$Code == $Law

Code is law. This is a phrase that's used in our pioneering realm of blockchain technology, cryptocurrencies and Web 3.0. This post will explore some of the challenges resulting from this concept.

What does it mean to say that "code is law"? It's essential to have a good understanding of the origin of the phrase, as well as the time and circumstances in which it appeared, to have a full understanding of its influence on our current and future society. The phrase was coined by Lawrence Lessig in his article "Code is Law" and his 1999 book Code and Other Laws of Cyberspace in which he writes about the structure and nature of regulation of the Internet. He writes that we've come to equate liberty with "freedom from government" and, doing so, have failed to see the new regulator that's about to replace government. That new regulator being code, the software (and hardware) that forms the architecture colloquially labeled as "cyberspace."

He uses the basic code of the internet - the protocols called TCP/IP - as an example of how this code regulates behavior and values. TCP/IP enable the exchange of data among peer-to-peer nodes, interconnected networks and servers. In essence, and in the early days of the Internet, this code was neutral about the data and ignorant about the users; it didn't know who sent what or when, making it nigh impossible to regulate. This caused tension between different values, goals and norms. It's good to remark here that laws are in fact formalized, encoded norms; they're the formal, state enforced layer over the norms that are enforced by society. As a species we'd discovered that it's wrong to murder long before we encoded that socially accepted norm into law.

This unregulability (if that's even a word) is a double-edged knife; the resulting anonymity, for example, is good for privacy, something to which we attach great value. On the other hand this prevented us from knowing who posted child-porn or engaged in fraudulent deals. The code that made up the architecture influences our behavior in that way. Through the decades we've seen a convergence between code and law. Code was gradually changed in order to better regulate behavior in cyberspace; architectures for identification and rating were developed, greatly reducing privacy. Cookies, first developed by the team from Netscape, became the first code that enabled tracking the behavior of end-users This was done initially to aide commerce, for it is essential for commerce to know who buys what and when.

The question posed by Lessig is important now more than ever; how do we, in a world where our lives are increasingly located in this online architecture, have a say, a vote, a voice in determining the way the coders shape the architecture? Especially in our realm of cryptocurrencies, online assets and smart contracts, the belief that code will one day replace law is deeply rooted. When there's a flaw in the code that enables it to perform in an unexpected way, or when it opens up possibilities to scam investors for millions of dollars, we're prone to shrug our shoulders and say: "Well, code is law." This in itself is an admission that the anticipated freedom in this space is in fact the exclusive purview of the coders or experts; you can do all the research you want, and the code can be open source, but with a lack of understanding what the code actually does, we're sitting ducks in the crosshairs of scammers and frauds.

The CFTC Commissioner recently said, “I have heard some say that ‘the code is law,’ meaning that if the software code permits it, an action is allowed. I disagree with this fundamental premise. Case law, statutes, and regulations are the law. They apply to the code, just as they apply to other activities, contracts, or agreements.” He explained, “It is certainly possible that the software code does not represent the entirety of the participants’ agreement and must be interpreted in connection with traditional contract law concepts like good faith and fair dealing.” In other words, the rule of law trumps computer-generated code.
_{source: Above the Law}

Indeed, cutting out "the middle man" and the government raises this important question: should software developers protect our freedoms? And what other (constitutional) rights should we leave in the hands of the creators of the code and architectures? If we have to rely on the advice and recommendations of the experts who fully understand the code, that threatens our ideological goal of decentralization of power. Code is law, but knowledge is power. Even something like a DAO (Decentralized Autonomous Organization) is only as perfect as its underlying code. Code that's made by imperfect beings, with their own biases and goals, as we all are.

"Code is law" isn't to say that software will replace law, but rather that this software should incorporate certain constitutional principles. This is how Lessig formulated the pivotal dilemma in his original paper:

Our choice is not between "regulation" and "no regulation." The code regulates. It implements values, or not. It enables freedoms, or disables them. It protects privacy, or promotes monitoring. People choose how the code does these things. People write the code. Thus the choice is not whether people will decide how cyberspace regulates. People--coders--will. The only choice is whether we collectively will have a role in their choice--and thus in determining how these values regulate--or whether collectively we will allow the coders to select our values for us.
_{source: Code Is Law - On Liberty in Cyberspace}

Like I said: this question is more important now than in the pre-cryptocurrencies era in which Lessig first posed it, because financial transactions are a big part of how we interact in cyberspace as well as in real life. And even though this space is still very much in its infancy, it's rapidly becoming more complex and difficult for the non-initiated to follow, with the advent of DEXs, DeFi, Liquidity Pools, DAOs and so on. I believe that with community based protocols like Hive and Loop Markets we've made a step in the right direction towards shared accountability, much like in a real democracy; the pooling of knowledge and communicators combined with a team of creators and experts who value the input the end-users will greatly help in navigating the above mentioned challenges. I think that, for now at least, this is the best compromise between complete decentralization and holding on to some control over the behavior of all participants. I would be amiss if I didn't mention the high level of interactivity from, and the recent actions against voting-rings taken by the development team on Loop Community; it's a perfect example of the balance I'm speaking of.

I'll leave it here and I hope I haven't bored you all too much with this post on the principles and ideologies underlying our digital public square and markets. Just like TCP/IP and the subsequent layers on top of that regulated much of our online behavior up to this point, Web 3.0 will do the same, and the integration of smart contracts and cryptocurrencies will open up a whole new realm of code and architecture for us to reckon with. If there's anything that I wish you take away from this, it's that "code is law" holds as much possibilities for as against freedom, and that we collectively will have to decide which way it goes. I'll leave you with a lecture on the subject by Lawrence Lessig himself.

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