Thibault Schrepel ‘Collusion by Blockchain and Smart Contracts’ 33 Harvard Journal of Law Technology (forthcoming, 2019)

This article, available here, introduces the first taxonomy of collusion on the blockchain. It explores the functioning, robustness and limits of such collusive practices, and highlights how companies may use smart contracts and sophisticated algorithms to collude in the blockchain environment.   An introductory section describes blockchain technology and its potential uses. A blockchain is an open and distributed ledger recording all sorts of transactions between users. Consensus mechanisms are used to make sure that information and transactions are recorded on the blockchain. This, in turn, means that data and records on the blockchain cannot be easily modified, which in turn breeds trust. Blockchains assign three different roles to their users. Blockchain users may read the information on the blockchain, propose new transactions and validate the blocks. On public (“permissionless”) blockchain, all users can read and propose new entries into the blockchain. Block validation is restricted to some users only, following a consensus mechanism. On private (“permissioned”) blockchains, all three actions can…

The Blockchain (R)evolution and the Role of Antitrust

This piece, available here, explores a number of (EU) antitrust issues that may arise in the context of blockchains. It is structured as follows: The paper starts by explaining what the blockchain is and what it can do. The blockchain is a technology that uses a software protocol based on cryptography to keep exchanges secure. It allows anybody in the chain to see all transactions on it, removes the need for trusted intermediaries keeping a transaction ledger, and ensures that the transaction ledger is immutable and very hard to tamper with. Blockchains can be divided into open and permissioned networks. Open (i.e. public) networks are accessible to anyone, so that the database is truly public information. This is the case of the blockchains underlying Bitcoin and Ethereum. Permissioned (i.e. private) networks make access conditional upon authorisation by the owner or owners of the network. An example of a permissioned network is Corda, a distributed ledger platform designed specifically for financial institutions to…

Sebastian Louven and David Saive ‘Antitrust by Design – The Prohibition of Anti-Competitive Coordination and the Consensus Mechanism of the Blockchain’ ZRI Working Paper

This paper, available here , argues that important competition concerns arise from the use of consensus mechanisms in blockchains. Under such mechanisms, new information is only added to the database if the majority of network participants, the ‘nodes’, agree to do so. This requires coordination between the various network participants, which raises questions regarding whether and to what extent this voting behaviour is anticompetitive. The paper also discusses what type of measures may be adopted to ensure that a blockchain complains with competition law by design. It is structured as follows: Its second section provides the legal background for concerns about the functioning of consensus mechanisms. Information may be exchanged between competitors in a blockchain that would otherwise have remained undisclosed to the participating companies or the public. In some cases, public disclosure or selective disclosure of certain information may have procompetitive effects, e.g. when information is aggregated and contributes to greater price transparency so that customers can make more informed decisions, thus…