IEEE Blockchain Podcast Series: Episode 2
A Conversation with Balázs Bodó
Director, Associate Professor and socio-legal researcher, Institute for Information Law (IViR), University of Amsterdam
Listen to Episode 2 (MP3, 50 MB)
Part of the IEEE Blockchain Podcast Series
Brian Walker: Welcome to the IEEE blockchain podcast series, an IEEE Digital Studio production. This new blockchain series entitled “Research Notes in Blockchain” is hosted by Quinn DuPont, Assistant Professor at the University College, Dublin School of Business, and the author of “Cryptocurrencies and Blockchains”. Professor DuPont is joined by Dr. Balázs Bodó, an economist and social legal scholar at the University of Amsterdam. Dr. Bodó also runs the Blockchain and Society Policy Research Lab at the Institute for Information Law a think tank specializing in blockchain governance, societal issues, and regulatory and policy approaches.
Quinn DuPont: So Dr. Bodó, maybe can just start with a little bit of biography for me. I see online that your earlier research focused on piracy which you have later managed to connect to blockchain technology. I'm just wondering if you could tell me a little bit about how you started in your research on piracy and how that eventually evolved into something that focuses on blockchain.
Balázs Bodó: I'm working now as an Associate Professor and Senior Researcher at The Institute for Information Law at the University of Amsterdam which is like a world leading information law research institute staffed with like 90 percent lawyers, corporate IT lawyers, data protection lawyers, media regulation, free speech regulation scholars; a very legal research environment. And I don't have a legal training. I have a training in economics, social sciences, media studies. And I ended up here because around 2005 while I was still back in Hungary, my home turf, we started to implement Creative Commons licenses as an interdisciplinary effort to somehow address this issue of digital culture, cultural reuse, and trying to sort out things at the intersection of digital technologies, the circulation of cultural material and commercial and non-commercial uses. And then I realized that there are lots of issues where-- or how I see the world around, how I see the technology, or how I see the social economic cultural processes enabled by technology are very different from how copyright scholars, traditional legal scholars see these things. So I decided to actually work at them in the hope that we can actually build some kind of a common understanding around how technology-- how new things can be interpreted at the intersection of technology, society and law. And so that led me to piracy research because what I've seen is that-- especially as the peripheries such as post-communist Europe, Creative Commons was not really the right answer to the challenges that we had at that time there, but piracy was. Peer-to-peer pirates were able to build from the bottom up a very consequential and very relevant collection of cultural goods which were not legally accessible. And I really got fascinated by this power of peer production, if you like, of people being able to pool resources in such a manner that resonated really well, also, with the tradition of communist countries where a whole alternative public was built by individuals collaborating in a networked manner. So I started to look into it with my own tool set, my economics background, my statistical knowledge, my cultural studies sensibilities. Or for like how people in a peer-to-peer manner are able to pool resources. And then how you can actually describe that in a non-adversarial manner from the legal perspective. And that became interesting at the institute where I am now. Now, the question how that leads to the blockchain research, well, when blockchain technology started to gain prominence, I had this nagging feeling I already had when I tried to interpret peer-to-peer file sharing from the illegal perspective, is that there is a technological development emerging here. Which if it is really picked up by a substantial amount of people can force the legal profession to ask fundamental questions, again. Or may have the impact of forcing the legal discipline to give different answers to questions already encountered. And, of course, one of the major questions that I'm interested in is like what is the power relation between a technological form of power characterized as a peer-to-peer decentralized centerless disintermediated network form of power, and the legal or discipline area or judicial power which expresses itself in prohibitions and prescriptions and has the state apparatus as an enforcement mechanism behind it. And what is happening where these two are in conflict, or when one is challenging the other, is it possible for, again, people protect developers to pull off the same trick as they did with the peer-to-peer file-sharing is that they create a system which is very difficult to grasp by legal means or to enforce against by the state powers. And if that is the case, then what kind of-- what is the form of power that is emerging in these anarcho libertarian or crypto libertarian corners of the internet. And I told this to my legal colleagues like guys something is happening here. You better pay attention. And then I realized that maybe I am the one who has to pay attention to this because I'm in this interdisciplinary position, maybe best situated in trying to act as an information carrier between very different domains. And, of course, Mercurius is the protector god of thieves, and merchants and wanderers. So I assumed, again, the head of this garden. And decided to somehow try to build a trading zone when legal profession, social sciences, economists can actually look at what's happening within this technology domain and what kind of impact they can identify which needs attention from a societal perspective or from a particular disciplinary perspective.
Quinn DuPont: So you mentioned that you emerged out of this interest in cultural reuse, and specifically the peer-to-peer technologies and the communities that were building up around these technologies. Early on there was a great deal of talk about peer-to-peer and piracy and within the blockchain and cryptocurrency space, I think, as well. But something seems to have changed. Do you think it’s true that something has changed here? And that the space of blockchain is maybe different from what it was when you first were interested in the topic?
Balázs Bodó: What’s certainly changed is that all of those actors and stakeholders and institutions got really interested in blockchain technology which the original blockchain developers were hope to bypass, circumvent, neutralize, fight against and I find this fascinating. This has started out as an effort to bypass central banks, bypass states, set up a sovereign technical system independent of centralized control. And what I see is that big corporations, more firms, nation-states, the European Union are all super interested in this technology. And one of the key questions for me is why? And what happens when a technological innovation is picked up by those who it was developed against? And how that changes the architecture and how that changes the overall set up? And one of the key understanding in this space is for me, in the last few years, was that blockchain technologies were designed to be very strict control technologies where you delegate control, the ability to control, the ability to exercise power to within the architecture. And that is the appealing things for all these centralized players as well who are seeking new modes of technological control in a highly technologized society. And so it seems like the whole idea turned out rather than a tool of liberation, or a tool of insurgency into this dual-use technology whereas a control technology can easily be deployed for rather different purposes that it was originally designed for.
Quinn DuPont: So to focus on some of these differences, in a recent article you described four key points of interaction between blockchain technologies and that culture and copyright. And I think, if I may, the four are you got smart contract overreach or private ordering, copyright registries, digital rights management, or DRM, and then artist renumeration. So I'm just wondering if you could tell me a little bit, you know, which one you think is the most significant. And maybe just a explain a little bit of about that kind of key point of interaction.
Balázs Bodó: The article that you refer to looked into copyright related uses of distributed ledger technologies, and that is like from very early on like with the Imogen Heap, one of the high potential application domains. For understandable reasons, the whole technology seemed to be an ideal architecture for keeping track like describing copyrighted works through like digital tokens. And then automating certain types of transactions whether those of the copyrighted versus copyright metadata through smart contracts or automated transactions. And it can be like organized in a transparent manner. The token system also offers a remuneration system where monies can also flow. The distributed ledgers can provide transparency and use and buy something and whatnot. On paper it looks really well matched with the circulation of intellectual properties is administered by the current players. And we were trying to look through that system. And what we have identified in that article is that the technology is still on paper ideal, but like as all technological development the question whether it will be used or whether it will be efficient or whether it will be widespread. It's not that much the question of the quality of the technology or the actual architecture of the technology because every technology development is, in fact, an institutional change or an institutional development. So in this sense within the copyright domain, the institutional conditions of technology applications are not present. It's not that it's not a good technology, but it's also-- but the problem is that the institutional environment of international copyright is very hospitable to the implementation of this technology. That being said, if you zoom out and say, okay, what have we learned in the copyright domain that might be applicable elsewhere? And where we see that maybe in the long run maybe not this technology, but on another technology platform, we should expect some kind of fundamental changes in how we do our stuff in society or economics, then I would highlight two potential changes. One is these property registries where we have now land registries. We tried to build but failed to build global IP copyright registries. I think the world is moving relatively fast in this direction of like you need some kind of a universal registry of all kinds of whether these are pharmaceuticals, or whether these are raw materials or whether these are weapons or whether these are units of payment, or whether these are humans. And we all have the different names of sovereign identity supply chain management, smart property, la-di-da-di-da-di-da, but they are all point of this universal administrative capacity to manage all kinds of flows, material human-- in material. And I-- if you ask me, the major trend is this like what is-- what will be the right infrastructure for this extension of administrative capacity, both of state or political sovereigns and of private party.
Quinn DuPont: If these are all united underneath a legal view, but they’re treated rather quite differently all these different administrative technologies, aren't they. Right? Supply chain is treated rather differently from copyright which is treated differently from weapons tracking.
Balázs Bodó: Yeah, that's right. I see this like free floating signifier blockchain technology is that the most important capacity is not that it's able to deliver useful or operational or very efficient solutions to questions. But they are able to ask point to questions in a sense. And whether I see blockchain being applied left and right to supply chain management, to IP registries, to self-sovereign identity management, then what I see is that this technology is working as a probe, and highlights almost universal drive towards we need to administer all kinds of things. And maybe there will be at least an interoperable technological solution which enables these different currently not really well administered or part administered or siloed flows of services, materials, people, to be interoperable. Well, that's the whole point, right? That somehow these flows become visible for each other. And what is the platform that enables this interoperability is one of the key questions here. Or what is the right combination of technological, institutional, legal, political, economic conditions that enable these administrative systems to see each other and to talk to each other?
Quinn DuPont: One of the fascinating things about hearing you describe this, and it’s present in all of your work, is your understanding of the tension between what might be called the real and the ideal. Or so way that these systems actually get implemented in the way that they look like on paper or their ideals. And I would like to just kind of introduce this idea that you have brought up about policy neutrality. And hear you say it's a sort of a key factor in how systems move between centralization, and decentralization. And this is in your paper where you try to really interrogate this ever-present desire for decentralization within a blockchain space. And here, as I see it, what you're doing is you're sort of looking at the different goals and ideals and seeing how in reality some features end up centralizing. There's some domains that centralize and some decentralize. I wonder if you could just maybe break this concept of policy neutrality and these tensions between centralization and decentralization down a little bit for me.
Balázs Bodó: Decentralization is super interesting and it's a recurring pipe dream. Right? Its first-generation internet was like super nice because it's decentralized. And then when it closed down then we had web 2.0 which was again super nice because it was decentralized rather than this CompuServe model. And then when it failed then we have web 3.0 which is like great because it's decentralized. So again and again we have this recurring pipe dream that a particular technological architecture, namely decentralization, will lead to these social, economic, political, utopia which we are not having at the moment because centralized economic political forces just pervert our ideals. And that never happens, but it's still nevertheless interesting. It’s what is this decentralization? Why is this so important? Why does it play such an important role these technical utopias or utopian thinking? What is this property which highlights, again, or leads people again, and again, and again to return to it? Again, what is the thing that decentralized technologies are pointing to? What is the question that they are pointing to. And it's an upcoming paper. It's coming out hopefully soon. I am trying to-- so I stumbled upon on the question of trustworthiness or trust. And the question of how do we trust each other across hugely different, social, economic, cultural, linguistic, historic gaps, in an era where we are logged in global networks of finance, of production, of telecommunications, of media, of supply chains, of networks, of whatnot? And where we face global challenges that we can only solve together like climate degradation, mass human displacement, pandemics, whatnot. And how do we deal with a situation where most of our institutional trust mechanisms which enable us to cooperate like with strangers within the boundaries of a nation-state are still optimized for the nation-state scale. Right? So the courts, the jurisdiction, the law enforcement are mostly still like operated at nation-scale level. And we are struggling to scale up especially in the European Union. The European Union is a half a century political effort to actually scale up some of these trust creating functions to a continental level. It doesn't work at the global level. Look at the UN or look at the WHO. Look at breakdown of climate talks. We are unable to operate systemic trust mechanisms on a global scale and the European Union is also struggling to create that on a continental scale. The US is struggling to operate that on a continent.
Quinn DuPont: And on a practical level, would you say that an engineer ought not point directly at decentralization as an ultimate goal? But would rather look at the ways in which decentralization and other kind of ideals can be held in tension or can emerge in concert? Is that the kind of practical lesson here?
Balázs Bodó: The practical lesson is that there is-- so, the technology was very quick to react to this trust crisis. Right? And that there you see the sharing economy emerging like Uber, Airbnb, Facebook. These are trust machines, if you like, which enable me to sleep in a stranger's bed, sit in a stranger's car, trust that the stranger talking to me across the pond is actually saying something truthful or relevant or meaningful. And what we are seeing is that these technological responses to how to create trust on a global scale are also suffering from the trustworthiness, or the lack of trustworthiness of the technology operators or the technological companies. They cannot be trustworthy. We cannot trust them to actually act in our best interest or do what they promised to do. And this is what I see as the web 3.0 or decentralized web or decentralization, the latest wave of decentralization is that how do we design? What are the conditions that would allow us to produce on a global scale technological infrastructures which enable us to cooperate with strangers across the globe? And that is Bitcoin. Right? I don't need to-- it's a very specific technological architecture, very different from what Airbnb and Uber is offering which enables to engage in a value exchange with a random stranger, right, through a very particular technological design. And now the question is like, again, what is the-- what are the conditions of compatibility of these technological approaches with the existing institutional frameworks? Because when it comes to cryptocurrencies the problem is that Bitcoin works, but it's incompatible with the global financial system. Unless there is a way to make it compatible one way or another the two systems, this global risk proposal to how to solve the trust crisis will not be available for us. For me, from a legal perspective, the question is like what can we do? What can we do to actually acknowledge that we need that kind of global infrastructure of systemic trust production? And then, how can we engineer them in a decentralized way, in a manner that actually enables it to talk to the existing infrastructure?
Quinn DuPont: You mentioned, when we started, that you’re working environment that's filled with legal scholars and that you have a somewhat unusual position in that mix. And I think a lot of what you have to do is a lot of translation work. In reading your work, I was struck nonetheless, with the kind of legal precision you're bringing to this topic. And which made me think that you, in fact, might see the world of cryptocurrencies and blockchain a little bit differently through your eyes than what I might see. I'm just wondering, if you’d maybe make a bit of a pitch for why the legal issues are so important here. And maybe what you think the upcoming, let's say, hot button issue for lawyers and for social legal issues would be for cryptocurrencies and blockchains going forward.
Balázs Bodó: So there are two ways to answer this question, like, when your audience is lawyers. For them, one of the most important messages I have is that looking to how legal power can take the form or can be embodied in technical systems with their own rigidity, with their own automatisms, with their own lack of discretion or their probabilistic workings. And think about what happens when power is mechanized in that sense, when legal power is turned into this self-enforcing machine. And try to think about in this very moment there is a thesis defense that I had to skip which was about like pharmaceutical anti macro-- what is it? Sorry. A pharmaceutical stewardship, that you steward antibiotics through blockchain supply chain management, which is like a great public interest, public welfare use of blockchain technology. If you have a stewardship technology which enables you to control the use of anti-macrobiotics in a manner, that doesn't lead to resistance development of resistance in developing countries, where the enforcement of these things is more lax or less reliable. And this was the question to the student for me. Think about when you establish a system where western pharmaceutical companies are able to control the prescription of the use of their pharmaceuticals, their medicines in developing countries, how you actually are establishing a technological mechanism to project your jurisdiction or your power into like developing countries. And how is that different from all the colonial projects that we have seen so far in the recent years. Then you have another technology which is like the warship, but that's the same vector to project a certain type of colonial power in certain systems. So this is one message to the lawyers I always say that these technologies are vectors to project certain types of power over territories, populations, practices. And be very aware of how that technology works.
Quinn DuPont: That's a lesson for the engineer there, too, isn't it really?
Balázs Bodó: Well, the engineers-- I’m laughing so hard all the time that I’m reading Vlad Zamfir and I'm reading Vinay Gupta who are coming from the technology space in and around blockchain. And then they have started to realize that there is this professional fleet of lawyers and they started to learn what they are doing, and what their usefulness is. And they turned from these rather naïve, I have to say, ignorant, sometimes arrogant position of like we can code anything, and we can code any solution. To this realization that something that that law is a power to pay attention to, and to deal with because it's not just a limitation or a hindrance or an inconvenience that you have to code, or you can code around. But like the rest of the world that they need to interact with is organized by the legal power. So without actually understanding the world, which is organized by this judicial form of power, there is no way you can engineer a system which is able to interface with that. Right? And that is the big decentralize of Bitcoin conundrum. It’s like how can you engineer these decentralized systems in a manner that is not just legible for the existing legal frameworks, but they are also compliant. So they can just kind of say, well like DRTs, there is a fundamental incompatibility between the GDPR, the European Data Protection Regulation, and distributed ledgers because they are immutable. And because that will hinder the distribution or the uptake of this technology. If you cannot engineer a legally compliant system which is able to respond to the GDPR requirements or the anti-money laundering, know your customer, financial regulatory frameworks, then you will go so far. And the best you can hope is that there will be an insurgent use of your technology like peer-to-peer file sharing, but it will never be part of the mainstream as we were all hoping that this type of peer-to-peer distribution and access to culture will be the dominant and mainstream model of how you access culture.
Quinn DuPont: Do you think that these technologies will make that transition? Or do you think this sort of ignorance and arrogance is going continue to prevent their adoption?
Balázs Bodó: Well, yeah, I really hope that there is better understanding of how these systems work from both sides. The lawyers also need to understand, and then this is my mission. I have to explain the lawyers what to expect from the technology and what not to expect it from the technology. That was the hubris of copyright lawyers when they thought that they can just think away or legislate away or enforce away peer-to-peer file-sharing. Right? That didn't happen. And that was a misunderstanding from that size. Every stakeholder needs to go through this learning experience. And I also think that these conflicts are in that sense super productive because it forces every payer or every party in that conflict to think better and more of like how they can better conceptualize how the other is thinking, or what the other is doing. What are these incentives of the other? And I also believe that technology as a sovereign form of power is also super transformative in itself. It's able to push regulatory frameworks, everyday practices, business models into the direction-- into one direction-- into the direction which is like embodied in the technology as an ideal.
Brian Walker: Thank you for listening to our interview with Professor Bodó. To learn more about the IEEE blockchain initiative, please visit our web portal at blockchain.ieee.org.