技术与企业 治理：区块链 加密货币和人工 智力

TechnologyandCorporateGovernance:Blockchain,Crypto,andArtificialIntelligence

November2018

LawWorkingPaperN°424/2018

MarkFenwick

KyushuUniversity

ErikP.M.Vermeulen

TilburgUniversityandECGI

©MarkFenwickandErikP.M.Vermeulen2018.Allrightsreserved.Shortsectionsoftext,nottoexceedtwoparagraphs,maybequotedwithoutexplicitper-missionprovidedthatfullcredit,including©notice,isgiventothesource.

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Technology and Corporate Governance:Blockchain,Crypto,andArtificialIntelligence

WorkingPaperN°424/2018November2018

MarkFenwickErikP.M.Vermeulen

©MarkFenwickandErikP.M.Vermeulen2018.Allrightsreserved.Shortsectionsoftext,nottoexceedtwoparagraphs,maybequotedwithoutexplicitpermissionprovidedthatfullcredit,including©notice,isgiventothesource.

Abstract

Overrecentdecades,theon-going“digitalrevolution”hastransformedmanyaspectsofeverydaylife.Thinkoftheincreasedpowerandshrinkingsizeofpersonalcomputersandsmartphones;theglobalexpansionoftheInternetandthenewformsofsocialinteractionthathavebeencreated;and,thereadyavailabilityofmassiveamountsofcloud-basedinformation(“BigData”),whichisprocessedbyautomatedalgorithmsforuseinmultiplesettings.But,howhasthedigitaltransformationaffectedtheorganizationandoperationofabusiness,andwhatdoesthismeanforcurrentregulatoryframeworks,particularlythoserelatedtocorporategovernance?And,howarecurrentandnear-futuretechnologicaldevelopments-thinkdistributedledgertechnologies,“smarter”formsofautomationandartificialintelligence-likelytodisruptthecurrentcorporategovernancediscussion?Thispaperexploresthesequestionsandconcludesthatcurrentcorporategovernanceapproachesneedtoadapttothesetechnologicalandbusinessdevelopmentsinordertoremainrelevant.

Keywords:ArtificialIntelligence,Blockchain,CorporateGovernance,Cryptocurrency,Crypto,Decentralization,DeepLearning,DigitalTransformation,DistributedLedgerTechnology,MachineLearning,Smartcontracts,Technology,Tokens

JELClassifications:D26,D85,G30,K20,K22,L17,L26,O16

MarkFenwick

ProfessorofLaw

KyushuUniversity,GraduateSchoolofLaw744MotookaNishi-ku

Fukuoka819-0395,Japan

phone:+81926424462

e-mail:

mark@law.kyushu-u.ac.jp

ErikP.M.Vermeulen*

ProfessorofBusiness&FinancialLawTilburgUniversity,TilburgLawSchoolProf.Cobbenhagenlaan221

5037DETilburg,TheNetherlandsphone:+31134668111

e-mail:

e.p.m.vermeulen@

*CorrespondingAuthor

Electroniccopyavailableat:/abstract=3263222

TechnologyandCorporateGovernance

Blockchain,Crypto,andArtificialIntelligence

MarkFenwickandErikP.M.Vermeulen

KyushuUniversity–GraduateSchoolofLaw

TilburgLawSchool

October2018

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Abstract

Overrecentdecades,theon-going“digitalrevolution”hastransformedmanyaspectsofeverydaylife.Thinkoftheincreasedpowerandshrinkingsizeofpersonalcomputersandsmartphones;theglobalexpansionoftheInternetandthenewformsofsocialinteractionthathavebeencreated;and,thereadyavailabilityofmassiveamountsofcloud-basedinformation(“BigData”),whichisprocessedbyautomatedalgorithmsforuseinmultiplesettings.

But,howhasthedigitaltransformationaffectedtheorganizationandoperationofbusiness,andwhatdoesthismeanforcurrentregulatoryframeworks,particularlythoserelatedtocorporategovernance?And,howarecurrentandnear-futuretechnologicaldevelopments-thinkdistributedledgertechnologies,“smarter”formsofautomationandartificialintelligence

-likelytodisruptthecurrentcorporategovernancediscussion?Thispaperexploresthesequestionsandconcludesthatcurrentcorporategovernanceapproachesneedtoadapttothesetechnologicalandbusinessdevelopmentsinordertoremainrelevant.

Keywords:ArtificialIntelligence,Blockchain,CorporateGovernance,Cryptocurrency,Crypto,Decentralization,DeepLearning,DigitalTransformation,DistributedLedgerTechnology,MachineLearning,Smartcontracts,Technology,Tokens

JELClassifications:D26,D85,G30,K20,K22,L17,L26,O16

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TechnologyandCorporateGovernance

Blockchain,Crypto,andArtificialIntelligence

MarkFenwickandErikP.M.Vermeulen

“GoDigital!”

#goingdigital.ThiswasthehashtagusedatablockchaineventorganizedbytheOrganizationforEconomicCooperationandDevelopment(OECD)inParisinmid-September2018.1Itcapturesperfectlythechallengefacingbothindividualsandorganizationstoday.Weallneedto“godigital.”Clearly,therearehugeopportunitiescreatedbyemergingtechnologies.But,thespeedandscaleofcurrentchangemeansthatweoftenstruggletounderstandandadapt.Knowingwhattodoisdifficultwhenoperatingunderconditionsofcognitiveuncertaintyaboutthemeaningandeffectsofrapidtechnologicalchange.

ThiscombinationofexcitementandanxietyexplainswhytheParisOECDeventattractedclosetoathousandparticipants.Nodoubtthereisenormousinterestin#goingdigital.Similareventsarebeingheldallovertheworldandtheygenerateagreatdealofattention.Moreover,thisinterestcutsacrossdiversegroupswithverydifferent“stakes”indigitalization.Ononesidearethe“oldschool”regulatorsandotherpolicymakersstrugglingtomakesenseofnewrealitiesandwhatitmeansforcurrentrulesandregulations.2Ontheotherarethe“visionary”foundersofstart-upswho(often)seetheirbusiness-buildingasamissiontochangetheworld.3

Corporategovernance,inparticular,isakeysiteforthisdiscussionanddebate.Notleast,becauseithighlightsboththeimportanceandconfusioncreatedbyrecenttechnological

1

/finance/oecd-blockchain-policy-forum-2018.htm

2MichelCallon,PLasoumes,&YBarthe,ActinginanUncertainWorld:AnEssayonTechnicalDemocracy,(MITPress,2009).

3JessicaPowell,TheBigDisruption,Medium,October2,2018:/s/the-big-disruption/the-big-disruption-36fbed0268cf

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developments.Thereisalotofinterestinemergingtechnologies.But,whatalsoseemsclear,isthatthevariousdifferentstakeholdersinthecorporategovernancespacearemovingatdifferentspeedsandindifferentdirections.Everyoneisawarethatsomethingimportantishappening.But,thereismuchlessagreementonwhatthedigitaltransformationmeansforthefutureofbusinessmodelsandorganization,aswellascorporategovernanceandotherrelevantregulatoryframeworks.

Somecommentatorsbelievethatthereisnourgentneedtoputdigitaltechnologies(suchasblockchainandartificialintelligence)ontheregulatoryagenda.Accordingtothisview,thediscourseandpracticeofcorporategovernancewillnotbedisruptedbynewtechnologies.Theorganization,productsandservicesofcompanieswillcertainlyneedtoadapttothesechangesasaresultofshiftsinthedemandsandexpectationsofconsumersandworkers.However,thekeyconceptsandfeaturesofregulatorymodelsneednotchange.Onthisaccount,traditionalregulatorymodelsarerobustenoughtodealwiththeeffectsoftechnologicalchangeonbusinessmodelsandorganization.

But,isthisviewcorrect?Orisitanaïvestancethatwillbedetrimentaltothefutureofbusiness,theeconomyandsociety?Analternativeviewisthatbusinessmodelsandorganizationswillberadicallytransformedbythedigitaltransformation.Althoughthereismuchlessagreementonhowthiswillhappenandinwhatdirectionitwilltakeus,thereisanemergingviewthatextantregulatorymodelsofcorporategovernancewillstruggleandneedtobere-examinedinlightoftheprofounddisruptiontobusinesscausedbyemergingtechnologies.4

Thispaperexaminesthisdiscussion.Ourintentionistohighlightanumberofkeyissuesandneglectedthemesthatwebelieveareimportant.Fourconnectedissuesarehighlightedthatseemparticularlyrelevanttoanydiscussionontheimpactofnewtechnologyoncorporategovernanceandbusinessregulation.

First,contemporarytechnologicalchange–theon-goingdigitaltransformation–ischaracterizedby“amplificationeffects”asmultipletechnologies“accelerate”eachother.

4TimM.Zagar,ANewChapterforICONOMI:TransformationofCorporateGovernanceandIssuanceofEquityTokens,Medium,September27,2018:/iconominet/a-new-chapter-for-iconomi-transformation-of-corporate-governance-and-issuance-of-equity-tokens-dc603df2272b

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Whereasprevioustechnologicalrevolutionsweresequential(newtechnologyfollowingnewtechnology),the“DigitalRevolution”involvesmultiplesimultaneoustechnologicaldevelopmentsthatimpacteachotherinunexpectedandimportantways.Thisfacthasprofoundimplicationswhenconsideringthepotentialeffectsoftechnologicalchangeonbusinessandsociety.Notleast,weallnowliveunderconditionsofradicalcognitiveandnormativeuncertainty.

Second,recenttechnologicalchangesaredisruptingthe“oldcorporateworld”ofcentralizedauthorities,hierarchiesand“proper”proceduresandprocesses.Howbusinessisorganizedischanging,asaresultoftechnology.Crucially,theemerging“newworld”ischaracterizedbythe“decentralizationanddisintermediation”ofbusinessorganizationsthatdisruptstraditionalhierarchicalformsoforganization.

Third,“retrofitting”–the“adding”ofdigitalsolutionstooldersystemsormodelsinthebeliefthatthiswillfutureproofanorganization–mayworkinsomecontextsbutneedstobetreatedwithcaution,particularlywhenlookingformedium-tolong-termsolutions.Moreradicalapproachesareoftenrequired,mostobviouslywhennewtechnologyisgenuinelydisruptiveofexistingwaysofthinkingandworking.

Finally,newtechnologiescontinuetofacilitateanddrivemoredispersedformsofcorporateorganization–whatwecall“community-drivencorporateorganizationandgovernance.”Inparticular,systemsoforganizationalgovernancehavedevelopedinwhichauthoritativedecisionsarereachedbyacommunityofusersintheabsenceofacentrallydesignatedauthoritythatmakesandenforcesthosedecisions.

Ourconclusion?Regulatorymodelsneedtoadapttothesedevelopmentsinordertobeeffectiveandremainrelevant.Inparticular,moredynamic,experimentalandpolycentricregulatoryformsneedtobedevelopedthataresensitiveandresponsivetoconstantchange.Theriskforregulatorsandotherpolicymakersisthatbyfailingtoact,othermorecreativejurisdictionswillgainacompetitiveadvantageinattractingthebestnewbusinessesandthemostcreative“talent.”

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“AmplificationEffects”

Muchofourworldisnowbuiltonthezerosandonesofcomputercode.Codeistheinvisiblearchitecturestructuringoureverydaylife.5After,allthedevelopmentandproliferationofcodeistheessenceofthedigitaltransformation.Or,asMarcAndreessendramaticallyputsit,“softwareiseatingtheworld.”6

Inthe1990s,forinstance,digitaltechnologies(thehypertexttransferprotocol—http)profoundlytransformedhowwecommunicate.TheWorldWideWebbroughttheworldtousandchangedhowweproduce,shareandconsumeinformation.Currently,weareexperimentingwithblockchain,artificialintelligence(AI),robotics,sensors,andmultipleothernewdigitaltechnologies.And,weoftenreadhow“thistechnology”or“thattechnology”–beitautomation,AIorsomethingelse–hasthepotentialtochangetheworldonthesamescaleastheInternet.

Butonereasontobelievethattheeconomic,culturalandsocialimpactof“new”digitaltechnologieswillbemuchgreaterthanwehaveexperiencedbeforeisthatnewtechnologiesincreasingly“amplify”eachother.

Weshouldn’tlookatanyonetechnologyinisolationbut,ratherathowtechnologiesinteractwitheachotherandcreatesynergiesthatgreatlyincreasestheirsocialimpactandeffects.Ofcourse,each“individual”technology,suchasdistributedledgers,artificialintelligenceorrobotics,canhaveanenormousimpactonsociety.Buttounderstandwhat“goingdigital”reallymeansforthefuture,itisnecessarytothinkaboutwhatthecombinationofemergingtechnologiescando.

AtthecoreofthisconvergenceoftechnologicaldisruptionistheproliferationofBigData,advancedanalytics,andhuman-machineinterfacing.Forexample,considertheconvergencebetweenroboticsandcomputersciences.Recentdevelopmentsinrobotics,forinstancearemadepossiblebyonlineconnectivity,moresophisticatedstatisticalandprobabilistic

5SeeLarryLessig,Code:Version2.0,(CreativeCommons,2006);WilliamMitchell,CityofBits:Space,Place&theInfobahn,(MITPress,1995).

6MarcAndreessen,WhySoftwareisEatingtheWorld,WallStreetJournal,August20,2011.

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techniques,theavailabilityofhugeamountsofdata,theshrinkingsizeofmassivecomputationalpower,andthetransformationofplacesandspacesintoIT-friendlyenvironments,e.g.,smartcities.OfparticularsignificanceinthisregardistheconvergencebetweenroboticsandAI-relatedresearchincomputerscience.7Althoughspanningseveraldisciplines,suchasphysicsandmathematics,electronicsandmechanics,neuroscienceandbiology,thefieldofroboticsisincreasinglyintertwinedwithadvancementsofAI.Thesynergiesbetweentheseindependentlydevelopingyetdeeplyconnectedfieldsareprovidingmultiplenewopportunitiesforfurthertechnologicaldevelopments.

Assuch,therealsignificantofdigitaltechnologiesishowthey“accelerate”and“reinforce”eachother.Itistheseamplificationeffectsthataredrivinganexponentialgrowthofmultipletechnologies(seeFigure1.)Itistheseamplificationeffectsthatwillcreatenewopportunities,aswellasdisruptexistingbusinessmodels,formsoforganization,andregulatorymodels.

Figure1:TheExponentialGrowthofTechnology

7McKinseyGlobalInstitute,ArtificialIntelligence:TheNextDigitalFrontier?June2017:

https://

/~/media/McKinsey/Industries/Advanced%20Electronics/Our%20Insights/How

%20artificial%20intelligence%20can%20deliver%20real%20value%20to%20companies/MGI-Artificial-Intelligence-Discussion-paper.ashx

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Thisdevelopmenthasanumberofimplications,mostobviouslythedegreeandqualityofuncertaintythatcharacterizespossiblefuturetechnologicaldevelopmentsandtheirsocialeffects.Aparadoxofnewtechnologiesisthattheymakeourliveseasier,buttheyalsomaketheworldharder–perhapseven,impossible–tounderstandorpredict.Thedigitalworldisaworldofrisk–ofidentifiableandmeasurabledangers–but,moresignificantly,itisalsoaworldofradicaluncertaintyinwhichwecannolonger“know”withanydegreeofcertaintythecurrentstateoftechnologyorthelikelydirectionoffuturedevelopments.Allofus–government,thescientificcommunity,businessandthegeneralpublic–nowliveunderconditionsofradicalcognitiveandnormativeuncertainty.

“Decentralization”&“Disintermediation”

TheInternetisfullofdiscussionaboutthepossiblefutureusesandbenefitsofdigitaltechnologies.Oneoftheperceivedbenefitsofsuchtechnologiesisthattheyenablemoredirectand“flatter”formsofinteractionandtransaction.Theconsensusisthatthiswilldriveasocietalshiftawayfroma“centralizedworld”tomoredecentralizedanddisintermediatedalternatives.

Theworldhaslongbeendominatedbycentralizedorganizationscharacterizedbyacombinationofformalandinformalhierarchies,and“proper”proceduresandprocesses.Ofcourse,pre-definedstructuressupportedby“correct”procedureshaveoftenbeennecessaryto“getthingsdone”andtogeneratetrust.Andtechnologicalrevolutionshaveoftenledtoanincreaseinsuchstructuresandprocedures,aswecometotermswiththeimpactofthesenewtechnologies.Assuch,economic,socialandpoliticalmodernizationhasbeendrivenbythesuccessofcentralizedhierarchicalstructuresandorganizations.

Butwenowseemtobeatacrossroadsinwhichdigitaltechnologiesareintroducingashiftinoureconomy,cultureandsociety.Notleast,becausetechnologycanrevealtheshortcomingsofcentralized,hierarchicalandproceduralizedformsoforganization,andnewtechnologycanprovideuswithmoresatisfyingalternatives.

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Manyofthemostinnovativetechnologyfirmstoday,forexample,arenowcharacterizedbya“best-idea-wins”cultureinwhichmorecollectiveformsofdecision-makingarefostered.Thistypeofopenandinclusiveworkenvironmenthasbeendescribedasa“flat-hierarchy.”

Inordertosucceed,aflat-hierarchydependsontheactiveparticipationofeveryoneinsidethefirm.Withoutthecooperationandinputofemployeesthisapproachwillnotsucceed.Assuch,anadditionaladvantageofsuchanopenworkingcultureisthatitprovidesgreateropportunitiesforpersonalexpressionandthisensuresthatthecompanyremainsrelevant.Inthisway,aflathierarchyworkstoretaintherelevancyofthefirmfortheemployeesandothercompanyinsiders,aswellastheconsumerswhobenefitfromthehigherqualityproductsorservicesthatsucha“flat”corporateculturecandeliver.

Therearecurrentlymanyvariationsonflat-hierarchyorganizationsdiscussedinsocialmedia.Oneexampleofthisoperatingspacehasrecentlybeenreferredtoasa“holacracy”andsuchorganizationalstructureemphasizestheimportanceofmakingeveryonealeaderbydisseminatingdecision-makingpowertoautonomousandmulti-disciplinaryteamswithinanorganization.Suchteamswork“cheek-by-jowl”toidentifyrelevantsolutionstoparticularproblemsandbymakinginnovativeproblem-solving–“improvingthings”–thebasisofstaffbonuses.Inthisway,ahealthyinternallycompetitivefirmculturecanbefacilitated.Anotherexampleisthecomparisonbetweenleadershipinbusinessorganizationswithleadershipinsportsteams(whereteammembersareinspiredthroughshortmeetingsor“huddles”)orleadershipinmilitaryoperations(whereleadershipisoftenchanneledthroughotherresponsiblekeypersonswhohelpre-iteratethefirm’svision).

Thisdevelopmentreflectsamoregeneralrealizationthat“oldworld”organizationsmakedecision-makingslow,cumbersomeandcostly.Onadailybasis,wecanseehow“digitaltechnologies”leadtobetterandmoresatisfyingsolutions.Forconsumers,thisstartswiththesimpleconveniencesofnew“platform”stylecompanieslikeUberorAirbnbthatemployautomatedalgorithmstomatch“users”withindependentserviceproviders.8

8MarkFenwick,JosephA.McCahery&ErikP.M.Vermeulen,TheEndof“Corporate”Governance:HelloNewWorldofPlatformGovernance(2018):/sol3/papers.cfm?abstract_id=3232663

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Statedbluntly,thereislittleroomformaneuverinahighlycentralizedworldanddecentralizedalternativesofferadegreeofindependencethatresonateswithmoreandmorepeople.

Digitalizationhasdiminishedinformationasymmetriesandchangedourexpectations.Consumers,forinstance,havebecome“smarter,”betterconnected,andmoredemandinginwhattheyexpectofproductsandservices.Welovethe“speed,”“convenience”andopportunitiesofferedbydigitaltechnologiesandwearenotwillingtogivethemup.Inanageofsocialmedia,the“voice”oftheend-consumerhasbecomemorepowerfulthaneverbefore.Asaresult,therelationshipbetweenconsumersandbusinesshaschangeddramatically.Evencompaniesoperatinginabusiness-to-businessenvironmentneedtotakeconsumerviewsmoreseriously.9

Digitizationempowerspeopleinotherwaystoo.Forinstance,digitaltechnologieshelppeoplebecomemoreawareoftheirhealth.10Individualscannowmonitortheiractivitiesandhealthinrealtime(thinkofrecentdevelopmentswithsmartwatches).Sensors,BigData,andalgorithmsprovideinformationthatcanhelpmedicaldoctorsmakemoreeffectivediagnoses.But,thesetechnologiesalsomakepeoplemoreknowledgeableabouttheirownhealthcondition.Assuch,thetraditionalhierarchicaldoctor-patientrelationshipisdisrupted.Inmanycontexts,digitalizationtransformstraditionalrelationshipscreatingflatterandmoredynamicinteractions.

Anotherimportantfeatureofthistechnology-driventransformationthatisworthemphasizingarethe“disintermediation”effects.Intheoldworldofhighlycentralizedorganizations,acrucialrolewasplayedbyvariousintermediarieswhowereabletogeneratetrustbetweenvariouspartiesinbusinessrelationships.

9GeoffColvin,WhyEveryAspectofYourBusinessisAbouttoChange,Fortune,October22,2015.

10Deloitte,ConnectedHealth:HowDigitalTechnologyisTransformingHealth&SocialCare(2015):/content/dam/Deloitte/uk/Documents/life-sciences-health-care/deloitte-uk-connected-health.pdf

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Electroniccopyavailableat:/abstract=3263222

Inthecontextofthedigitalrevolution,who,what,when,andhowpeople“trust”ischanging.11

Wetendtothinkof“trust”and“trusting”asafeelingoremotionbutascontemporarycommentatorsontrusthaveobserveditmaybebettertothinkoftrustasatypeofdecisionthatisintimatelyconnectedwithrisk.12We“trust”whenwedecidetotakesomekindofrisk,i.e.,tovoluntarilyexposeourselvestosomekindofdanger.We“trust”thelocalsupermarkettosellushealthyandsafefood.We“trust”ourdoctortoprovideeffectivemedicaltreatment.We“trust”thebabysittertotakecareofourkids.

Ineachcase,“trusting”involvesadecisiontoexposeourselvestoadangerofsomekind(unhealthyfood,poormedicalcare,harmtomykidsetc.).We“decide”toplaceourfateinanotherpersonororganization.“Trust”involvesthetriumphofhopeoverfear.Weovercomeournaturalaversiontoriskinanticipationofabetterfuture(atastymeal,goodhealth,anightawayfromourchildren).Everyday,allofusmakemultipledifferentdecisionstotrust.Together,thesechoicesdefinewhoweareandwhatmatterstous.

Butwho,what,whenandhowwetrustischanging.Therearemultiplereasonsforthischange,buttechnologyisabigpartofthisshift.Mostobviously,wearemuchlesstrustingoforganizations,authoritiesorprocedures,butinsteadplaceourtrustinmachinesoralgorithms.Ontheonehand,weseemtohavebecomemuchlesstrustingofotherpeopleandtraditionalcentralizedorganizations(politicians,experts,companiesetc.).Ontheotherhand,weseemverywillingtoplaceourtrustinmachines.

Inonesense,thedigitaltransformationhascreatedanewexperienceoftrust.“Digitaltrust”isthefutureandthe“unprepared”(people,organizations,andsocieties)willcertainlyloseout.Whereasinthepast,peoplereliedheavilyonintermediariesandotherthirdpartiestomanagetrust,weincreasinglyplaceourtrustindigitalsystemsandalgorithms.Inthisrespect,itappearsthatpeoplehavelessandlessconfidencein“oldworld”institutions.Satoshi

11CarolineLee,WhyMillennialsDon’tTrustYourBrand,Medium,August22,2017:

/why-millennials-dont-trust-your-brand-b7ffce5c86c6

12IrisBohnetandR.J.Zeckhauser,Trust,RiskandBetrayal,JournalofEconomicBehavior&Organization,(2003)Volume55.

Nakamoto’spapersettingoutthekeyconceptsofBitcoin-blockchainisanillustrationofthiseconomicandculturalshift.13

Thespeedydevelopmentofdistributedledgertechnology(includingblockchain),smartcontractsandartificialintelligencewillonlyfurtherautomatetrust.Assuch,institutionalizedtrustisbeingreplacedbydigitaltrust.Itisobviousthattheautomationof“trust,”“faith,”and“confidence”hasatremendousimpactonworker-employerrelationships,themeaningofleadership,andhowmanagementoperates.

Theopportunitytocommunicateandinteractwithpeersdirectly(throughsocialmediaandwithouttheinterferenceofthirdparties)spursentrepreneurshipandcreatesnewopportunitiestobecreative(thinkYouTube,Instagram,etc.).Our“new”relationshipwithdigitaltechnologyalsomakesitpossibletohavepeer-to-peerconnections,communications,interactions,andtransactions.Algorithmsanddata-analyticshelpusfindpartners,assistants,sponsors,help,accommodation,etc.

Ofcourse,thesedigitalsystemsaren’talwaysflawless,butthefactisthatweincreasinglyrelyondecentralized“peer-to-peersystems.”Theconvenienceofthesenewsystemsattractsus.Thelooser(digital)connectionsandinteractionsaresomuchfasterandmorecomfortablethantheold“formal”waysofmakingfixedappointmentsandritualizedmeetings.Anditdoesn’tstopthere.Wecanalsonow“meet”andinteractinonline“virtual”spacesevenifwearethousandsofmilesawayfromeachother(thinkofdevelopmentsinthegamingindustry,forexample).14Virtualrealityandaugmentedrealitywillonlyaddtothisunparalleledconsumerexperienceandthewaywerelatetoeachother.

13SatoshiNakamoto,Bitcoin:APeer-to-PeerElectronicCashSystem,October31,2008:

/bitcoin.pdf

14KeithStuart,FortniteIssoMuchMoreThanaGame,Medium,August17,2018:

/s/greatescape/fortnite-is-so-much-more-than-a-game-3ca829f389f4

“Retrofitting”

Althoughmoreandmorepeoplerecognizethat“goingdigital”isimperativeforallbusinessandthatsuchchangealsohasimplicationsforregulators,itappearsthatmanycommentatorsregard#goingdigitalassimplyaquestionof“retrofitting.”Byretrofitting,wemean“adding”digitalsolutionstooldersystems,models,andorganizationsinthebeliefthatthiswill“futureproof”anexistingapproachandmakeitmoreefficient.Variousreasonsareoftengivenfortheretrofittingapproach.“Cost”savingsthatresultfromcuttingoutintermediariesandcreatingmoretransparencyareusuallymentioned.

Manyrecentexamplesofsuchretrofittingrefertodistributedledgertechnologies,suchasblockchainandothersimilartechnologies.Ablockchainisadatabaseor“ledger”,i.e.,acontinuouslyupdatedrecordoftransactions(reflecting“whoholdswhat”ataparticularpointintime).Onceatransactionisverifiedandvalidatedaccordingtosomepredefinedrulesandprotocols,a“block”isaddedtothechainwithallpreviousrecordsinlinearandchronologicalorder.

Whatmakestheblockchain“immutable”isthattheledgerordatabaseisdistributedtoacountlessnumberofparticipants(“nodes”)aroundtheworldinpublicpeer-to-peernetworks(similartotheInternet)orpriv