Regulation is a patch to the current economic and social paradigms. For example, capitalism and free markets are currently seen as the best working solutions for the economy. However, private ownership of the means of production and their operation for profit which are inherent in capitalism result in less than optimal conduct by the economic actors. Information asymmetries between the participants of the economy and selfish behavior of dominant parties result in exploitation of less informed or weaker participants of the economies or less than optimal results for the society in general. As a reaction, regulation is implemented as a patch to the disadvantages of capitalism.
Regulation has a purpose and is generally good for the people. In a somewhat functioning system of government, i.e. a good democracy, opposite to the perception of the regulated subjects, regulation is not something that is imposed by some random mad tyrant. Instead, regulation has a very specific purpose. For example, financial regulation has the goal to protect the creditors and investors as well as the target to ensure financial system stability.
Regulation is usually reactive. Regulation is a severe intervention in people’s liberty. Thus, it is rarely implemented with the foresight of a vague upcoming issue. Regulation is typically implemented after there was a severe impact of adverse behavior on society or after the perception of such with a public outcry.
Smart contract creators are responsible. As smart contracts are immutable after deployment, regulatory action cannot be effectively summoned upon them reactively. This may result in nuisance with regulators and the public. Any assumption by smart contract creators that they are not responsible for their creations is dangerous. Thinking that there are no consequences of their works being used by bad actors and that there will be no repercussions might be naïve.
I appeal to the blockchain community to think about the implications of on-chain creations before the respective deployment and promotion. It is essential that smart contracts are created with a pure intent and wise foresight. Also, the comprehension of the general values of society is paramount to create solutions which are seen as valuable and do not result in outrage and a devastating reaction.
Let’s be great pioneers of blockchain technology by acting and creating responsibly! Regulatory elements can be embedded into smart contracts. Please, let this be the inception of a respective discussion.