Distributing authority – state sovereignty in the age of blockchain

ABSTRACT According to the classical understanding of the state sovereignty, a state is sovereign when it enjoys full control over its territory, sole authority internally, and independence of outside authority. Those aspects of control and authority will further manifest themselves in law making and law enforcing. Blockchain with its distinctive characteristics can challenge state sovereignty thus seen. Its most salient feature is ability to distribute control and authority over data. Having potential to facilitate transactions without middlemen and render some legal institutions redundant, blockchain carries with itself both great promises and chilling risks for public institutions. Meanwhile, countries implement various policies related to this technology, positioning themselves among passive observers or active regulators; as outsiders or as early adopters. The argument made in this article is that, regardless of the adopted approach, blockchain poses systemic challenges to the sovereignty of states. The article examines fundamental features of blockchain that combined cause the inherent distribution of control within a blockchain environment which, in turn, challenge traditional law making and law enforcement. Finally, I make a point that those features make blockchain equally as ground-breaking as incoherent with the legal and practical functioning of sovereign states and, therefore, some trade-offs are imperative.