In a recently published paper, Ethereum cofounder Vitalik Buterin along with Harvard faculty Thibault Schrepel argued that blockchain is positioned to help antitrust laws in areas where regulations are difficult to apply and enforce.
The paper, dubbed Blockchain Code as Antitrust, explains that blockchains can aid antitrust laws by increasing decentralization and preventing the creation of monopolies. However, they said, blockchains can only do so if regulations support the technology.
“Law and technology should be thought of as allies – not enemies – as they feature complementary strengths and defects,” reads the paper.
Bringing trust with blockchain
Buterin and Schrepel explained that blockchain — with the help of smart contracts — can create trust in situations where laws are hard to implement, such as “when jurisdictions are mutually unfriendly (cross-border issue), or when the state is not enforcing legal limitations on the exercise of power by its agents or private entities.”
Smart contracts help create an ecosystem where none of the transacting parties are subject to placing trust in an unknown person or entity without being assured that their transaction will be successfully completed.
The fact that blockchain’s primary purpose is to decentralize various industries complements antitrust laws that prohibit companies from creating a monopoly or abuse their centralized market power to eliminate competition:
“The idea is for all market players to retain the ability to decide without having to follow the instructions of centralized economic power.”
Stressing for legal support
Buterin and Schrepel urged antitrust agencies to consider using blockchain technology. As a two-step process to promote blockchain for decentralization, they suggested that antitrust agencies set up new regulatory sandboxes so that more developers can test the technology without antitrust concerns.
If these sandboxes succeed, the agencies could move further with safe harbors, which are similar to sandboxes but with no limit in time or scale, they wrote. They summed up saying:
“When technology chooses confrontation, the law must also choose confrontation. When the tech chooses collaboration, the law must choose collaboration despite the absence of certain sanctioning it may entail.”