be used to encompass token. Though not evaluating any specific application of norms, the paper argues for a corresponding openness in legal interpretation, especially when it comes to disruptive technologies.
Table of Contents
I. Technical features of DLT
1. P2P networks and consensus reaching
2. Hashing
3. Asymmetric cryptography
4. Token
a) Rivalry
b) Exclusivity through immanent allocation
c) Immutability
d) Interim result: Tokens as digital things
3. Currently still existing challenges
II. Function of the law
1. General
2. Private law and property
3. Technology
III. Necessity to recognize new objects as legal objects
IV. Applicability of property law on tokens
1. Dogmatic reasons to recognize tokens as legal objects
2. Token characteristics indicating their recognition as real things
3. Currently still existing challenges
V. What law can learn from disruption
Objectives & Topics
This paper investigates the legal status of distributed ledger tokens, examining whether they should be legally recognized as objects of property. It explores the technical foundations of Distributed Ledger Technology (DLT) and evaluates the capability of existing private law dogmatics to encompass these novel digital assets.
- Technical mechanics of Distributed Ledger Technology (DLT)
- Core properties of digital tokens (rivalry, exclusivity, immutability)
- Function of private property law in regulating modern technology
- The necessity of legal recognition for token-based economic objects
- Evolutionary adaptation versus revolutionary creation in legal interpretation
Excerpt from the Book
I. Technical features of DLT
DLT is a technology based on three informatics concepts: peer-to-peer (P2P) networks, consensus mechanisms as well as asymmetric cryptography and hashing. In 2009, these were combined for the first time in the bitcoin network. Only this convergence of concepts made it possible to avoid a double spending of virtual coins, a problem that arises from the infinite copyability and unlimited usability of digital data which had plagued research for several decades.
1. P2P networks and consensus reaching
P2P networks generate consensus following fixed rules making use of game-theoretic incentivization. This consensus refers to a current state of units assigned to respective holders. It thus constitutes a kind of ledger from which it is possible to deduce how many units belong to whom. The data itself, i.e., the ledger, is stored at each individual node in the P2P network as an own copy, which is the reason the term ‘distributed ledger’ emerged.
2. Hashing
The state of the distributed ledger is made up of and can only be changed by transactions that are linked to previous transactions by hashing. Hashing creates a unique essence of data with a fixed size, regardless of the data's previous size. This essence, the hash, will always be identical but changes with even the slightest alteration of the data. Linking each transaction to the previous one by hashing means that each transaction includes the hash of the previous transaction into its own data, so that the previous transaction cannot be changed anymore without having to change the hash in the subsequent transaction.
Summary of Chapters
I. Technical features of DLT: Analyzes the fundamental informatics concepts behind Distributed Ledger Technology, including P2P networks, hashing, and asymmetric cryptography, to establish the technical identity of tokens.
II. Function of the law: Explores the purpose of legal systems, focusing on how private law regulates reality, defines property, and responds to new technological developments.
III. Necessity to recognize new objects as legal objects: Discusses the ethical and economic reasons for treating tokens as legal objects, emphasizing their importance for social order and investment security.
IV. Applicability of property law on tokens: Examines the legal dogmatics of applying property law to tokens, arguing that their unique technical characteristics make them resemble physical objects in a legal sense.
V. What law can learn from disruption: Concludes that law can and should evolve through interpretation to accommodate new technologies, treating innovation as an evolutionary transformation rather than a revolutionary break.
Keywords
Distributed Ledger Technology, DLT, Blockchain, Token, Property Law, Digital Assets, Private Law, Rivalry, Exclusivity, Immutability, Smart Contracts, Digitalization, Legal Dogmatics, Virtual Objects, Token Economy
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the legal categorization of tokens generated via distributed ledger technology and explores whether these units should be treated as legal objects of property.
Which specific themes are addressed regarding tokens?
The central themes include the technical structure of DLT, the functional similarities between digital tokens and physical objects, and the requirements for legal allocation.
What is the primary research goal?
The goal is to determine if current legal frameworks, specifically property law, are sufficient to encompass the token economy or if adjustments in legal interpretation are necessary.
What scientific methodology is utilized?
The author employs a legal-dogmatic analysis, examining existing civil law principles in relation to technological challenges and the evolving definition of 'objects' within the digital sphere.
What topics are within the scope of the main part?
The main part covers the technical pillars of DLT, the function of law and property in modern societies, and the specific application of legal norms to blockchain-based tokens.
By which keywords can this work be characterized?
Key terms include DLT, token, property law, digital assets, immutability, legal dogmatics, and algorithmic governance.
How does the author define the relationship between disruption and law?
The author argues that disruption does not imply a radical break for the law; rather, law should adapt through an evolutionary, functional interpretation of legal terms to maintain stability.
What is the "double spending problem" mentioned in the text?
It refers to the risk of digital units being copied and spent multiple times, a technical hurdle that early DLT solutions, such as the Bitcoin network, successfully addressed.
- Citar trabajo
- Anjuli v. Hülst (Autor), 2021, Why the Law Needs to Encompass Token, Múnich, GRIN Verlag, https://www.grin.com/document/1451460
