All right, welcome back to Bitcoin Study Sessions. I'm Lucas. I am joined by Mr. Grant Reichert Esquire, who shares the same professional designation as W. Aaron Daniel Esquire, the author of Dispute Resolution Without the State.
This is an academic work printed in the Satoshi Papers by Natalie Smolenski.
I'm pretty sure I'm smart enough to figure out how to put a link to this.
And I hope that you read along.
That is our goal with these talks is that we elevate discussion around Bitcoin and around the topics that Bitcoin touches,
which as we're finding out as we further pursue this topic is basically everything.
But today is an interesting one because today goes into how does enforcement work from a judicial perspective?
In the court of law, what we're trying to do is resolve disputes.
and essentially that comes down to power and control because without the ability to coerce
someone into a resolution then your courts have no power but what happens when we live in a world
where the money cannot be controlled by any individual power how does that affect be a
resolution and where could we possibly go? How could this perhaps improve our legal system and
make it better and more fair and possibly cheaper for all those involved? So as always, to kick it
off, Mr. Grant Riker to Esquire, please give us a beautiful summary of what we've read today and
then let's have a talk about it. Thanks, Lucas. And I like Lucas gave a really kind of
of, you know, 60,000 foot aerial view. That's an excellent broad context summary of what we read
today. And I'm going to give a bit more of a granular summary. And our purpose in doing this,
again, is when we talk about something, Lucas and I, we want to make sure we're talking about
what the author wrote, fairly discussing their point. So I'm going to try to get those arguments
out on the table. And then Lucas and I are going to, you know, kind of try to parse them apart a
bit and then add our own perspective. So as Lucas mentioned, this essay in the Satoshi Papers is
Dispute Resolution Without the State by W. Aaron Daniel.
He's a practicing attorney with a Florida Bar-certified
Appalice Specialist designation, years of practice,
founder of the Open Source Justice Foundation,
a nonprofit dedicated to supporting development of open source tools and software,
founder of Bitcoin Grove, a community accelerator and co-working space in Miami,
many other things, including he has an app called Resolve now,
which I think we might discuss just a bit towards the end.
this essay is going to cover another use case for bitcoin which is always exciting to see and it's
going to cover to something near and dear to my heart lawyers built on bitcoin which is something
i want to see more and more different professional designations building on bitcoin from their own
respective skill sets so as lucas mentioned you know i guess to step back a bit further so one
problem that bitcoin solves is universal permissionless access to a stable financial
system. We know that large swaths of the world population live in countries with rapidly
inflated currency. Large swaths of the world's population are unbanked. They have no access to
bank accounts. Bitcoin fixes that, provides everybody permissionless access to a stable
financial system. Just have to have a cell phone internet connection. What other problems can
Bitcoin fix? Another problem, access to justice. More than 4 billion people live outside the
protection of the law without access to justice. They can't get into the courthouse doors to
a fair, neutral, and accessible court system.
54% of the people globally live in authoritarian countries where kind of ultimately justice
is at the whim of people who control the system.
And even in the U.S., there's large and disparate access to the courthouse.
So this article proposes a new type of dispute resolution system, which can be built on Bitcoin
to remedy some of those access issues.
First, the author kind of gives some background generally, and Lucas mentioned this.
Let's talk about courts, the court system. It seems like courts have to be state run because they rely on the monopoly of coercion that the state has to actually enforce the judgments produced by the courts.
Civil court systems produce judgments that declare the rights and obligations of parties, which are different than other types of kind of judgments decisions in society because they're forcible.
You can get the police to come over and make the other party pay what they owe you that the court has said that they owe you.
Within our court system or our current judicial system, or rather kind of outside of it on the peripheries of it, we also have private non-coercion based options for resolving disputes.
These are kind of known as alternative dispute resolution mechanisms or ADR.
You can get the decision in ADR from an arbitrator saying that party A should pay party B, but then if that party refuses to comply with that ADR resolution, you then have to go to court to get the coercive power of the state to make them pay.
If a private system then is going to be a viable substitute for that state-run court, it's going to need to solve this problem. How can judgments be enforced in the absence of the state monopoly of force, coercion, etc.?
So the author, Daniel, is two things. An alternative dispute resolution system, an ADR system, is going to need to be truly independent of the state. One is control of the flow of funds. Two is processes that closely reflect the norms of a community in which the ADR system is embedded.
So first, control of the funds.
That's going to allow enforcement of the judgment
because then you can just direct the funds to the winning party
without having to get the police to come in, the troops to come in,
whoever, and make them hand over the money.
The system just automatically diverts funds to the winning party.
Second, processes that reflect the norms of the community.
That's going to convert the perception of legitimacy experiments
on the ADR system, which is necessary
if you actually have to get people to use it.
You can design the most beautiful, intricate ADR system, but if nobody believes it's fair, just, or legitimate, nobody's going to use it.
Here, then, I'm going to read this thesis, broadly written, of Daniel and his own words.
This essay proposes a new class of ODR, online dispute resolution systems, that enable any community to resolve its disputes through control over the flow of funds.
Bitcoin dispute resolution, or BDR, is a new class he proposes.
This new class of ODR, online security resolution, uses the Bitcoin network, the world's most decentralized communication protocol for the transfer of value.
By anchoring dispute resolution systems in Bitcoin's interoperable, programmable, and global network, self-executing monetary judgments can be rendered that do not rely on the courts for enforcement.
The essay then has a two-part structure.
The first part examines existing ODR systems, and then the second part examines why the Bitcoin network is particularly well-suited to be an ODR, online dispute resolution system, and then gives two specific formulations of the way that a BDR could be constructed.
Existing ODR systems, the author gives two broad categories for these, off-chain and on-chain.
Off-chain don't use crypto, on-chain do.
Off-chain, we get it as examples from the author.
Very interesting.
I mean, if you're interested in examining the way that it's resolved around the world in alternative ways, very interesting.
We get eBay in India, the MGR in Afghanistan, the Benoam system in Israel, and the Prospera Arbitration Center system in Honduras.
So eBay in India.
eBay just has control of funds, which is the first criteria for private enforcement.
And in India, the eBay there all has a community court system built into it where the seller can dispute reviews, jurors are selected by an algorithm, review evidence for both parties, and then disperse funds automatically or whatever to the winning party.
So eBay is one example of an ODR.
Another example, the MJRGA in Afghanistan.
The mobile JIRGA, MJRGA, was a proposed system in 2010.
And it was observed at the time that Taliban courts were perceived as, more people use the Taliban courts than the national court systems for reasons of perceptions of legitimacy and efficiency of the court system.
So people were like, we need to get people away from those courts.
They developed this mobile Jirga idea.
The Jirga is a traditional system where a bunch of elders got together and kind of talked about a resolution for a dispute and said the resolution and the people followed it.
And then the mobile jirga essentially is a way to make this process online. You can do it remotely. The elders can intervene remotely. People upload their evidence, etc.
This wasn't actually put into place. It was a proposal. But Daniel notes that it shows how ODR systems can resolve not just disputes in e-commerce like with eBay, but like real-world substantive disputes about what happened.
Then the Benoim in Israel, this is incredibly interesting. The Benoim alternative online dispute resolution system, ODR system, is kind of in Israel for small fender bender style property disputes.
There's this ODR between insurance companies, kind of like a private court system specific to a particular industry.
This uses experts to decide cases, and if the experts do not have their cases overturned on appeal, they are sent more cases.
The control of funds stays within the system.
All these insurance providers basically maintain the system together.
All the funds are kept internally with them and then paid out to the winning insurers at the end of the month.
Daniel notes that this system shows that you can build a whole non-coercive, functional ODR system if the parties consent to it and all come together to enter into it based on consent.
Last for the non-champing ODR examples is the Prospera Arbitration Center.
Prospera, if you haven't heard of it, is a semi-autonomous city in Honduras, part of the Free Cities Movement.
The Prosper Arbitration Center, their manner of arbitration, where the citizens, the residents of Prospera consent to this ODR system, like in Venom, and then they agree they're going to abide by the judgment.
That makes it functional.
So these are all samples of off-chain.
The author, Daniel, then gives two examples of on-chain systems, BISC and Scleros.
BISC is a peer-to-peer Bitcoin for fiat exchange
operated by a DAO, Decentralized Autonomous Organization.
Resolves disputes that the traders have about their trades, essentially.
And he talks about how this cloud distinctions.
You can have lots of ways to construct things like this.
This uses a two-of-two multi-stakes.
So the parties put their funds in this containment vessel
that they both have to sign to get out.
And then that allows for the control of funds
that then makes a judgment enforceable
without having to have an authority to enforce it.
Kleros is an example on Ethereum
used by freelance workers to resolve disputes
with an interesting crowdsource decision-making mechanism
in which jurors are chosen that try to,
they decide not based on any body of law,
but they predict what the other jurors
are most likely to decide, essentially.
It's kind of a shelling point, as Daniel notes,
for jurors taking the winning solution
and then getting rewarded for that.
And then Kleros really shows, Daniel says,
the use of smart contracts
to achieve automatic enforcement
that can substitute for the force of law
if people voluntarily enter into the system.
So we have eBay, Benom, Bisque, and Kleros.
These show that ODR systems that are private
and don't rely on the state can function.
The MJERGA and Prospera Arbitration Center
show that you could actually resolve
real world disputes through ODR systems,
not just like e-commerce, eBay limited disputes,
if the parties consent and buy into the system.
That's the first part of the essay,
the author's survey of ODR systems.
The second part, again,
is what role can Bitcoin play in a potential ODR?
But before I do that, Lucas, I want to get your perspective
and just see if that makes sense,
like what ODR systems are
and how they could be important and game-changing
if they were more widely used.
Yeah.
When I read through this,
what came to me was the idea
that truth is just simply what we agree on.
And so we're trying to find truth.
And what ODRs allow for
is effectively a crowdsourcing
of that truth-seeking model.
The Kleros one is really interesting
because I think it's almost like
a prediction market. It's almost like poly market where instead of, instead of like what
you believe, what you're trying to do is just predict what other people, um, are going to,
are going to, um, settle upon. Um, because if the juror picks, if you get paid as a juror,
if you are on the majority juror position, so you want to kind of try to coordinate what are
the majority of other jurors going to pick.
Yeah, so that's a really fascinating approach
because it compensates jurors for being on the popular side.
So they have, in effect, they have skin in the game, right?
If you're on the losing side, then you actually lose,
because you're staking totems, right?
Yeah, so it would be like, you know, it'd be like,
I'm going to go be a juror at a regular trial in a courthouse.
And I walk in and they're like, all right, put up a thousand bucks.
Yeah.
And you can't talk to any of the other jurors and take in the evidence and then cast your vote guilty or not guilty or however you want to do it.
And then if there's 12 people and you're the one that votes and the 11 vote the other way, then your thousand bucks goes, I think it goes to the Dow, right?
Or it goes to, maybe it goes to feed the payments to the other jurors.
But I find that interesting because, you know, I like I've been a juror before and it's ridiculous.
Like you bring in these people that have no idea what's going on.
They're very easily persuaded one way or another.
And you've got two people that are professional persuaders who are attempting to get you to see their side.
But you began saying that the juror system is supposed to – or a dispute resolution system is supposed to find the truth.
But the Kleros is not designed to find the truth.
It's explicitly not designed – don't decide what's true.
Maybe you want to find the true thing because you think other jurors are going to pick the true outcome.
But it's not really the criterion you're deciding.
Final popular, I guess.
So, yeah, that's a – I don't know.
That's just a really fascinating – really fascinating one.
Well, I'll just say Daniel's perspective on that. He does say that that method, that shelling point method of juror decision making, he thinks that it's maybe, you know, it's not good in the sense that it's interesting, maybe it works, but it's going to, it makes it tougher to confer legitimacy and fairness neutrality from an external point of view.
If you realize that jurors are deciding on that basis maybe you less likely to go into that system because you don think you going to be the popular part Exactly Yeah And so you you know you can see it maybe working for certain instances but for anyone who is like oh I have a complex case to make that is going to require you know people to really think it probably wouldn work
Let's define for people who may not know shelling point.
So a shelling point would be basically where actors in an environment that have other actors, they're making decisions not based upon what they think will happen or not based upon what they believe, but based upon what they think other actors will do.
the more general idea of a shelling point is how do you coordinate multiple actors without direct
communication between the parties so say that you and i um are going to go meet in new york city
but we realize when we get there that we didn't say where in new york are going to meet so we'd
have to find this we'd have to like the shelling points like is it the empire state building the
statue of liberty is it grand central station we'd like think of the places where's lucas
most likely. So we try to coordinate
between parties with
no communication possible.
And so you're trying to kind of guess what
the other party's thinking. I would be at the
Carnegie Deli, which I think still exists
but I'm not sure, eating a very large
pastrami sandwich. That narrows
it down. Yeah, good.
So
we've got these
online dispute resolution
platforms.
BISC is an interesting one.
The Benoam
Kind of let's talk a little bit about that, I think, because that's one that when reading through this, it seemed like it's the one that's working the best because it has really narrowed the scope of what they do, where this is a dispute resolution platform that only addresses very narrow cases,
which would be disputes between insurance providers and claimants regarding very specific types of claims on automobiles and accidents.
So one of the things that is constantly bandied about when I was at the network state and being around all these founders and things like what Balaji would say and other people that came in and talked to us was do things that don't scale.
and that's really where you want to start, where everybody's always like, well,
how do I build this platform that manages everything in the world,
when instead what you really need to do is find out if what you do provides value.
And so I wonder, is that a good example of doing things that don't scale,
where it's like, yeah, we can resolve whether or not I dinged your door with my door,
but we're probably not going to be able to move into the realm of being maybe like a DUI
or a reckless driving plane or something like that.
How do we take that narrow view and then apply it to a wider subset of disagreements
Or are we always going to need to have this legacy system in order to dispute those more complex?
I mean, if you want to expand on the Benoim system, I think you begin by abstracting its elements and seeing why generally it functions.
Is it because it's insurance?
No, maybe not.
Maybe what's more general about it that allows it to succeed is it has the same recurring parties, the insurance providers.
It has parties that are often on one side of the dispute, then being on the other, plaintiff and defendant.
So nobody's trying to establish precedent that's going to be favorable to them in the future because they don't know what side of the game they're going to be on when they're playing it next time.
You do have, again, the recurring type of dispute.
It doesn't have to be insurance.
There are lots of recurring types of disputes within the legal realm that you could design a court around.
But you're going to, again, need to have recurring parties and industry that is able to coordinate between the parties.
So it is going to be limited in scope on what you can coordinate on.
And there are going to be some types of, you know, even an ADR system or an ODR system, rather, online dispute resolution system that tries to regulate real world conduct outside of like e-commerce.
You know, there's so many types of disputes we can get into and types of resolutions.
it begins to be tough to think of something that's going to, in the manner of the Benoim system,
be able to encapsulate all forms of legal dispute, I guess.
But I think we're going to talk about in a second the BDR, Bitcoin dispute resolution.
And we can kind of think then, will this handle the range of real world disputes?
Because the author does have a suggestion.
So we'll move on to the second part of the essay.
Again, this part is what role can Bitcoin play?
We've talked about these ODR systems.
Can we construct on them with Bitcoin?
So Bitcoin meets two conditions for a successful ODR system.
Remember, control of the flow of funds, community embedment, essentially consistency with community norms are the two conditions.
So control of the flow of funds in order to enforce judgment.
Bitcoin is a stable, independent, programmable financial system, which includes its own internal transaction rails.
If all the parties are using it, you can agree in advance and allow the funds to be dispersed by some sort of smart contract using the Bitcoin system.
You're all operating within the same financial system.
And there's also decentralized verification with nodes and other measures of decentralization so there's less third-party risk when you trust the system.
The second part, community buy-in.
And ODR systems that are embedded in the community can get people to actually perceive the system as fair and therefore use it.
Bitcoin permissionless has communities across the world.
The author lists various countries in which there are nascent or established Bitcoin communities.
And to quote the author, the Bitcoin network embodies the principle that justice should be accessible to all, not only those with bank accounts, credit cards, or state-issued identification.
The different Bitcoin communities around the world then can adapt, can use Bitcoin as the control of funds mechanism and then design rules around the ODR system they want to use that is consistent with the norms of that society.
The author gives two examples of BDR systems that illustrate this.
The first is a local community BDR, Bitcoin Dispute Resolution Court model.
Again, Bitcoin is programmable, so you can have second layers on top of it.
And a lot of times we casually throw around second layer.
So the author gives a good example of what that means, though.
An example of a second layer, SMPTP for email, which integrates into the TCP IP-based internet protocol.
So email is a second layer on top of the internet.
In the same way, Bitcoin can have second layers on top of it that give it more functionality.
Fediment is one example of a way that Bitcoin can be elaborated upon.
It's a community banking model for Bitcoin in which people hold their money together, their Bitcoin together, in this eMint that then issues them a cash-style token that they use amongst themselves, transfers instantly, doesn't have to settle on the underlying Bitcoin protocol.
and so it allows Bitcoin's functionality
amongst a trusted community
that's willing to participate in this structure.
To quote the author,
in short, sediment enables communities
to create what might be called
their own financial operating system.
This allows for control of funds,
one necessity for an ODR,
and then the community can then designate
a dispute resolution system
according to their needs and values.
Lucas and I talked about different ways
that jurors can be picked and decide, like the Schelling Point model or something different.
And then the judgments will be automatically enforced by the people who consent to enter
into that system, thereby substituting consent for the coercion of the state.
The other example, the second one, is an example.
A Prosper-like city could implement this.
The parties in the community agree in advance to participate in the BDR system.
They deposit and maintain the minimum amount of Bitcoin in that community Fediment model.
Upon taking residence in that community, when the dispute arises, the funds are already locked in.
Both parties submit evidence to that Fediment community app to some BDR panel.
A decision is issued and the Bitcoin transfers automatically.
So that's the first example, like a community model, a local court option.
In addition to that local court option model using FedEmit, where a community makes their own dispute system, Daniel gives another example of BDR for already existing online communities.
The example he gives is the open source software development community, which uses sometimes a bounty model where people who want some code offer a bounty for the production of it.
Whoever does the code, they claim the bounty, but then that depends on the bounty offer actually agreeing to pay out based on the code they get.
BDR could automate bounties, Daniel says.
You can have a panel of third-party reviewers that are selected as jurors to adjudicate whether a bounty was met.
And if so, that can trigger the release of Bitcoin from an escrow that was previously funded by the person offering the bounty.
That type of escrow can be done through tools.
Daniel mentions a couple.
Discrete log contracts in the FedEmit protocol or Bitcoin mini-script.
Not really familiar with the discrete log contracts specifically.
He also notes that a bounty bulletin board, which the bounties are noted, can be maintained through the decentralized NOSTER data protocol.
So those are the two models.
One is that local community court model amphetamine, and the other one is given in the context of software seeking, like offering bounties for code.
What do you think of those two types of potential BDR systems?
So we had this at the network state and this was something that you can immediately see the moral hazard, which is the it's called the earn program.
And the networks network school posts these bounties for primarily it's like media stuff.
So the network state wants to get something done for the network state.
So they offer a bounty for whoever in the network state does that task.
And it's not even just specifically for the network state.
Like I remember one of them, my friend Juba submitted one.
There was a bounty to create a 59-second vertical video that chronicled Naya Bukele's rise to power in El Salvador.
Right.
So it's not specifically that.
But this is, again, this is kind of in line with the open source software idea, which is that the reason why people create open source software, even though they don't financially benefit from the immediate use of that software, is that they and everyone else benefit down the line.
The best case example of this is Bitcoin, where it was created, it was put into the world without holding back coins, without pre-mining, without investors, without cashing out, because it made it better.
You know, this is why, you know, if you're running a household and you're in charge of the food, then it's a benefit for you to purchase healthy food.
Even though you're not the only one consuming it, it makes everyone healthier around you.
So if you're in a neighborhood and you take care of your lawn and you take care of your garden, then it not just benefits you, but it also benefits the neighborhood because it makes it better for everyone.
These are these certain sacrifices that people make.
But back to the idea, so you posted bounty under the earn program and you could immediately see that there is a moral hazard, which is that there could be 10,000 submissions.
And if you wanted to, there's actually nothing to stop you from just taking the best one and using it and not compensating the user for it.
And so Daniel does a really good job of outlining that moral hazard and proposing a solution to it using this kind of layer two that you can build on top of it where you have this adjudication layer that is basically community sourced and community enforced through software.
one thing that Claro does really well, they're the ones that place it in a, they place the
disputed funds into a time-locked multi-signature smart contract, which is basically just like
saying, hey, you're suing me for $10,000. I'm going to have to put $10,000 into an envelope
and hand it to this guy, and this guy is not going to hand it to anybody
until a dispute has been resolved, until there is a decision.
I think that it really is needed because Daniels does a very good job of outlining,
even though I think he does it quickly.
But the system that we live in right now, it offers justice,
but only through power and control.
And you can't escape that system.
You're just part of it, and it can reach out and touch you.
But these systems, they offer dispute resolution,
and all they ask for in return is consent.
And consent meaning control over the flow of funds
in order to reward the winner or the truth seeker, I guess.
And also a consent, like to maintain,
maybe you have to maintain a bond, essentially,
amount of funds in an account
so that if you become party to a dispute,
that is already locked in.
So you have to consent in advance to be part of a court system.
And then, yeah, you're already...
Yeah, he gives that example of like,
if you're posting a bounty, you know, the person posting the bounty has to put up the
funds, but the person applying for the bounty has to put up an application fee as well.
And so everybody has some skin in the game and you can I guess again like skin in the game ensures that people act morally more than anything
Yeah.
You mentioned the network state, Lucas, and I was curious.
You mentioned the EARN program sort of bounty system to get things done.
It sounds like the Prospera dispute resolution, the Prospera arbitration center,
was more broad in resolving disputes among the residents.
I mean do you even know like was is the network state subject to Malaysian law as far as people
resolving disputes or is it semi-autonomous in the same way where the network state could have
its own internal law and arbitration center that applies that law so as far as I understand and I
think we covered this one time when I was there not you and I but when I'm Sarah I do believe
that you are subject to Malaysian law
and the exclusions that are put in place
for the special economic zone
where Forest City is located,
which is the fake island that it sits on.
So, no, there is no standboxing, really,
of autonomy that Prospera has.
And I do think that's...
I personally think that's vital.
If you're trying to create a society that you need to be able to set your rules and do what you want within that boundary.
There's a guy there, James of Arc, who is a charter city guy.
So charter cities are different than network states.
Charter cities simply hope to exist within existing cities but have their own prerogatives, have their own laws, have their own rules.
And I think about the importance of that.
I heard somebody once define like what a nation is as the only jobs that a nation has is to defend property rights and defend borders.
And if you view a nation or a country in that way, then the charter city model is one that really, I think, gets it right in terms of, look, we're going to have our own disputes.
We're going to have our own court system.
We're going to have our own laws.
We're going to have our own taxes.
We need to be able to enforce that among our community.
So, yeah, the current model of the network state, I don't believe, has any sort of ordinary laws.
Even if there was Malaysian law generally applied, you could have a second layer of network state law on top, which would just be essentially the power of biology to evict people that – or the network state higher-ups to evict people who don't abide by certain community norms.
and then you could have an arbitration center that resolves people consent that okay i'm part
of the network state i consent um if there's dispute that rises with me and somebody else
it goes through this arbitration mechanism and i automatically consent that i will abide by the
result of it and then there's like that there still might be within the united states you then
maybe have to the person doesn't want they say they're going to abide by it but then they don't
you might still have to go to the court system to get an enforceable judgment because you don't have
like control of the funds unless again a person bought into the system maybe they have to post a
bunch of money leave it in the system and then if they don't abide by the result of the arbitration
if they go to the court and they forfeit all the funds i mean that would be one enforcement mechanism
to get people to abide by the judgment even if the judgment regulates their behavior which is
not being coerced you know you could make forfeit all the funds that they posted if they don't act
accordingly to the judgment so i can see it that is something that exists where you know
like you sign a contract and that contract is basically outlawed in certain
behaviors and stuff like that.
If you break those and they beat you out, it's a, it's a fairly informal process,
but ultimately the it's,
it's not really enforceable until there's, you know,
the power and control of Malaysian lobby.
Yeah. But if you log in money into a, you know, some sort of smart contract,
even if, you know, the ultimate eviction was according to Malaysian law,
You could make people suffer if they sought that remedy going to the court because they've already forfeited all the money they posted.
So even if they might just abide by the result because they don't want to lose their money that they posted in the system.
So that's the way that control of funds, as the author notes, is an essential way that you can get, I think, judgments maybe that regulate conduct beyond merely the disposition of the funds themselves.
Another part that I thought was interesting. So we recently read Sal Pineda's take on Bitcoin's potential role in transitional justice, situations of transitional justice, which are situations where countries are transitioning away of after a situation of mass atrocity, genocide, civil war, an authoritarian, extended authoritarian rule.
The country is unstable. It realizes there was past injustice. The country both needs to process that past injustice, but also stable itself to move forward. So the seal of transitional justice has arisen to enable a framework for people to apply when the country's in that situation.
Salvin talked about how Bitcoin used as a way to help reconstitution a neutral financial system.
He also noted, this is the part that's relevant, that court systems in transitional settings are often compromised because there's partisans of one side of the past dispute.
Maybe the people against whom Jeff Fried was committed now can come to court systems that are heavy-handedly going after everybody.
Daniel, though, he's offering a way, we could say, apply a BDR in a transitional society setting. The BDR, Bitcoin to be resolution system, is a stable court system, completely independent of the state in a sense.
I mean, you're still going to have to select independent jurors somehow, which can be difficult, but at least it offers somewhat of an enforcement framework, perhaps, if someone wanted to try to design one in a transitional setting that would be more resistant to the ways in which transitional courts are compromised.
I mean, one would need to sit down and do the math and find a real creative way to select jurors, enough information anonymous so they render fair verdicts and then weed out jurors in the future if their types of decision making aren't in accord with, you know, or exhibit certain trends of bias or something.
This is a massive problem that presents a massive opportunity for resolution. I talked about this in one of my seminars on status games. And there's, you know, there's like three ways to gain status. One is to effectively be a bully and to take from others. One is to effectively be a victim and oblige others. And the third is to be meritocratic and to earn it.
And the instance that we see, like in El Salvador, I remember when we were living up in Wenatchee, you had a lot of clients when you were doing immigration law that had come from El Salvador.
and some of them did not have this rosy picture of what Nayib Bukele is like that many of us see
because it was such a sweeping thing that occurred where there is no other way to do it.
When you're living under a authoritarian regime, what you're doing is you're living under a bully
and the only way that you can take out a bully is to be a bigger bully.
And so you replace one thing with another, even if it is better intentioned,
then you still end up with the bully problem.
And so you can see how this naturally is going to create hellacious bias
when you go to the court system because the people who are now running the courts
are, we've seen this in America now, where we saw the Biden administration weaponize
the justice system, and now we're seeing the Trump administration do the same thing.
All right?
It's just whoever's in power.
I will say that Bitcoin, I mean, philosophically, right down to its foundations, is designed
around the ethos that maybe it doesn't take a bigger bully.
Maybe it takes the creation, a bottom-up, like Bitcoin, like Satoshi creates a bottom-up
solution to this banking the chancellors on the brink situation. So maybe you can,
cypherpunks write code, that's their solution. It's not to join some political party and try to
be the bigger bully. It's to create solutions outside and independent of the state that based
on our consent, we can substitute for the mechanisms of the state. It's exactly what BDR
is. An online dispute resolution generally, how can we take consent of the governed and make that
the foundation instead of top-down coercion,
which generally is the project of the Satoshi papers,
is to get back to the consent of the government,
the ideals of our founders,
that Bitcoin can represent a more general remedy to tyranny
than a bigger tyrant.
Yeah, last night I read,
so I was reading in the Our Tribal Future book,
and there was a line in there that really struck me,
which is that we need to remember that we are citizens, not subjects.
And I think that even in America, and maybe particularly in America, we've somewhat forgotten that, that we are citizens,
that we are living in a country that exists because we consent for it to exist, not because we are under the umbrella of Powell.
and therefore subject to whatever comes down.
You bring up, I think, the most important point about Bitcoin
and about change just in general,
not with regard to monetary policy,
but just any sort of change.
And beneficial change, it seems to me,
can only come from the ground up.
It can only come bottoms up.
When we try to do things top down,
then we end up with all the second and third order consequences
that we never think about.
And of course, if it comes top down,
then it comes from the position of power
and the position of power is always going to do things
and set laws and regulations and codes of conduct
that allows it to stay in power.
And so, yeah, bottoms up,
Bitcoin dispute resolution is something that
once the mechanisms are in place
And it seems like they are falling into place and there are options through Fediment and through online smart contracts that allow people to lock up funds in a time dispersed manner and to only disperse those funds if they both agree and consent to the ruling.
we have these tools and we have these mechanisms and they are being slowly adopted and they're
being adopted in areas where people are most likely to be negatively affected by what the
top-down system is. Because you mentioned in your initial summary, you know, four billion people
don't have access to justice,
but there's also the other 4 billion people,
the justice that they have access to
is a two-tiered system, at least two-tiered.
You know, the United States is a perfect example
of if you have money, you can avoid prison,
you can avoid certain things.
If you don't, then you're subject to the wind.
Yeah, no, and that's, I mean, that wasn't,
I mentioned that because Daniel puts that front and center too,
And I want to read his concluding paragraphs because they tie back to that notion that Bitcoin banks the unbanked as a permissionless, decentralized global financial system.
I don't know if you want to say courts the uncoorded, but it does something like that.
It can do something like that.
If you have a BDR system, it can also potentially solve an access to justice problem.
So I'll just read these couple paragraphs because it does an excellent job summarizing this paper.
The global, interoperable, permissionless nature of the Bitcoin network now enables any community, regardless of its location or size, to create an ODR, online dispute resolution, system that uses programmable money to generate self-executing judgments.
These systems can only obtain control over user funds with the consent of the disputants.
This means that state-backed coercion can be removed from the dispute resolution process entirely.
The Bitcoin network and its native asset provide democratic tools for communities to establish the rule of law irrespective of the quality, efficacy, or fairness of any particular state or court.
Transforming ODR into BDR will advance and normalize the practice of dispute resolution without the state expanding access to justice for all of the community.
Yeah.
I like it.
I do too, man.
And like never accuse Bitcoiners of simply number go up when you see the applications that are being built and the promise that the protocol offers in so many different ways.
Yeah, this is the, you know, when people initially get into Bitcoin, I remember hearing Andreas Antonopoulos talk about when he first discovered Bitcoin.
I think he said he spent the next three months or four or five or six in a just what he described as a fugue stake where he is realizing as he looks at the world in front of him with new eyes, what are the consequences of money that is decentralized, money that is finite, like money that cannot be taken.
it can only be given. And these are the Bitcoin solves this type of questions that are worth
asking because if it is simply number go up, then it's degeneracy and you may as well
put your money into some sort of moon coin, doge coin, whatever. But if you are looking
for something that is greater.
You're looking for something that really can affect humanity
at a base level and put us in a mode of cooperation
instead of competition, but competing against ourselves
in order to cooperate at a higher level.
I think it is beautiful to consider these avenues.
you wanted to talk I'm going to change subjects a little bit you wanted to bring up the resolve
app can you tell us a little bit about that I don't know enough about it to discuss it in depth
I just wanted to know and this does bring up like a question I had or something I want to mention so
the resolve app is something that Daniels has he an entrepreneur working with others put out an app it deals with something like risk management for insurers by allowing them to denominate in bitcoin my understanding is something like um
if you're insuring bitcoin but you're not also like holding bitcoin but you're holding fiat to
reimburse people that's not a good solution because people lose their bitcoin yeah right
you're insuring something asset that's going way up and you're holding an asset that's going down
or something like that but i don't want to it's so i've heard just he has a podcast about it look
it up it's very interesting but that's like you know this is an article written by an attorney
a practicing attorney their bitcoin is a technology that has as we're seeing a vast number of social
applications like dispute resolution that's something we need because of the social nature
of um so bitcoin is um again a technology that has a bunch of social applications because we're
social animals and we're exploring the ways that bitcoin's unique aspects it's immutability
decentralization, permissionlessness is interacting with the ways that humans organize
ourselves in various ways through our financial interactions, court interactions, etc.
This is an article by an attorney.
And I'm really curious, like what other like attorneys are building on Bitcoin, thinking
about building on Bitcoin, or what other ways can attorneys, people with knowledge of the
legal systems, knowledge of our social arrangements through law, use this new technology to offer
decentralized solutions.
Benoim is another way that attorneys built an ODR resolution system in an area of law.
What can Bitcoin now do, not just for dispute resolution, like resolvers, maybe a way that
it's changing insurance risk management.
On Twitter, there's, you know, I wanted to find more attorneys.
There's one called Bitcoin Laws by Julian Farah Farrar.
And that's a great, if you want to look for like a summary of change, the changing nature
of laws around Bitcoin around the United States,
a summary of pending house bills, et cetera.
I mean, it's just an excellent account to follow.
Zach Shapiro gives,
like another thing that attorneys do
is give commentary on legal cases that affect Bitcoin.
I always remember reading a ton of his stuff
on the cash situation with Roman Storm.
And so attorneys can also kind of discuss
what's happening in criminal or penal settings
for people who are doing Bitcoin-related things
and also defend them.
But I'm just like,
what can attorneys build on Bitcoin?
And then the broader question,
what can anybody with their own particular professional
or non-professional skillset build with Bitcoin?
It's just a fascinating thing.
One of the things that I think about,
I mean, you're in an apartment,
you had to put a security deposit down.
There is a...
So there is often a problem, especially in like college towns, where you see lessors, the people that are renting out the property.
They're often very heavy handed with the security deposit.
And people find themselves being taken advantage of because they're a college student.
They don't have the funds to dispute that, oh, this, you know, this mark that I left on the wall, you know, I'm going to lose my entire security deposit, you know, $1,500 or something because of that.
And that's like an area where I could see this really being useful with this community resolution, much like the like the bounty system proposal where, you know, you enter into the contract, you put your security deposit not in your not in your renters or in the lessor's name, but you put it into a time locked two party system.
And then if there is a dispute at the end of it, then the evidence is submitted by both parties.
And then you have people that are voting whether or not the owner deserves to get the security deposit or the person deserves to get it back.
But that's when that having lived in a couple of college towns and I used to finance some people that owned a lot of properties that I saw up front that it was not, it's a moral hazard.
It's really just the problem.
It's not like the people are bad.
It's just that, look, if somebody's already given you the money, then you're probably not going to give it back unless there's a really good reason.
And so they look for reasons to keep it.
That's one.
I'm trying to think how can how can Bitcoin play a role in murder trials?
And I'm so at the start of this, you'll note that Daniel says he begins talking about civil court judgments.
And so that's the easiest one. Right. Right. Because it doesn't require coercion.
Right. Where it's just like, yeah, control of flow funds usually is sufficient to resolve a civil case.
Like someone's got to pay somebody else. Yeah.
And he notes, too, that the M. Jerga model is based on not on retributive justice, but in like compensating parties.
So retributive justice is like there's no in some situations, there's no amount you can pay somebody.
An eye for an eye needs to happen between the parties to restore some sense of moral equilibrium.
Like you just have to put the person in a cage.
They have to physically suffer.
Maybe the death penalty is merited.
Right.
Yeah.
The Im Jirga one I think is interesting because he notes that it hasn't worked, right? The mobile Jirga thing hasn't been taken. And when I was reading it, so the way that it exists right now is what they do is they get together a group of elders.
And if it's like from two different tribes, they get, you know, six elders from here, six elders from there.
They go meet under a tree.
Somebody supplies a, you know, a bar.
And it makes me laugh.
It makes me think of, you know, we're both from western Kansas.
And the standard unit of account for any sort of volunteer work is a steak dinner.
Yeah.
And people love their steak dinner.
A pack of beer and you'll leave that behind.
Yeah, or a 30-pack, yeah.
Yeah. And so they're not they're not going to let that go easily. And I was like, dude, you just you just need to throw a steak dinner on top of this M. Jirga thing.
It's interesting you were describing, you say they meet in front of a tree.
And that's one of the details they mentioned in this article.
And that's what, like, it's not ridiculous to say that.
Because when I was reading this M. Jirga, and they were talking about how they wanted to make this Jirga embodied system face-to-face into a mobile thing,
I immediately became skeptical because it's all of the rich tradition of this face-to-face encounter.
The system kind of works based on shame in the parties that, oh, the elders have rendered a result.
I'm going to abide by it because if I don't, the people know that I'm disobeying the elders.
But if it's this abstract system and they, yeah, yeah, then I could see how that system would lose, you know.
But again, this is every community with a Fediment model around the world in which Bitcoin funds are controlled locally.
They can, according to their own norms and customs, try to design some sort of ODR system, maybe with a face-to-face element somehow.
However, that abides by their norms, right?
Everybody can like iterate and you don't have to have a one size fits all type thing.
That was an interesting one, this community thing that he proposed where, you know, say you have the little town that I grew up in, a couple thousand people.
And in order to be a citizen of that town, you would have to put up a certain amount of money that is kept within the fediment system of that town in order to ensure that if there is some sort of dispute that you have the funds that are available to pay if you're found liable.
So, you know, I think you look at these little towns, most of these people bank in community banks.
It's no different than that.
It's just that it would be under one umbrella instead of eight or ten.
And it would be enforceable through consent, which I like that idea.
The thing that the thing that I wonder about is like, how much money would you have to put in?
Like, you know, it may be like because you think about like it may be a significant amount that you would need to keep as a balance in there because of, you know, what if I burn your house down?
Yeah.
Right.
But like as your risk profile declines over time, as you get older, maybe you post a bond in Bitcoin, that Bitcoin appreciates over time, and then suddenly you built in a social security mechanism from that initial bond amount because it pays out in your later years just on like a time-locked or whatever manner where it's like you get distributions every year from it because it's appreciated so much over 40 years.
You can now retire on the initial bonds you posted to participate in civil society or whatever.
Yeah. You would want more for the old people because they're the ones that always drive through the wall.
That aspect. I said lower risk profile, but there is a certain people could then, yeah, maybe they would be more cautious about modifying their own risky behaviors if they're like, oh, I've already posted this cash amount that I can get back if I don't do something very stupid.
Yeah, because then it's like, yeah, it removes a step. It removes a step where it's like, oh, not only do I have to get caught, I also have to get coerced into paying. It's like, no, now I just need to get caught. Because if I screw up, then my money is.
This brings up one aspect of the article that kind of concerned me, not in the article, but this whole notion.
I mean, like maybe it becomes easier to impose like social credit system once you're the thing is you've consented to enter into the system.
But if the system is big enough where exit becomes difficult, like if we first the communities, you know, Norton, Kansas, then it's Kansas, then it's the United States, then it's the Western Hemisphere that are within the same system or something.
you post an amount of money suddenly you're locked in and they can impose automatic debits from that
if the people if it's not constructed well you know i mean bitcoin is resistant to that because
you can construct the arrangement to be separate apart from that with the with the external party
third party not having control but if it's designed ex-ante from the ground up with the
third party having control they can also do that yeah there's uh that's it's it's so interesting to
see how those systems work because you think about like London, which has, I think, more
security cameras than any place in the world and San Francisco, which is very heavily,
heavily surveilled. Washington, D.C., very heavily surveilled. These are really dangerous places to
be. Like these are among the most dangerous places in the world for physical violence.
but you can definitely get caught for walking across the street.
And so you put these systems in and you're right,
it creates that moral hazard that allows for the nitpicking
and the nickel and diming of parking violations
and jaywalking and this, that, and the other.
But in practice, it doesn't seem to be breaking down the violence
and that the actual yeah so it quite allows you if you start off with the right principles to
build a system that doesn't allow for a third party to control it and that's and that's the
beauty of it you don't have like ethereum you can build on that at the end of the day there's always
a third party risk if you build on bitcoin you can build something resilient to a state later
coming in and say we want to impose yeah we want to impose our own social credit aspect on top of
Yeah, that's what we need is we need a group that votes on it.
When they see me jaywalk and they review the video and they're like, he walked across and there was no cars coming.
It was just red and he just had shit to do and he had a place to go.
We'd be like, fine, we'll let that guy.
But if you've got the guy that walks out into traffic and causes an accident, maybe we can find that guy.
we can determine that crowdsourced from bottom up in a way that it's fairness something that
is I think less important than usefulness and common sense like you know you walk across an
empty street that has a red light fine like it's it's not fair because you're you're doing the
thing that is supposedly against the law but it's stupid well it just comes down to community norms
like i've heard if you have a japanese person they're never going to cross when there's not
a walk sign blinking like their notion of jaywalking is just very culturally embedded that
you don't do that and there's social coercion if you do do that whereas other cultures are much more
open with it's okay you know to walk in a situation and neither one is absolutely correct
or incorrect. It's just, again, every community
can build their system according
to their norms.
Yeah, that is
a very American
thesis that I'm proposing, which is
basically like, I'm just going to do what I want
up until the point
that it affects somebody else.
The right to swing nice to the Santa Claus
since its nose begins and all.
Yeah. I like it.
For an ODR system to function,
I'm just going to give a broad concluding summary.
For an ODR system to function that needs to have
control of the flow funds
and you need to have a community in which it can be embedded
so people actually use it. A BDR
system can conceptually
achieve both.
That community is also worldwide so we can
begin to patchwork, implement this wherever
you are. And BDR
then could be a way in which the
uncorded or courted,
right? Is that the...
We court the uncorded.
Of course.
Yeah.
I think you're just making up words now.
court yeah that's fine so yeah yeah i it so what what i think what we found through this discussion
is that bitcoin does hold the technological ability to export a fair and just legal system
to places where it's not domestically available and i think we also have uncovered that it's
not really domestically available anywhere.
That even in the country,
the United States, that supposedly
has the best legal system in the world,
we still have a two-tiered legal system.
We still have opportunities for injustices.
So I think
it can make everything better for everyone.
You can always
improve access to justice.
The court system in the United States is notorious
for various things.
I mean, it can be expensive. You've got a lawyer up,
and it's adversarial, which is not good in some situations.
So, yeah.
Yeah. All right. All right. Well, we're going to take this out.
That's all I got. All right, guys. Thank you for joining us. Once again, we are reviewing the Satoshi Papers by Natalie Smolinski. Very much encourage you to take a read. And if you'd like to please view our videos that are online that can go as a companion with these.
thank you to W. Aaron Daniel Esquire
for fantastic work
thank you to Grant
for our first in-person ability
to discuss these things
and as always
please if you find value in this
share it with your friends
and consider it yours
we're all in this together
so have a good one