Conflict Management for Regulation-Averse Blockchains?

Riikka Koulu, Kalle Aleksi Markkanen

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

The blockchain architecture is often envisioned as a potential mechanism for the automation microtransactions between interconnected IoT applications, as transactions could be directly enforced through the technical governance structure it provides. However, this chapter draws attention to the limitations of the blockchain architecture in providing tools for conflict management, which is here considered to be a vital for both governance and the legitimacy of the system. Although blockchain’s potential for conflict prevention is often emphasised, experiences from public blockchain networks such as Ethereum demonstrate that prevention is not sufficient but instead dispute resolution mechanisms are needed for addressing unpredictable events. To this end, alternative conflict management strategies have been developed for blockchain-related disputes. We assess these emergent redress mechanisms from the perspective of conflict management with specific attention to fairness of outcomes and due process rules. By making a distinction between systemic disputes and low intensity disputes we demonstrate how conflict management, governance and technological infrastructure converge on blockchain networks. This convergence, in turn, influences how fairness expectations and due process safeguards are formulated, causing concern for the fairness of emergent conflict management. The design of blockchain-based IoT applications should take into consideration the need for conflict management and particular attention should be paid to the fairness of such mechanisms, as these contribute to the fulfilment of fairness expectations, the legitimacy and predictability of governance structures and, in the end, feasibility of mainstream use.
Original languageEnglish
Title of host publicationRegulating Industrial Internet through IPR, Data Protection and Competition Law
EditorsRosa Ballardini, Olli Pitkänen, Petri Kuoppamäki
Number of pages27
Volume2019
PublisherKluwer Law International
Publication dateSep 2019
Publication statusAccepted/In press - Sep 2019
MoE publication typeA3 Book chapter

Cite this

Koulu, R., & Markkanen, K. A. (Accepted/In press). Conflict Management for Regulation-Averse Blockchains? In R. Ballardini, O. Pitkänen, & P. Kuoppamäki (Eds.), Regulating Industrial Internet through IPR, Data Protection and Competition Law (Vol. 2019). Kluwer Law International.
Koulu, Riikka ; Markkanen, Kalle Aleksi. / Conflict Management for Regulation-Averse Blockchains?. Regulating Industrial Internet through IPR, Data Protection and Competition Law. editor / Rosa Ballardini ; Olli Pitkänen ; Petri Kuoppamäki. Vol. 2019 Kluwer Law International, 2019.
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Koulu, R & Markkanen, KA 2019, Conflict Management for Regulation-Averse Blockchains? in R Ballardini, O Pitkänen & P Kuoppamäki (eds), Regulating Industrial Internet through IPR, Data Protection and Competition Law. vol. 2019, Kluwer Law International.

Conflict Management for Regulation-Averse Blockchains? / Koulu, Riikka; Markkanen, Kalle Aleksi.

Regulating Industrial Internet through IPR, Data Protection and Competition Law. ed. / Rosa Ballardini; Olli Pitkänen; Petri Kuoppamäki. Vol. 2019 Kluwer Law International, 2019.

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

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AB - The blockchain architecture is often envisioned as a potential mechanism for the automation microtransactions between interconnected IoT applications, as transactions could be directly enforced through the technical governance structure it provides. However, this chapter draws attention to the limitations of the blockchain architecture in providing tools for conflict management, which is here considered to be a vital for both governance and the legitimacy of the system. Although blockchain’s potential for conflict prevention is often emphasised, experiences from public blockchain networks such as Ethereum demonstrate that prevention is not sufficient but instead dispute resolution mechanisms are needed for addressing unpredictable events. To this end, alternative conflict management strategies have been developed for blockchain-related disputes. We assess these emergent redress mechanisms from the perspective of conflict management with specific attention to fairness of outcomes and due process rules. By making a distinction between systemic disputes and low intensity disputes we demonstrate how conflict management, governance and technological infrastructure converge on blockchain networks. This convergence, in turn, influences how fairness expectations and due process safeguards are formulated, causing concern for the fairness of emergent conflict management. The design of blockchain-based IoT applications should take into consideration the need for conflict management and particular attention should be paid to the fairness of such mechanisms, as these contribute to the fulfilment of fairness expectations, the legitimacy and predictability of governance structures and, in the end, feasibility of mainstream use.

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Koulu R, Markkanen KA. Conflict Management for Regulation-Averse Blockchains? In Ballardini R, Pitkänen O, Kuoppamäki P, editors, Regulating Industrial Internet through IPR, Data Protection and Competition Law. Vol. 2019. Kluwer Law International. 2019