The unbearable memeness of being

I like a good meme as much as the next person, but you have to take them for what they are worth and sometimes they aren’t worth much more than a chuckle or a ponder. Software development in general and “crypto” in particular are full of memes — it’s a veritable meme factory.

A couple of years ago the meme du jour was “code is law,” an out-of-context quote from a Larry Lessig book that starry eyed cryptokiddies took to mean that instructions written into software can literally become law and supplant human systems. There were and are a couple of problems with the code is law meme including the fact that Lessig didn’t actually mean what people claimed:

Code is not law, any more than the design of an airplane is law. Code does not regulate, any more than buildings regulate. Code is not public, any more than a television is public. Being able to debate and decide is an opportunity we require of public regulation, not of private action.

The fact that code can regulate or govern human behavior doesn’t mean that it can or should supplant human law. Thinking that privately designed deterministic systems are suited for regulating messy non-deterministic human life is a mistake. And this mistake leads to design errors borne of hubris on the one hand or laziness on the other.

Bitcoin grabbed my attention in 2014 for technical reasons, nothing to do with memes. I was building software that needed payments functionality and there was no easy way to hook into the U.S. banking system. Part of my problem seemed solvable by irreversible peer-to-peer money that didn’t require a centralized intermediary. I soon thereafter discovery Ethereum, early days, and the notion of programmable peer-to-peer transactions, escrow in particular, also stuck with me.

But what I didn’t get from these technologies — and still don’t — is the “code is law meme,” which still seems to distract programmers from building protocols that don’t require governance to attempt to swallow the ocean and reinvent corporate governance from whole cloth. That's something I saw and heard of a lot of (and still do) at Berlin blockchain week, which reminded me of Marx’s recast of Hegel in the introduction to the Eighteen Brumaire that history repeats itself “[o]nce as tragedy, and again as farce.”

Crypto projects that use the words “decentralized” and “autonomous” and “organization” seriatim all deserve a jaundiced eye, and caution that they might easily be either tragedy, farce or both. I won’t cast aspersions on any particular project, but observe that the error of the DAO model is the error of code is law: it mixes protocol with governance, and assumes that the ability to write software translates into the ability to sort out messy details like buy sell agreements or appraisal clauses.

The idea of “wrapping” DAO code in a legal entity comes closest to making some sort of design sense but it ignores the fact that in the eyes of the law the DAO isn’t actually an organization, it’s a protocol. The organization is the thing that you formed with a secretary of state filing and payment of a fee. Bottom line — we are years away from computer code replacing legal code as a way of instantiating corporate existence. The interesting technical projects are ones that bite off chunks of governance that can be automated or simplified, as opposed to whole cloth reinvention.

Look, I’d really, really like to be a cheerleader here. As a dear friend explained to me not long ago, “People like a bull more than a bear” — it’s better for business. But after forcing myself to read through one of the more prominent DAO governance sites, my eyes were practically bleeding after reading language like this: “Decentralized organizations change our relationship with governance: from something that is imposed upon us by others, into something we choose to opt into. Where we are equally serving and served, rather than just serving.” I mean you can opt into an LLC or a C corp or a partnership. This is meaningless technobabble and if one is being cynical it’s in the service of a cryptocurrency token arbitrage wealth creation, which probably has another 3-5 years left for serious wealth creation (if you’re good at math and gambling). The things will last beyond this period, the true innovation, will fix base level problems without claiming to reinvent the entire world.

The other meme that caught my attention recently (and which prompted this particular column) is “code is speech” or a variant sometimes heard in crypto “bitcoin is money and money is speech.” I had actually planned on writing an extended screed on the flaw in this argument but happened to find a lovely piece by a professor from my alma mater, Neil Richards, titled “Apple’s 'Code = Speech' Mistake”.

Richards points out that code qua code isn’t itself protected. What the first amendment covers is “expressive conduct” but at the same time this protection doesn’t provide absolute protection from law or regulation:

Where does this leave us, then, when we’re considering the regulation of code by the government? The right question to ask is whether the government’s regulation of a particular kind of code (just like regulations of spending, or speaking, or writing) threatens the values of free expression. Some regulations of code will undoubtedly implicate the First Amendment. Regulations of the expressive outputs of code, like the content of websites or video games, have already been recognized by the Supreme Court as justifying full First Amendment treatment. It’s also important to recognize that as we do more and more things with code, there will be more ways that the government can threaten dissent, art, self-government, and the pursuit of knowledge.

In short, and as I assume everyone reading this column understands, the simplistic notion that writing code may be protected as expressive conduct doesn’t mean that that the government can’t apply the Bank Secrecy Act to bitcoin transactions. You’d think this is Captain Obvious territory now but perhaps as a testament to the tenacious power of memes, this argument never seems to die.

The nice thing about memes — hazardous though they are — is that they simplify complex fact patterns. This leads me to the Kleiman v. Wright litigation, believe it or not. As reported on The Block last week, the Court issued a potentially case-ending order against Craig Wright in this long-running dispute over the ownership of a boatload of Bitcoin. The order was issued in the context of a sanctions and contempt proceeding.

Over-simplifying, the plaintiff said Wright had failed to produce evidence and had falsified documents, and asked the Court to punish him for doing so. That punishment took the form of an order establishing certain facts to be true. However — and this is important — the case has not yet concluded and, contrary to news reports from multiple sources, Wright hasn’t been ordered to transfer any bitcoin (or cash, for that matter) to Kleiman at this point. There is no final judgment. And while it’s quite unlikely that Wright will pull his fat from the broiling fire of two federal judges saying he’s not a credible witness, it is theoretically possible that he could win on one of the few grounds remaining to him (statute of limitations, for example). In short, reports about massive amounts of bitcoin being dumped on the market to satisfy a judgment are wrong.