Establishing civil liability for smart contracts : a hybrid legal framework to regulate an emerging technology

Abstract

Distributed ledger technology has been hailed as being a technology that ensures accurate, tamper-proof records. Although there is no reason to doubt the underlying mathematical formulae and algorithms that achieve this result, the human being remains the ultimate weak link within the whole architecture; ensuring that glitches and errors will occur and belying the promise of a totally secure set of processes. In fact, distributed ledger technology has over the past years been the victim of a number of incidents, both in the form of intentional unauthorised access to the ledger by hackers as well as nnintentional use of the code by its users. This is not to say that the technology does not ensure accurate and tamper-proof records but, as in all things mundane, limitations and conditions of the technology are being discovered with each and every incident that takes place, very often at the cost of the person, legal or natural, suffering damages. As explained by Zetzsche et (2017), "[w]hile distributed ledgers may well be more secure than traditional centralized ledgers, recent events call for an analysis of who will bear DLT losses and responsibility for damages in connection with a blockchain". [Excerpt]