DLT: Order & Law

"DLT" stands for Decentralized Ledger Technology and is better known as "blockchain". DLT enables network participants to document transactions in database networks in a secure and efficient way. It has the potential to capture and deliver value in a trustworthy and cost-effective fashion.

There are private,"permissoned" DLT platforms, and public, "unpermissioned" DLT platforms (such as Bitcoin). The DLT platforms are not absolutely risk free, as a defective code or program bug can disrupt the order that might have financial implications. In this respect, the DLT or blockchain virtual order is not dissimilar from the imperfect physical world order, and rare disputes still have to be resolved.

For the private or "permissioned" DLT networks, the choice of the applicable law (eg HKSAR law) can be dictated by the platform developers or be agreed upon with participants. The real challenge is what should be the rule of the game for public or "unpermissoned" DLT networks? In the absence of any worldwide agreement, I suggest such network champions practise "equity + special circumstances" - an international customary rule - with a view to turning it into an "instant" custom, accepted as law by participants.

In designing and building any DLT networks that deliver practical value propositions, one feature is to include their own dispute settlement and self-enforcement mechanism. I believe problems originating from technology can also be resolved technologically. As DLT continues to develop, I strongly believe the fundamental moral and legal principles continue to apply!

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