In a recently published paper, Ethereum co-founder Vitalik Buterin, along with Harvard professor Thibault Schrepel, argued that blockchain technology is positioned to help antitrust law in areas where regulations are difficult to apply and enforce.
The paper, called the Blockchain Code as Antitrust, explains that blockchains can help antitrust laws by increasing decentralization and preventing the creation of monopolies. However, they said, blockchains can only do this if the regulations support the technology.
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„The law and technology should be seen as allies, not enemies, as they have complementary strengths and weaknesses,“ the document reads.
Building trust with blockchain
Buterin and Schrepel explained that
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technology, with the help of smart contracts, can create confidence in situations where laws are difficult to apply, such as „when jurisdictions are mutually hostile (cross-border issue), or when the State does not apply legal limitations to the exercise of power by its agents or private entities“.
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Smart contracts help create an ecosystem in which no party to the transaction is subject to trusting an unknown person or entity without being assured that their transaction will be successfully completed.
The fact that Blockchain’s main purpose is to decentralize various industries complements antitrust laws that prohibit companies from creating a monopoly or abusing their centralized market power to eliminate competition:
„The idea is that all market players retain the ability to decide without having to follow the instructions of the centralized economic power.“
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Highlighting legal support
Buterin and Schrepel urged antitrust agencies to consider the use of blockchain technology. As a two-step process to promote blockchain technology for decentralization, they suggested that antitrust agencies establish new regulatory frameworks so that more developers can test the technology without antitrust concerns.
If these frameworks are successful, the agencies could go further with safe harbors, which are similar to the frameworks but without time or scale limits, they wrote. They summarized:
„When technology chooses confrontation, the law must also choose confrontation. When technology chooses collaboration, the law must choose collaboration despite the absence of certain penalties it may entail.