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104 Iowa L. Rev. 679 (2018-2019)
Law and the Blockchain

handle is hein.journals/ilr104 and id is 693 raw text is: Law and the Blockchain Usha R. Rodrigues* ABSTRACT: All contracts are necessarily incomplete. The inefficiencies of bargaining over every contingency, coupled with humans' innate bounded rationality, mean that contracts cannot anticipate and address every potential eventuality. One role of law is to fill gaps in incomplete contracts with default rules. Emerging technologies have created new, yet equally incomplete, types of contracts that exist outside of this traditional gap-filling legal role. The blockchain is a distributed ledger that allows the cryptographic recording of transactions and permits smart contracts that self-execute automatically if their conditions are met. Because humans code the contracts of the blockchain, gaps in these contracts will arise. Yet in the world of smart contracting on the blockchain, there is no placefor the law to step in to supply default rules-no legal intervention point. The lack of a legal intervention point means that law on the blockchain works in a fundamentally different way from law in the corporeal world. Business organizational law provides a prime example of how the law uses default rules to fill gaps in an incomplete contract and how the law works differently in the blockchain context. I. INTRODUCTION........................................68o II. ORGANIZATIONAL LAW AS A GAP FILLER ....................686 A. THE IRM AS AN INCOMPLETE CONTRACT . ..................686 B. THEORIES OF TiE CORPORATE FoRM .............. ......691 1. Limited Liability .................... ........692 2. Asset Partitioning .................... .......694 3. Exceptions that Prove the Rule ............ .....695 III. THE 2o16 DAO ............................. ......697 A. BACKGROUND ...........................................697 B. GOVERNANCEOF THE 2oi6DAO. ............ ..............701 C. THE HA CK AND HARD FORK.............................7 04 * M.E. Kilpatrick Professor of Law, University of Georgia School of Law. I thank participants of the University of Washington Faculty Workshop Series, the First Annual Works in Progress Program on Blockchains and the Law, the Minnesota Law Faculty Works in Progress Workshop, and the 2018 Law & Entrepreneurship Retreat. 679

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