Blockchain

Blockchain
Series Editor
Imad Saleh
Blockchain
The Advent of Disintermediation
Matthieu Quiniou
First published 2019 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Part 1. The Blockchain: a Tool for Non-centralization

and Disintermediation . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction to Part 1 . . . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 1. Non-centralized Architecture . . . . . . . . . . . 7

1.1. Certified timestamping of transactions, operations,
and events in a non-centralized registry . . . . . . . . . 11
1.1.1. The network of nodes: the peer-to-peer
architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.1.2. The timestamping system . . . . . . . . . . . . . . 13
1.1.3. Recording of transactions and
other operations . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.2. Encryption, anonymity, transparency, and
verifiability in a non-centralized network. . . . . . . . . 18
1.2.1. A unique approach to transparency . . . . . . . 20
1.2.2. An advanced form of privacy by design . . . . . 21
1.2.3. Blockchain and protection of trade secrets . . 26
1.3. The implications of a non-centralized model . . . . 28
1.3.1. Limiting the risk of data loss . . . . . . . . . . . . 29
1.3.2. The lack of a central authority . . . . . . . . . . . 29
1.3.3. Non-centralization and game theory . . . . . . . 29
1.3.4. Oracles and decentralization . . . . . . . . . . . . 32
vi Blockchain
Chapter 2. The Dynamics of Disintermediation . . . . . . 37

2.1. Self-execution of smart contracts . . . . . . . . . . . 37
2.1.1. The notion and origins of the smart contract . 37
2.1.2. The functioning of smart contracts. . . . . . . . 38
2.1.3. The reference to the notion of contract . . . . . 39
2.1.4. Smart contracts — a radically
autonomous approach to the contract . . . . . . . . . . 42
2.2. Decentralized Applications (dApps) and
Decentralized Autonomous Organization (DAO) . . . 44
2.2.1. Functioning and characteristics of dApps . . . 44
2.2.2. User access to dApps . . . . . . . . . . . . . . . . . 46
2.2.3. The economy and the monetization
of dApps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.2.4. Decentralized Autonomous Organization . . . 50
2.3. Disintermediation and reduction
of transaction costs . . . . . . . . . . . . . . . . . . . . . . . . 51
2.3.1. Disintermediation by blockchain . . . . . . . . . 52
2.3.2. From control by intermediaries
to control over intermediaries . . . . . . . . . . . . . . . 53
2.3.3. The blockchain and trusted third parties . . . 54
2.3.4. Crypto-asset vectors of disintermediation . . . 55
2.3.5. A potential reduction in transaction costs . . . 56
Chapter 3. Blockchain Prospects and Ongoing

Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.1. Scalability . . . . . . . . . . . . . . . . . . . . . . . . . .. 61
3.2. Blockchain interoperability . . . . . . . . . . . . . .. 62
3.2.1. Atomic swap and Komodo . . . . . . . . . . . . .. 63
3.2.2. Interoperability and partnership between
Hyperledger and Enterprise Ethereum
Alliance (EEA) . . . . . . . . . . . . . . . . . . . . . . . .. 64
3.2.3. ISO and interoperability . . . . . . . . . . . . . .. 64
3.3. The junctions between the blockchain,
the Internet of Things, and artificial intelligence . .. 65
3.3.1. Blockchain and the Internet of Things . . . .. 65
3.3.2. Blockchain and artificial intelligence . . . . .. 69
Contents vii
Part 2. Blockchain Technology for a

New Socio-economic Paradigm . . . . . . . . . . . . . . . . . 73
Introduction to Part 2 . . . . . . . . . . . . . . . . . . . . . . . . 75
Chapter 4. Toward a Social Smart-contract? . . . . . . . . 77

4.1. Disintermediated direct democracy: perspectives
opened by the blockchain . . . . . . . . . . . . . . . . . . . . 77
4.1.1. The terms of the social contract:
centralized representative democracy or
disintermediated direct democracy . . . . . . . . . . . . 77
4.1.2. A path between direct democracy and
representative democracy: liquid democracy . . . . . 80
4.1.3. Political disintermediation through blockchain
and the hypothesis of a social smart-contract . . . . . 82
4.2. Participation, voting, and DAOs . . . . . . . . . . . . 84
4.2.1. DAOs: new ways of participation . . . . . . . . . 84
4.2.2. The Token Curated Registries . . . . . . . . . . . 85
4.3. Registries, administration, and blockchain. . . . . 86
4.3.1. Blockchain and e-Residency in Estonia . . . . . 86
4.3.2. The blockchain and the opening
of public data . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Chapter 5. Proteiform and Multi-sectoral

Transformations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.1. Tokenization of the economy and bartering . ... 91
5.1.1. Progressive evolution of the
monetary approach to crypto-assets . . . . . . . . . . . 91
5.1.2. The typology of crypto-assets . . . . . . . . . . . . 92
5.1.3. Crypto-assets and bartering . . . . . . . . . . . . 93
5.2. Interbank transactions and blockchain . . . . . . . 95
5.2.1. The Banque de France’s MADRE project . . . 98
5.3. Fundraising and ICOs . . . . . . . . . . . . . . . . . . . 99
5.3.1. The concept of ICOs and
other financing methods . . . . . . . . . . . . . . . . . . . 99
5.3.2. The functioning of the ICOs . . . . . . . . . . . . . 100
5.3.3. Regulations still uncertain . . . . . . . . . . . . . 103
5.3.4. Financing social innovation . . . . . . . . . . . . . 104
5.4. Legal and judicial evidence and
timestamping by blockchain . . . . . . . . . . . . . . . . . . 105
viii Blockchain
5.4.1. Method of legal proof by blockchain . . ..... 106

5.4.2. First receipts by the judicial systems . ..... 108
5.5. The renewal of the cadastral system
by the blockchain . . . . . . . . . . . . . . . . . . . . ..... 110
5.5.1. The first experiments . . . . . . . . . . . . ..... 111
5.6. The use of blockchain in the
entertainment industry . . . . . . . . . . . . . . . . ..... 112
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Introduction
The blockchain’s current visibility is due to the intensity

of speculative movement on crypto-assets in recent years,
particularly since 2017. Speculation related to crypto-assets
may appear to be a gregarious phenomenon fueled, in
particular, by the media and by the recent interest shown
by powerful institutions or companies wishing to take
advantage of this technology by implementing it or at least
by discussing it in the wake of this phenomenon. This craze,
which has been greatly amplified in recent months, and the
significant fluctuation in the price of these crypto-assets
have had the effect of restricting the focal length linked to
the blockchain to the speculative bubble.
Nevertheless, the blockchain technology and the first uses

resulting from it deserve real attention, and the paradox lies
in the fact that the main use of this technology is to enable
disintermediated transactions to be carried out and,
therefore, to a certain extent to speculate with great fluidity.
Before studying in detail the uses resulting from the

blockchain, it is necessary to focus on it as a technology, to
include it in its technological historical lineage and also in
its own technical system [GIL 78, GIL 79].
x Blockchain
Blockchain technology is particularly in line with ledgers

on clay, papyrus or paper tablets. The main purpose of the
first forms of writing was to create ledgers. Uruk’s proto-
cuneiform clay tablets, dated to 3400 or 3300 BCE,
traditionally presented as the first traces of writing, are
mainly composed of ledgers, listing livestock, and goods
[GAR 84, KEI 63, LEE 90]. These traces of the use of clay
tablet ledgers have made it possible, for example, for
researchers to conduct studies on the price structure and
evolution of the price of barley in relation to silver in the
neo-Sumerian economy based on the analysis of these tablets
[CRI 17]. One fragment of an ancient ledger shares
structural and functional characteristics with the blockchain
[QUI 17], the Inca Khipu. Khipu is a public ledger in the
form of a necklace composed of knotted strings ordering
information in an encrypted manner, which is difficult to
alter, with, according to recent advances in decoding the
strings [MED 18], specific color codes to add information
after the previously entered code.
Beyond the type of need to which the blockchain

technology structurally responds, this technology belongs to
the field of computing, as a technical system. The word
Bitcoin is also a reference to the bit, an abbreviation of
binary digit, the basic unit of measurement in computing
composed of 0 and 1. The bit referred to in Bitcoin is that of
the SHA-256 data block hash function, designed by the
National Security Agency and used to secure the Bitcoin
protocol by ensuring the validity of the blocks through the
Proof-of-Work (PoW) method or work proof. These hash and
security systems can be fallible. Security breaches in the
SHA-256 system could have destructive consequences for
Bitcoin. In 2005, Chinese researchers at Shandong
University demonstrated that it was possible to bypass the
safety of the predecessor of the SHA-256, the SHA-1, by
causing collisions, i.e. by obtaining the same signature (an
identical hash, i.e. the same bit string) for two different
blocks [WAN 05]. In 2017, Google succeeded, in practice,
Introduction xi
with colossal computing power to achieve a collision with the

SHA-1 system1.
In the same vein, some researchers have been interested

in increasing computing power due to advances in quantum
computers with quantum bits (qubits) on the durability of
Bitcoin’s PoW system [AGG 18]. It should also be noted that
the PoW system has been abandoned by several blockchain
projects, including the Proof of Stake (PoS), such as
Ethereum. The PoS or PoS grants, generally according to a
weighted random draw system, the right to create the next
block to an active validator on the network that has
deposited units of the crypto-currency of this blockchain.
Several blockchain projects, such as the Particl project, study
the techniques to make the blockchains resistant to quantum
computer attacks by enhancing the security of the PoS block
validation method.
Within the technical information system, the blockchain

can be described as a subcategory of the distributed ledger
technology. The specific features of these computerized
ledgers are that they do not have a central administrator
and do not depend on a single storage entity. In order to
ensure the consistency of the stored data, consensus systems
are necessary; as a distributed registry technology, the
blockchain has the specificity of using a consensus system
working with blockchains. The blockchain thus allows the
certification of histories and the validation of flows.
The blockchain technology responds to a need for

recording data and information in ledgers to carry out the
transactions. This technology, the main foundations of which
1 Details of the experience can be found at: https://

security.googleblog.com/2017/02/announcing-first-sha1-collision.
html; and https://shattered.io/.
xii Blockchain
were designed, patented2, and partially [PRE 96] tested in

the 1990s, was popularized with Bitcoin, in practice, from
2009 onward, at a time when consumers were very reluctant
to use their credit card numbers to make purchases on the
Internet, for the fear of being hacked. The seminal article on
Bitcoin published in 2009, entitled “Bitcoin: a Peer-to-Peer
Electronic Cash System” [NAK 09] is, as its title indicates,
focused on the deployment of a peer-to-peer electronic money
system. This article is not a cypherpunk manifesto but a
scientific article in computer science dealing mainly with the
presentation of a security procedure to be put in place for
payments by political signature.
Solutions such as PayPal, a company created in 1998 and

acquired by eBay in 2002, already existed when Bitcoin was
created in 2009. In a debate on the CNBC channel on August
14, 2018, the former President of PayPal, Bill Harris,
described the blockchain and all crypto-currencies as totally
useless, insisting that other technologies were more efficient
in meeting the need for money transfer and that the only
2 See, in particular, Patent of November 14, 1989 (filed July 30,

1987), granted to Ralph C. Merkle for “Digital signature system
and method based on a conventional encryption function”; Patent
of August 4, 1992, granted to Stuart A. Haber and Wakefield S.
Stornetta, Jr. “Digital document timestamping with catenate
certificate”; or Patent of November 25, 1986, granted to Tatsuaki
Okamoto, Shoji Miyaguchi, Akira Shiraishi, and Tsukasa
Kawaoka: “Signed document transmission system”. Patents have a
maximum validity period of 20 years from the filing date, so the
main innovations in encryption, timestamping, and distributed
registry have been in the public domain since the emergence of the
Blockchain ecosystem. It is therefore largely wrong to present the
first innovations in blockchain technology as open source; they
have in fact fallen into the public domain.
Introduction xiii
criterion to be taken into account was the speed of the

network3.
The difference with these technical currency transfer

solutions is that the blockchain, including that of Bitcoin,
because of its technological specificities, is not limited to the
transfer of pre-existing currencies but proposes a new
paradigm that is both non-centralized and distributed. The
blockchain technology is a profound response to the notion of
“paradigm” in the Kuhnian4 sense, in that it brings together
a community of researchers (and entrepreneurs) around a
scientific consensus. Consensus is also a central aspect in the
very development of blockchains, which are generally
participatory, and their code can only be modified if the
majority of the community agrees.
Currently, an ecosystem of transaction and operation

recording solutions is being developed based on these two
main axes of the blockchain, non-centralization and
disintermediation, and could transform uses. The emergence
of the blockchain as a technology is significantly changing
the economic balance of power and the central position
currently occupied by intermediaries (financial, legal,
institutional, editorial, etc.) who are trying to reposition
themselves to preserve their acquired advantages in these
3 B. Harris, former President of PayPal, August 14, 2018, CNBC

[MAS 18]: “I think the problem statement is correct. For instance,
one of the things that [people] who love Bitcoin or XRP [say] is look
at how difficult it is to get money from one country across the
border to another. It’s slow, it’s expensive, it’s all those things.
Agreed. You don’t need Bitcoin. You don’t need XRP. You don’t
need any of those to solve that problem. What you need is faster
networks”.
4 [KUH 83, p. 30]: “Men whose research is based on the same
paradigm adhere to the same rules and norms in scientific
practice. This commitment and the apparent agreement it
produces are necessary prerequisites for normal science, that is, for
the genesis and continuation of a particular tradition of research”.
xiv Blockchain
fields of activity. If this innovation did indeed lead to

important uses [EDG 98], some might interpret it as a new
form5 of technical determinism or at least a decisive element
in disrupting pre-existing power relations. This technology
is, thus, in the process of “socialization”, to use the notion of
the science historian François Russo6 or to use a more
common term, in the process of being adopted by society and
its institutions.
The gradual de-indexing of the currency, of the crypto-

currencies, should transform the way people consume and
invest, with the change in the purchasing behavior
depending on the payment method, as shown by numerous
“pain of paying” studies according to which, for example,
people buy more easily with prepaid cards or bet larger
amounts with casino chips and are willing to pay a higher
price for the same product with a bank card than with cash
[MON 97, RAG 08, SOM 01, VAN 13]. For the moment, no
study has been carried out on the comparative purchasing
behavior with crypto-currencies, which can be explained by
the difficulty in paying them as it stands. However, without
carrying out in-depth studies, the behavior at the ICOs
showed that holders of crypto-currencies invested with great
ease in projects allocating them new tokens; without
drawing hasty conclusions on this point, it could be
interesting to study whether investing with crypto-
currencies limits the risk aversion in relation to foreign
currency investment.
The blockchain represents a new step in Internet-related

transformations with the improvement of encryption, data
sharing systems, and the increase in the computing power of
personal computers. The uses permitted by the advent of the
5 See, for example, [MAR 94].

6 [RUS 86, p. 225]: “By socialization, we mean the process by
which a technical creation is welcomed into society, spreads and
develops within it”.
Introduction xv
blockchain could have a significant societal impact by

significantly reducing the role of “trusted” intermediaries.
Some intermediaries, whose added value was more due to

the strict selective linking from internalized databases than
to the trust inspired, were weakened by the first uses of the
Internet for the general public and then the smartphones.
The role of real estate agents or marriage agencies, for
example, has been greatly weakened with the emergence of
platforms for connecting individuals and then applications
such as swipe and match, i.e. selection on the fly. Some
intermediaries between companies and consumers have also
been weakened or replaced, such as travel agencies or taxi
booking centers.
The place of trusted intermediaries or trusted third

parties could be weakened with the blockchain, one of whose
functions is to massively constitute evidence by replacing
inter-individual trust by systemic trust [LUH 06] or more
specifically by algorithmic trust. In many countries, or more
precisely in many legal systems, intermediaries or trusted
third parties are public institutions, powerful companies at
the heart of ecosystems, and regulated professions (agents,
representatives, lawyers, notaries, financial intermediaries,
institutions for the filing of intellectual property rights, etc.).
Nevertheless, significant acculturation would be

necessary for disintermediated operations by digital proof
via the blockchain to replace, even in part, the operations
carried out on the basis of inter-individual trust or that
granted to certain institutions or professions. A transition
from the written contract to the smart contract, i.e. to the
algorithmic contract operating on a blockchain protocol,
could be even more difficult than the transition from the oral
contract to the written contract. The practice does not
systematically align itself with technical possibilities and
traditions or habits may persist due to cultural and civic
roots.
xvi Blockchain
By reasoning from a Western perspective, where the

written contract plays a central role in interactions,
operations, and transactions and where trust is more closely
linked to the bodies responsible for authenticating deeds or
ensuring their enforceability, the main obstacles to adoption
of the blockchain is that the enforceability of operations is
recognized outside the virtual world.
From an Asian perspective, particularly from a Chinese

perspective, cultural barriers could limit the use of self-
executed smart contracts. Indeed, Chinese society remains
very much attached to the relationship of trust between
individuals, transcribed in particular by the notion of the
Guanxi 关系 (trust network)7. Some Western commentators
have been able to point out this cultural difference at the
stage of contractual formalization and execution of contracts.
For example, a leading American specialist in Chinese law,
Stanley Lubman, pointed out that “Chinese businesses rely
on relationships rather than legal bonds. A contract is worth
only the paper it is written on; the real contract exists in the
minds of the parties and its strength consists in their
relationship and whether they believe they can trust each
other” [LUB 06]. While this position may seem radical, and
while Chinese society is evolving and adopting certain
Western business practices with the country’s openness to
globalization and economic development, the fact remains
that the disintermediation borne by the blockchain may not
be compatible with certain aspects of Chinese business
culture or Maoism, or with the authoritarian and planning
aspects of the socialist market economy.
It therefore seems useful to identify current or potential

changes in use linked to the blockchain and the social,
economic, legal, and administrative resistance that may
arise.
7 See, in particular, [LUO 07, LIU 12, LUB 06, TUC 11, TRA 12],
and [GRE 06].
Introduction xvii
The aim of this book is to discuss the possible uses of the

blockchain technology based on an analysis of two of its
fundamental characteristics, disintermediation and non-
centralization (Part 1) and concrete cases in several sectors
that make it possible to design a new socio-economic
paradigm (Part 2).
Part 1
The Blockchain: a Tool for

Non-centralization and
Disintermediation
Introduction to Part 1
As a secure, non-centralized, peer-to-peer ledger

technology, the blockchain makes it possible to restructure
entire parts of socioeconomic operating modes.
Even if many of the Blockchain projects, including the

Bitcoin project, do obviously seem to be anarchist crypto
projects, a current of thought called cypherpunk developed in
the 1990s in the United States, with the computerization
and advent of the Internet.
Several articles have been published by this group of

cypherpunks, including a Crypto Anarchist Manifesto
written by Timothy C. May, an engineer and cryptographer.
According to this manifesto written in 1988:
“Computer technology is on the verge of providing

the ability for individuals and groups to
communicate and interact with each other in a
totally anonymous manner. Two persons may
exchange messages, conduct business, and
negotiate electronic contracts without ever
knowing the True Name, or legal identity, of the
other. […] The technology for this revolution —
and it surely will be both a social and economic
revolution — has existed in theory for the past
Blockchain: The Advent of Disintermediation, First Edition. Matthieu Quiniou.

© ISTE Ltd 2019. Published by ISTE Ltd and John Wiley & Sons, Inc.
4 Blockchain
decade. The methods are based upon public-key

encryption, zero-knowledge interactive proof
systems, and various software protocols for
interaction, authentication, and verification”
[MAY 88].
Projects such as those by Wei Dai with b-money [DAI 98]

created in 1998 and referred to in the Bitcoin seminal
document [NAK 09, note 1] have attempted to implement
monetary projects based on block mining. One difficulty with
this type of project was to develop a model to generate money
and reward the provision of computing power. For Wei Dai,
computing power is increasing rapidly and its cost cannot
always be identified due to the limited, false, or dated
information available, creating a real problem for the
protocol1. The Bitcoin protocol proposes to solve this problem
of counterpart to computing power by an incentive system
based on the issuing of new crypto-assets and transaction
fees.
Since the creation of the Bitcoin protocol in 2009, the

blockchain technology has already undergone several phases
of evolution. Initially, the blockchain with Bitcoin mainly
allowed a timestamping mechanism for non-centralized
transactions using a peer-to-peer network and it was only
with the appearance of the second generation of blockchain,
focused on the deployment of smart contracts, such as the
Ethereum blockchain created in 2014 [BUT 13], that the
prospects for disintermediation were really felt. Currently,
the projects, referred to by some as third-generation
1 [DAI 98]: “One of the more problematic parts in the b-money

protocol is money creation. This part of the protocol requires that
all of the account keepers decide and agree on the cost of particular
computations. Unfortunately, because computing technology tends
to advance rapidly and not always publicly, this information may
be unavailable, inaccurate, or outdated, all of which would cause
serious problems for the protocol”.
Introduction to Part 1 5
blockchain projects, focus on scalability, interoperability

between blockchains and the implementation of machine
learning elements within decision-making processes.
The main characteristics of the blockchain and the

resulting changes in uses will be discussed in this section,
focusing the analysis on non-centralization (Chapter 1),
disintermediation (Chapter 2), and prospects for the
evolution and improvement of the blockchain (Chapter 3).
1
Non-centralized Architecture
The blockchain and the distributed registry technology

allow us to solve the problem of certification of the
transaction chain, without using a centralized system, to a
trusted third party.
The term “decentralized”, frequently used to refer to the

blockchain or its applications, does not seem entirely
appropriate to refer to the blockchain architecture. Indeed,
decentralization is a movement from the center to sub-
entities. In political science, for example, decentralization is
a process by which entities, generally local, are given their
own powers previously held by a central power, unlike
deconcentration, a process by which the central power
delegates powers at the local level to its representatives.
The blockchain architecture is not decentralized; it is part

ab initio of parallel centralized or partially decentralized
models, so the terms “distributed” or “non-centralized” seem
more appropriate. The term “non-centralized” was preferred
for this book because it explicitly marks an alternative to a
centralized model and avoids a debate that has no place in
this book between decentralized and distributed systems.
This typology, which is very frequently used not only on

blogs [EAG 17] but also in books on the blockchain [RAV 16],

8 Blockchain
is generally associated with a diagram that presents the

difference between centralization, decentralization, and
distribution, based on a book by Paul Baran on distributed
systems [BAR 62].
Figure 1.1. Paul Baran’s distributed system typology. Source: [BAR 62, p. 4]
The diagram depicting centralization shows only one

central point, the decentralization diagram shows a central
point and several central sub-points, and the diagram on
distribution shows one distribution mode among others, with
a connection between the nearest nodes only (see Figure 1.1).
Non-centralized Architecture 9
This schema is, wrongly, regularly used to present the

blockchain as a decentralized model and to contrast the
blockchain with distributed registers (of which the Bitcoin
blockchain, for example, is a sub-category). The authors,
using this schema to demonstrate that blockchains are
decentralized and not distributed generally, later indicate
that what makes the strength of a decentralized system
compared to a centralized system is that there is no central
point and that if a node fails the system persists1. Based on
this schema (and on the concept of decentralization in
general), this approach is wrong; there is indeed a central
point and if it is missing, the system no longer works.
Figure 1.2. Decentralized system. For a color version of this figure,

see www.iste.co.uk/quiniou/blockchain.zip
To repeat this diagram, the centralization point is

surrounded; if it is faulty, none of the central sub-points are
connected anymore.
1 See, for example, [RAV 16, p. 3]: “Bitcoin […]. It is also

decentralized because if one node fails, the network is still able to
operate”.
10 Blockchain
It should be noted that the use of the notion of

decentralization in the blockchain ecosystem has become
widespread with Ethereum and smart contracts. For
example, the Bitcoin seminal document did not refer to it
and used the notions of peer-to-peer and lack of central
authority, which is fundamentally different [NAK 09].
Vitalik Buterin, the founder of Ethereum, also indicated on
his blog that there was confusion about the use of the notion
of decentralization in the blockchain ecosystem and that the
above-mentioned schema was “unfortunately too widespread”
[BUT 17].
Blockchain networks, such as Bitcoin, are actually

designed according to a particular form of distributed
architecture, a peer-to-peer architecture, which could be
transcribed by the diagram below. It is this network
architecture, in which all nodes theoretically have a copy of
the registry and participate in consensus, which is referred
to in this book as the “non-centralized” architecture. All
points or nodes are connected or potentially connectable to
each other directly.
Figure 1.3. Non-centralized egalitarian system

Nevertheless, certain trends, such as the development of

private blockchains, the concentration by certain groups or
miners’ pools of the computing power used to generate
consensus, or the concentration of crypto-assets in a few
portfolios, raise questions about the maintenance, in
practice, of the non-centralization of certain blockchains.
A schema that more accurately transcribes a blockchain

network could, therefore, be as follows:
Figure 1.4. A non-centralized system with variable and multi-level weighting.

For a color version of this figure, see www.iste.co.uk/quiniou/blockchain.zip
While certified timestamping of transactions and

operations represents the initial and main use of the
blockchain technology (section 1.1), these non-centralized
ledgers also combine encryption and verifiability, anonymity
and transparency (section 1.2) in a new way. Some usage
implications can be discussed on the basis of this non-
centralized architecture and its primary characteristics
(section 1.3).
1.1. Certified timestamping of transactions, operations, and

events in a non-centralized registry
The primary use of the Bitcoin protocol is to allow the

bitcoin to be transferred from one portfolio to another or,
12 Blockchain
more accurately, from one key address to another, as well as

to allow timestamping and certification of the transaction
from the storage based on a distributed network.
A distributed registry or blockchain is based on a peer-to-

peer network and a consensus algorithm that allows the
duplication of the content stored and validated on the
different nodes of the network.
1.1.1. The network of nodes: the peer-to-peer architecture
Nodes are connection points to the distributed network,

nodes are peers, and nodes are equal connection points. In
the Bitcoin network, full nodes download blocks and
transactions and validate or invalidate them according to
Bitcoin rules.
In the Bitcoin seminal document, the operation of the

Bitcoin network is presented as being based on these nodes:
The steps to run the network are as follows:

1. New transactions are broadcast to all nodes;
2. Each node collects new transactions into a block;
3. Each node works on finding a difficult proof of work
for its block;
4. When a node finds a proof of work, it broadcasts the
block to all nodes;
5. Nodes accept the block only if all transactions in it are
valid and not yet spent;
6. Nodes express their acceptance of the block by
working on creating the next block in the chain, using
the hash of the accepted block as the previous hash.
With the increase in computing power required for the

proof of work, mining pools have been formed with an entity
operating as an administrator of the complete node and third

parties assigning their computing power to this node.
It is these peer nodes and their common functioning that

make the architecture of blockchains non-centralized.
1.1.2. The timestamping system
A timestamping system allows the Bitcoin proof-of-work

system to operate and adjust the difficulty of mining the
blocks.
Figure 1.5 represents, in the Bitcoin founding document,

the block aggregation and timestamping system in the
Bitcoin network:
Figure 1.5. Bitcoin timestamping system. Source: [NAK 09, p. 2]
Mined blocks are timestamped and then published within

these networks of non-centralized blockchain nodes, such as
the Bitcoin blockchain. During mining, the miner’s computer
tool (mining rig) indicates the time at which the mining of
the block begins. This time is expressed in Unix time, i.e. in
seconds, since January 1, 1970.
This timestamping is at the heart of the proof-of-work

system. If the computer clock is dysfunctional or deliberately
incorrectly set, the block will be rejected beyond a certain
margin of error. The block date must be greater than the
median of the last 11 validated blocks and less than the
14 Blockchain
adjusted date from the node network plus 2 h. The

time-stamping system of the Bitcoin blockchain is based
on non-centralization of the network. Therefore, the
timestamping of the Bitcoin protocol is only approximate and
works by reinforcement, relying on previous block time-
stamps and verification by the node network.
Mathematical researchers have verified, based on the

history of the blocks of the Bitcoin blockchain, whether this
precaution was necessary and have identified that out of
500,000 mined blocks up to November 2017, 13,618 blocks
had dates earlier than the previous block and 1,000 of these
blocks had an earlier date of more than 10 min [BOW 18].
The main objective of this timestamping system is to

check the integrity of the mined blocks and adjust the
difficulty of calculation. However, this timestamping system,
despite its approximate nature, may have other uses and
may make it possible, for example, to prove a prior art in a
transaction or operation.
1.1.3. Recording of transactions and other operations
The Bitcoin blockchain is a transaction-oriented registry

like a general ledger. The Bitcoin blockchain is not, as such,
designed to store data other than that required for
transactions; nevertheless, a text box has been provided for
each block, which is the coinbase text (not related to the
Coinbase exchange platform).
For example, it is in the text cornerbase of the initial block

(genesis block) that the founder of Bitcoin inserted a reference
to an article in The Times: “The Times 03/Jan/2009
Chancellor on brink of second bailout for banks”, to date it, i.e.
to prove that this initial block was not prior to the date of this
article (and that there was, therefore, no pre-mining) and,
according to some commentators, to include Bitcoin in the line
of cypherpunks or in opposition to the financial world.
The coinbase text is defined by the miner who discovers

the block. However, since a consensus between miners2,
known as “BIP: 34”, this text-based corner must contain the
size of the block. It is no longer possible for a miner, wishing
to have their block validated and integrated into the
blockchain, to insert only the text of their choice3.
The coinbase text is not the only way to integrate text or

other data into the Bitcoin blockchain. It is also possible, at
least for the moment, to code the text as false public keys and
pay transaction fees. Since the recipient key is not valid, the
transaction will be considered as an Unspent Transaction
Output (UTXO) and stored in the block that will then be
validated. There are other methods to record data in the
Bitcoin blockchain, such as the OP_RETURN or Data Hash
w/ Sig method. These have their advantages and
disadvantages, particularly in terms of available storage size
and decryption mode [SWA 17].
The OP_RETURN method is a meta-protocol of the

Bitcoin protocol dating from February 2014, making it
possible to name Bitcoin fractions. The objective of the
OP_RETURN method was to replace the other methods,
which were considered inadequate. Initially, it was possible
to store 80 bytes per OP_RETURN, then the storage capacity
was reduced to 40 bytes before being reduced to 80 bytes and
then to 220 bytes in 2018. This practice is referred to as
coloration, and these Bitcoin fractions are called “colored
coins”. This method allows the designation of fractions of
Bitcoin held to be changed to, for example, associate them
with an interest in property. A fraction of Bitcoin can, thus,
2 In summary, for a consensus to be reached between miners on

the Bitcoin blockchain, a minimum number of miners must apply
the rule so that it is established; thereafter, blocks that do not
follow the rule are considered invalid and the miner does not
receive the reward linked to the block.
3 https://github.com/bitcoin/bips/blob/master/bip-0034.mediawiki.
16 Blockchain
be colored to be a software license, a reproduction right of

a work, a property right on a computer, or shares of
companies. Specific portfolios are required to interpret and
read the number of colored corners associated with an
address.
In the Ethereum ecosystem, there is also a system of

coloring or designation — it is the creation of tokens. But
beyond the creation of tokens, i.e. in a way the coloring of the
Ether, it is possible on the Ethereum blockchain to execute
basic programs, called smart contracts. These smart
contracts make it possible, for example, to govern an
organization operating with tokens with voting rights or to
set the rules for raising funds in Ether, known as Initial
Coin Offering (ICO), by setting, for example, a financing
ceiling, a token/Ether ratio, and a financing campaign
duration. These blockchain features go beyond the strict
timestamping of transactions.
Neither Bitcoin nor Ethereum was designed to be general

storage systems. The records made correspond in principle to
traces of transactions or operations. Other projects, such as
Storj, have this general storage objective and are looking to
develop distributed cloud computing services. Storj is
described in its white paper as a “protocol that creates a
distributed network for the formation and execution of
storage contracts between peers” [WIL 16]. To ensure the
confidentiality of data stored with a peer, the data are
encrypted before being transferred to the peer performing
the storage. Thereafter, a proof of recoverability system can
be activated by the person who made the deposit to ensure
that his or her data are still stored.
Figure. 1.6 shows how the Storj system ensures that data,
documents, and files are encrypted before they are
communicated to the network.
Figure 1.6. Storj encryption system. Source: [WIL 16, p. 3]. For a color version
of this figure, see www.iste.co.uk/quiniou/blockchain.zip
Non-centralized Architecture
17
18 Blockchain
The stated objective of non-centralized cloud computing

projects, such as Storj, is to provide a solution that avoids
dependence on high-cost storage companies and reduces the
risk of unwanted data access. Storj acts as a storage
intermediary between private individuals.
While the blockchain has an overall disintermediation

effect for many activities (see Chapter 2), it also creates new
forms of intermediation, as in the case of Storj.
1.2. Encryption, anonymity, transparency, and verifiability

in a non-centralized network
The objective of many blockchains, starting with the

Bitcoin blockchain, is to allow both user anonymity and
transparency of operations. These two objectives may seem
a priori intrinsically opposed but are in fact perfectly
compatible. The concept allowing the junction between these
two objectives is Zero Knowledge Proof4.
This method of proof with zero disclosure of knowledge

makes it possible to preserve confidentiality on certain
information (civil status, business secrets, sensitive
information, etc.) while proving a status, characteristics,
property title, or even possession. From the point of view of
the preservation of personal data or the protection of trade
secrets, this method is particularly appropriate and effective.
This explains why the first uses of the blockchain were
deployed on the darknet for illegal transactions (drugs,
weapons, etc.).
However, it is questionable whether this approach to user

anonymity and transparency of operations adopted by public
blockchains is compatible with regulations, particularly
European regulations, on the protection of personal data and
transparency.
4 See, in particular, [BAN 16a] and [MIE 13].

The comparative diagram of the Bitcoin founding

document presents the fundamental difference between the
traditional approach to transparency and personal data
protection (referred to in the Traditional Privacy Model
schema) and the approach adopted for the Bitcoin blockchain
(referred to in the New Privacy Model schema).
Figure 1.7. Privacy Model schemas. Source: [NAK 09, p. 6]

20 Blockchain
1.2.1. A unique approach to transparency
Transparency as currently conceived in law is

transparency aimed at combating money laundering and the
financing of illegal activities, mainly terrorism. In the
European Union, the law applicable in this area has been
largely harmonized by a 2015 directive5, partially
transposed, for example, into French law by the Sapin 2 law
of November 8, 2016, and by Order No. 2016-134 of
December 1, 2016.
These rules require financial institutions to collect

information and verify the identity of customers; this
compliance procedure generally takes the shape of forms,
often referred to as Know Your Customer (KYC). The concept
of transparency resulting from regulation is therefore
focused on knowing the origin of funds and the identification
of clients and intermediaries.
The issue of transparency is central to the blockchain

protocols, but it is the transparency that is useful for user
interaction and not the transparency that is useful for
oversight bodies. The concept of dominant transparency in
non-centralized systems is radically opposed to that
defended by regulators. The transparency implemented in
the majority of blockchains is the transparency of ledgers,
allowing the reality of transactions to be verified. The
objective is to be transparent on the running and existence of
operations, and to be opaque on the origins of funds, the
reasons for operations and the beneficial owners.
This structural incompatibility of the blockchain with the

transparency rules of financial regulatory authorities
explains the difficulties encountered with banks and the
5 Directive 2015/849/EU on the prevention of the use of the

financial system for the purpose of money laundering or terrorist
financing.
compliance efforts made by cryptocurrency exchange sites

and ICO initiators, raising funds in cryptocurrencies. Indeed,
banking and financial transactions are highly regulated and
are based, in particular, on the identification and protection
of consumers or non-professional investors.
ICO initiators who need to identify themselves in order to

be credible to potential investors are aware that they must
comply with some of the regulators’ rules in order to be able
to effectively convert the crypto-assets of their fundraising
into foreign currency.
The same applies to most cryptocurrency exchange sites or

at least those that offer the possibility of performing currency
conversion operations and transfers to and from bank
accounts. Exchange sites that have made compliance efforts,
such as the deployment of customer information forms (KYC)
and bank accounts to carry out their activities, have a
competitive advantage over other exchange sites that only
allow the exchange of crypto-assets for other crypto-assets.
The dollar-indexed crypto-asset Tether (USDT) is designed to
limit the effects of the difficulty in accessing the traditional
banking system for certain trading platforms. According to
Tether’s white paper, the company would hold as many
dollars in reserve as there are Tethers available on the
market6. Authorities, particularly in the United States, such
as the Commodity Futures Trading Commission, regularly
conduct investigations to verify the reality of this reservation.
1.2.2. An advanced form of privacy by design
Regulation on the protection of personal data has been

strengthened at the global level, particularly in the
6 Tether: fiat currencies on the Bitcoin blockchain, “At any given

time, the balance of fiat currency held in our reserves will be equal
to (or greater than) the number of tethers in circulation,” p. 4,
https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf.
22 Blockchain
European Union, which is responsible for a universalist

regulatory dynamic. The General Data Protection
Regulations (GDPR)7 came into force in 2018. These
regulations reinforce the obligations placed on entities
collecting and processing personal data, in particular, with
regard to the collection of informed consent from data
subjects, and make them responsible by requiring them to
set up technical and organizational mechanisms to ensure
compliance8 and by introducing dissuasive sanctions9.
Anonymization and, to a lesser extent, pseudonymization

of personal data, i.e. preventing identification of the person
whose data are being processed10, and privacy by default and
design, i.e. collection methods structurally designed to
respect the privacy of users11 are effective methods of
protecting personal data implemented by this regulation and
converging with the blockchain approach.
Indeed, public blockchains, particularly the Bitcoin

blockchain, are structurally designed as devices allowing
anonymous transactions between peers. Blockchains are
generally intended to provide users with evidence with no
disclosure of knowledge.
The encryption of asymmetric keys, i.e. the combination of

private and public keys, is the central criterion for the
anonymization of blockchain users. In the Bitcoin
7 Regulation (EU) 2016/679 of the European Parliament and the

Council of April 27, 2016, on the protection of individuals with
regard to the processing of personal data and on the free
movement of such data and repealing Directive 95/46/EC (General
Data Protection Regulation).
8 Id Art. 24. Id.
9 Art. 83: in some cases, up to 20,000,000 euros or, in the case of a
company, up to 4% of worldwide annual turnover.
10 Id. Art. 4.
11 Id. Art. 25.
blockchain, the signature system works with a private key, a

public key, and a Bitcoin address.
The private key is randomly generated and corresponds to

a 256-bit number; therefore, there are two different 256
different private key possibilities, which makes the creation
of duplicates of private keys unlikely, despite the lack of any
centralized key allocation and makes it particularly difficult
to identify a randomly generated private key.
From the private key, it is possible to calculate the 256-bit

public key using the elliptical curve secp256k112, but the
opposite is not possible in its current state. From the public
key, it is possible to generate a Bitcoin address from the
hash functions SHA-256 and RIPE®-160 and then from a
base58check encoding, making decryption of the address
particularly complex.
However, despite this encryption, the function of which is

to make it impossible to identify the private key, the
transactions carried out from different addresses appear and
it is possible to draw up a history for the same Bitcoin
address (or Ethereum, for example)13, using blockchain
history browsers.
In addition, the uses of the Blockchain ecosystem mean

that many players, such as trading platforms or ICO
platforms, ask users to fill in personal information in a
customer information form (KYC) with their Bitcoin or
Ethereum address, which makes it possible to link the two
elements and, thus, to know the history of transactions made
by a person identified from his or her address.
In addition, as mentioned earlier, it is possible to

integrate messages into the Bitcoin blockchain, in particular
12 See, in particular, [BRO 10].

13 See, for example, https://www.blockchain.com/fr/explorer or
https://etherscan.io/.
24 Blockchain
via the coinbase text or the OP_RETURN function, and some

blockchains, such as Storj, are designed as distributed cloud
computing services. Thus, it is possible to store data,
including personal data, on the blockchain. However, one
characteristic of the blockchain makes it difficult to make it
compatible, despite the encryption of data, with the
regulatory provisions on the protection of personal data,
namely, the irreversibility of the blockchain. Indeed, when
the data are integrated into a block, and if this block is
validated, the data are in principle associated with the
blockchain, as long as the latter works and the personal data
cannot be deleted.
The only solution would be to make a hard fork, which

incorporates significant protocol modifications of a pre-
existing blockchain with rules that are not backward-
compatible. Hard forks are generally designed to fix major
bugs or limit the effects of hacking by retroactively erasing
suspicious transactions in extreme cases14, but such a
solution does not seem feasible for only deleting personal
data stored on a blockchain.
This irreversibility of the blockchain contradicts the right

to withdraw from Article 16 of the GDPR15 and the right to
delete Article 17 of the same text16. Note that the creators of
14 A list of all the forks carried out or to come can be consulted on

the website http://forks.net/list. Some forks give rise to the
allocation of the crypto-asset to the holders of several crypto-asset,
which is the case, for example, with the Bitcoin Private (BTCP)
and has been allocated to both Bitcoin (BTC) and Zclassic (ZCL)
holders.
15 Regulation (EU) 2016/679 of the European Parliament and the
Council of April 27, 2016, on the protection of individuals with
regard to the processing of personal data and on the free
movement of such data and repealing Directive 95/46/EC (General
Data Protection Regulation), Article 16.
16 Id. Art. 17.
the blockchain are not the controllers; the controller is the

person who requested the integration of this data into a
block. The only sub-contractor is, virtually, the miner who
acts as a validator host.
As for the entity who has created and deployed the public
blockchain, but not designed it for such use and who has no
power to edit, transform, or even delete the blockchain, their
responsibility should not be engaged except after extensive
reading of the regulatory texts. To hold a public blockchain
creator liable in such a context would be like holding
Microsoft liable for any database inserted in an Excel file.
This could be different for private blockchains, where the
nodes are controlled by the same entity or at least by a
consortium composed of identified entities, generally linked
together by convention.
There are also blockchains with reinforced secrecy

protection protocols such as Zcash, Bitcoin Private, Monero,
and Komodo.
Some of these protocols aim to ensure a maximum level of

anonymity even to the detriment of the possibility of proving
a transaction, such as Monero, a blockchain created in 2014
and based on the CryptoNote protocol using a ring signature
system, making it possible for network nodes to prove the
signature but impossible for them to identify the key used to
sign it, the signature having been made by a set of keys and
not just one [FUJ 07]. Monero is also based on a system of
so-called stealth addresses, for single use.
Created in 2016, Zcash differs from Monero’s model and is

based on a system called the Zero-Knowledge Succinct Non-
Interactive Argument of Knowledge, or zk-SNARK. Its
objective is to allow anonymity through a zero disclosure
proof system. Zcash offers users of its blockchain the option
to make their transactions anonymous. These protected
operations are called shielded. The Zcash team intends to
26 Blockchain
deploy other zk-SNARK applicators to generate evidence for

complex operations17.
1.2.3. Blockchain and protection of trade secrets
Public blockchains operating on zero knowledge disclosure

evidence systems, such as Zcash, could in medium term
represent powerful vectors for the protection of technical and
operational secrets.
The protection of information and knowledge by secrecy

has always existed in practice and traces of the protection of
these secrets by law can be identified in Roman law in the
context of actions brought against slaves who revealed their
master’s secrets in return for money [SCH 30]. Nevertheless,
until recently, regulations on the protection of secret
information were mainly focused on the protection of state
secrets. In terms of protecting secret technical or commercial
information held by companies or individuals, American
regulations had a pioneering and international promoting
role. The key regulation in the United States is the Uniform
Trade Secrets Act (UTSA), which dates back to 1979 and
influenced, in particular, the provisions of the 1995
Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS-WTO), which aimed in particular to
generalize the protection of undisclosed information18 within
WTO (World Trade Organization) Member States from a
global trade perspective.
The value of certain technical or commercial information

kept secret may be significant, and transactions involving it
directly (assignment and licensing of patents or technology
transfer) or indirectly (franchise, joint venture, or takeover of
a company) may be difficult to achieve because of the balance
17 https://z.cash/technology/zksnarks.html.
18 ADPIC, Section 7 (Article 39): Protection of Undisclosed
Information.
to be struck at the negotiation stage between disclosing

elements of secrecy for its economic value and preserving
secrecy in the event of failure of the negotiations [QUI 15].
In the European Union, regulations on the protection of

secret knowledge were quite disparate and often implicitly
integrated into protection against unfair competition, until
the EU Directive 2016/943 of the European Parliament and
of the Council of June 8, 2016, on the protection of
undisclosed know-how and commercial information (trade
secrets) against unlawful acquisition, use, and disclosure.
Article 2 of this Directive defines the concept of business
secrecy as follows:
“‘Business secret’ means information that meets

all of the following conditions:
— they are secret in the sense that, in their

entirety or in the exact configuration and
assembly of their components, they are not
generally known or easily accessible to persons
belonging to the circles that normally deal with
the type of information in question;
— they have commercial value because they are

secret;
— they have been subject to reasonable steps,

regarding the circumstances, by the person
lawfully in control of them to keep them secret”.
One of the peculiarities of the knowledge trade is the

difficulty of proving ownership, possession [PAR 08, PEL 01,
p. 290] or ownership of knowledge [BIN 17, p. 82]. The
“reasonable provisions […] designed to keep it secret” to
which the Directive refers in the definition of trade secrets is
a crucial point in the protection, enhancement, and trade of
secret knowledge. This approach echoes the approach of law
and economics economists and, for example, Ejan Mackaay’s
28 Blockchain
work advocating the protection and recognition of a right to

trade secrets through the use of available legal and technical
mechanisms, referring to the very pragmatic notion of
creating one’s own barriers: “build/mind your own fence”19.
Blockchain, particularly blockchains with enhanced

confidentiality, is a first-rate technique for enforcing rights
over secret knowledge. Zero disclosure evidence and
encryption are very useful tools for operations involving
secret knowledge. It is, thus, possible with these technologies
to create within the same organization or inter-organization
levels of knowledge classification and access levels or to
prove the possession (exclusive or not) of knowledge without
disclosing its exact substance.
Nevertheless, the implementation of devices involving

secret knowledge with high added value in a blockchain
would require complex specific developments. As it stands,
the main use of blockchain for trade secrets concerns the
timestamping and encryption of trade secrets, in the same
way as a Soleau envelope, a French instrument proposed by
the National Institute of Industrial Property to prove a prior
art while keeping its contents secret.
1.3. The implications of a non-centralized model
The non-centralized model of the blockchain is based on a

nodal architecture, with encryption and timestamping
functions. The blockchain structurally allows the members of
this distributed network to interact in a complex way
19 [MAC 99, p. 257]: “The logic of ‘build/mind your own fence’ is

historically apparent, I submit, in property rights in land and
other assets. It also appears to be part of the traditional trade
secret law. If you seek remedies against a violator of your trade
secret, you will have to show that you took the proper steps to keep
the knowledge in question confidential. […] The law merely
supplements your efforts at creating your own fence”.
without having recourse to a central administration, a

service, or sales platform on the Internet or any entity with
legal or de facto authority or power. This non-centralized
model allows many operations to be disintermediated.
1.3.1. Limiting the risk of data loss
Due to its network architecture of nodes, peers, recording,

and replicating the ledger, the risk of data loss due to failure
or hacking is lower in a blockchain than in a centralized
system based on multiple backups. For example, some
registry holders are not connected at the time of a blockchain
attack, and the multiplicity of user configurations makes it
even more complex to carry out a global attack on a
blockchain network. The consensus mechanisms already
mentioned also promote data integrity and availability.
1.3.2. The lack of a central authority
As previously indicated, the blockchain model can be

termed as non-centralized rather than decentralized, since
the blockchain does not result from a prior centralized model
but is inscribed ab initio in parallel with it. Decentralization
is generally reversible because the central authority only
renounces it if it is specifically forced to exercise a power
that it is not in a position to reclaim or, more generally, to
reinterpret as falling within its field of competence. The
central authority loses its status as a central authority only
if it renounces the competence to determine the extent of its
competence (also known as the Competence-Competence
principle or Kompetenz-Kompetenz).
1.3.3. Non-centralization and game theory
Blockchains are not based on a central or even partially

decentralized authority but on a distributed system with
30 Blockchain
weighted votes allowing positions to be taken to ensure the

integrity of the blockchain and implement consensual
improvements. In many ways, blockchains use game theory
[VON 44], including John Nash’s contribution to non-
cooperative games [NAS 51], and the theory of incentive
mechanisms [HUR 73], mainly for block validation
algorithms and consensus.
With centralized registers, the central entity has, at least

virtually, all the power to alter the content of the ledger in
order to take advantage of it, which justifies the use of this
type of register by individuals, mainly because of the
authority exercised, the de jure or de facto monopoly or trust
in the central actor.
With decentralized ledgers, such as blockchains, their use

is explained in particular by the transparency and absence of
errors in the register, due to the fact that actors with a
validator role are encouraged not to compromise the protocol.
Many researchers in mathematics and logic are beginning

to take an interest in game theory in the field of consensus
building within blockchains20. For example, in the proof-of-
work blocks, the “game” is designed in such a way that the
miner designated to validate a block has no interest in trying
to corrupt the blockchain by adding an invalid block. If the
proof-of-work model corresponds to an incentive device for
miners to create a block to obtain a reward, this incentive is
coupled with a deterrent device to corrupt this block, the
reward not being awarded or, more accurately, awarded on
an alternative channel, which will be declared as invalid by
the consensus of the miners, the latter having an individual
interest in validating the authentic, uncorrupted channel.
These models for predicting and orienting the behavior of

rational actors, particularly in the application of game
20 See, for example, [EYA 18, STO 18, KIA 16].

theory, are useful in a decentralized context but demonstrate

their limitations when confronted with complex and evolving
realities. Thus, in a model such as the Bitcoin blockchain, in
the event that a group of miners holds more than 51% of the
computing power due, for example, to centralization induced
by heterogeneous electricity costs, the incentives inherent in
proof of work may not be sufficient to preserve the integrity
of the blockchain.
Incentive models are also the basis of Token Curated

Registries (TCR). These token-based registers are designed
to develop quality lists based on collective intelligence built
on opinions expressed by people who are encouraged to build
an informed and sincere opinion. This encouragement to give
an informed and sincere opinion takes the form of a bet that
an opinion will be that of the majority of the opinions
expressed: to give an opinion, tokens must be bet, and if the
opinion expressed is the one ultimately retained by the
majority, a reward is granted from the tokens bet by those
who have expressed a different opinion to the majority21.
In this context of TCRs, if the participants’ behavior is

indeed guided by the incentive given to them, a rational
actor will not seek to express their opinion but to express
their opinion of the general opinion or of the majority view of
the general opinion, which is still different22.
Moreover, this mechanism does not prevent people from

investing massively in the least likely outcome to win the
tokens bet by rational participants who have expressed their
opinion on the general opinion. This strategy can also be
guided by a party with an interest other than obtaining the
tokens obtained at the end of the vote, such as, for example,
the indexing of one of his company’s services in the register,
21 See, in particular, [SPA 18].

22 In psychology or behavioral economics, demonstrations linked to
beauty competitors: [MOU 79, MOU 86, HO 98, NAG 99].
32 Blockchain
or the non-indexing of a competitor. This diversion strategy

can be mitigated by allowing new votes to be triggered and
by freezing the withdrawal of the tokens invested for a
certain period. Indeed, it should be noted that since the
value of the token is intrinsically linked to the quality of the
register, if such behavior is detected on a register, the value
of the token is likely to fall enough to destroy the potential
gain and even part of the investment, before any conversion
of the token, particularly if the investment or gain in token
is frozen for a period of time.
1.3.4. Oracles and decentralization
There are several types of oracles and projects in this

field, software oracles operating from certified sources on the
Internet, hardware oracles operating with data collected by
connected objects with sensors and declarative oracles
operating with consensus rules [RAB 17]. In these different
cases, the receiving blockchain must set up a mechanism (or
game) to encourage entities to transmit correct information,
through a reward and a system of validation by other
entities within the framework of a consensus, for example. In
this field, there are many projects such as Oraclize or Augur.
In the case of Oraclize, it is a solution that works with

smart contracts from different blockchains (Ethereum, EOS,
etc.) and allows requests to be made using TLSNotary, a
system for auditing data and web browsing information (in
https sessions) that works with a specific browser extension
called PageSigner proving that data from the server have
actually been received.
In the case of the Augur project, the Oracle system is

particularly ambitious, since it makes it possible both to
deeply decentralize the betting system and to deploy a
predictive system based on collective intelligence, taking into
account in particular the betting rates. In such a system, the
incentive to give a sincere opinion is the expected gain from

the bets made, which is intended to guarantee, to some
extent23, honest participation in collective intelligence.
Figure 1.8. Oraclize ecosystem. Source: http://www.oraclize.it/
The Augur project is of real interest, but its

implementation is likely to encounter legal obstacles that are
difficult to overcome. In many countries, betting, especially
online betting, is highly regulated, the type of bets available
is very limited (sports betting and poker) and bets can only
be placed by authorized operators. In France, for example,
until recently, betting could only be offered by entities
23 If a system like Augur is indeed deployed on a sufficient scale,

some entities wishing to certify their potential on purpose
(communication, credibility with investors, lenders, insurers, etc.)
could try to bias this system by betting massively for a favorable
projection. Such a bias could even have a Pygmalion effect, a self-
fulfilling prophecy, if a system like Augur is adopted on a massive
scale.
34 Blockchain
benefiting from a state monopoly (Française des Jeux and

Paris Mutuel Urbain). Since the opening to competition24 in
2010, the regulatory authority has only approved about 10
operators. Other legal systems, often based on common law,
are more flexible in terms of betting and some countries have
also pursued a policy very favorable to this type of activity
for reasons of economic attractiveness, as is the case, for
example, in Malta and Gibraltar.
Beyond the limitation of authorized operators, attention

should be paid to the types of betting that can be offered in
a decentralized peer-to-peer system. One of the important
reasons in many legal systems for limiting betting to
sporting events is the absence of a significant impact of the
outcome of such events on society in general and, therefore,
of a rigged bet.
In a way, a transaction on a stock market can be

assimilated for the investor to a bet on the future of the
company or more precisely to a bet on the perception of the
company’s value in the future. In this field, which is less
insignificant than sport, national regulations are generally
very strict and punish market abuse. In France, Act No.
2016-819 of June 21, 2016, transposing European Directive
2014/57 of April 16, 2014, governs criminal sanctions for
market abuse, including insider trading, price manipulation,
and the dissemination of false information. In addition to the
criminal aspect, the competence of the National Financial
Prosecutor’s Office, a specifically competent administrative
authority, the Financial Markets Authority, has numerous
enforcement powers, an extended right to information (in
particular, in the event of a threshold being crossed) and may
hinder or impose conditions on certain transactions planned
by market participants. The main objective of this regulation
is to create confidence in the financial markets and to make
24 Act No. 2010-476 of May 12, 2010, on the opening to

competition and regulation of the online gambling sector.
this method of financing more fluid with the public, thus

reassuring investors against behavior that distorts the result.
A decentralized, anonymous, and unregulated betting

system in important areas of society could have deleterious
effects. By making it possible to bet on an election, clinical
test results, or someone’s death in such conditions, this
system could have many perverse and particularly
dangerous effects. Such a system would also be harmful
overall in terms of overall social performance because the
easiest way to win a bet is for a protagonist to bet on their
loss. However, betting mechanisms limited to certain areas
could be implemented in a blockchain with less significant
consequences.
With its decentralized architecture, the blockchain is a

technology that shifts the control modalities of actors with a
de jure or de facto monopoly to a neutral system that
responds to pre-defined and transparent rules that can
evolve according to the consensus of stakeholders. This
observation makes blockchain a powerful vector for
disintermediation.
2
The Dynamics of Disintermediation
The disintermediation dynamics linked to the blockchain,

beyond the strictly monetary domain, were only really
perceptible and envisaged with the appearance of the second
generation of the blockchain carried from 2014 by Ethereum
with the generalization of smart contracts.
Smart contracts, pieces of code recorded on the

blockchain, are used to set up conditions and rules of
interaction (section 2.1) and serve as a basis for creating
Decentralized Applications (dApps) using several smart
contracts and generally equipped with user interfaces
(section 2.2). These smart contracts, integrated into the
blockchain ledger and operating from the data recorded
therein, act as vectors for disintermediation and, therefore,
for reducing transaction costs (section 2.3).
2.1. Self-execution of smart contracts
2.1.1. The notion and origins of the smart contract
The notion of the smart contract could be defined as a set

of contractual clauses transcribed in the form of a code
written in a computer language, the execution of which is
programmed to be automatic when the conditions are met.

38 Blockchain
The idea of intelligent contracts based on cryptographic

protocols was conceptualized by Nick Szabo in the 1990s
[SZA 96, 97]. Szabo concluded an article on this subject in
1997 as follows: “Smart contracts combine protocols, users’
interfaces, and promises expressed via those interfaces, to
formalize and secure relationships over public networks.
This gives us new ways to formalize the digital relationships
which are far more functional than their inanimate paper-
based ancestors. Smart contracts reduce mental and
computational transaction costs, imposed by either
principals, third parties, or their tools” [SZA 97]. He also
referred to Mark Miller’s analysis that the law and
information technology (IT) were merging in many ways
[MIL 97].
Although aspects of the law can be automated and

computer scientists can draw inspiration from the
construction of laws and contracts to design computer
programs to govern the interactions, some aspects of the law
are difficult to automate because of their complexity and the
subjective and imperfect dimension that is often necessary
for the effective implementation of human justice in motion.
2.1.2. The functioning of smart contracts
The first smart contracts on the Bitcoin blockchain were

basic, and corresponded exclusively to the validation of
transactions between two addresses under certain
conditions.
With Ethereum, diversified and more complex smart

contracts were made possible, thanks in particular to the
Ethereum Virtual Machine (EVM) — the Ethereum
environment dedicated to smart contracts. The computer
language used to program smart contracts on the Ethereum
blockchain is called Solidity, a language similar to
JavaScript. This language, inspired by a language widely
The Dynamics of Disintermediation 39
used by developers, facilitates the adoption of this

programming environment and allows the deployment of
many projects based on it.
From a strictly IT perspective, a smart contract is a set of

functions defined by a sequence of instructions. In the
Ethereum ecosystem, sending crypto-assets to an address is
not necessarily a transaction from one user to another, as
addresses can correspond to a portfolio address or a smart
contract. It is thus possible for a user to send Ethers to
another user, and to join a smart contract by sending the
Ethers to the address of the smart contract in question.
Smart contracts can also work in combination, and sending
the Ether to an address of one smart contract can have an
effect on another smart contract. In addition, it is possible to
track the status of Ether's shipments on a smart contract, in
the Etherscan1 website.
In addition to the Ethereum blockchain, currently the

most widely used, there are many other blockchains with
smart contract systems such as Neo (supporting the
languages: C#, VB.Net, F#, Java, Kotlin, and Python).
A significant problem with smart contracts is the quality

of programming, and the possibility of using vulnerabilities
in their codes to hack into them. Several studies have been
conducted to identify potential attacks against smart
contracts [ATZ 17] and to propose solutions based on the
concrete errors identified by programming trainers [DEL 16]
with students.
2.1.3. The reference to the notion of contract
In French law, the basic definition of the notion of

contract is derived from the new article 1101 of the Civil
Code, according to which: “A contract is an agreement of will
1 https://etherscan.io/.
40 Blockchain
between two or more persons intended to create, modify,

transmit, or extinguish obligations.” Smart contracts meet
this definition, with parties accepting scheduled conditions
that generate obligations.
Moreover, because of the way in which the smart contract

is kept within the blockchain register and its timestamping,
the classification as an authentic instrument could be
considered.
In French law, the authentic instrument is defined by the

new article 1369 of the Civil Code:
“An authentic instrument is one that has been

received, with the required solemnities, by a
public officer having competence and capacity to
act.
It may be drawn in electronic form and kept

under conditions laid down by decree in the
Council of State.
When it is received by a notary, it is exempt from

any handwritten mention required by law”.
Consequently, as French law currently stands, the

authentic instrument depends more on the quality of the
person who guarantees the instrument than on the qualities
conferred on the instrument by the system put in place.
The decree in the Council of State referred to in this

article is Decree No. 2005-973 of August 10, 2005, amending
Decree No. 71-941 of November 26, 1971, on deeds drawn up
by notaries. This decree provides, at most, the procedures for
affixing the electronic signature by the notary, but no
reference is made to the blockchain.
However, because of the intrinsic qualities of the

blockchain, legal developments have already been considered
by parliamentarians. This was the case, for example, with an

amendment proposed by MP Laure de La Raudière in the
context of the transparency bill, aimed at granting
transactions integrated into a blockchain the status of
authentic deeds, because of the characteristics of this
decentralized and unforgeable ledger2.
Another aspect likely to lead, more indirectly, to changes

in terms of legal qualification, is the deployment of projects
led by the notaries, and the generalization of technological
solutions offered them to authenticate the documents and
the operations. Fiducial offers, for example, in its Notary
Ecosystem Solution, a solution for lawyers created in
partnership with Microsoft and Ethereum to guarantee,
thanks to the blockchain, the subsequent conformity of a
document with the original sent as an attachment to a third
party3. There is also a multitude of projects aimed at
certifying and timestamping documents, particularly in the
areas outside the scope of the lawyers’ activities, such as
standardization, certification of product origin and quality
control4.
2 Draft law on transparency, the fight against corruption, and the

modernisation of economic life, No. 3623 (tabled on March 30,
2016, No. 3785), Amendment No. 227 (Rect): According to the
second paragraph of Article L. 330-1 of the Monetary and Financial
Code, a paragraph is inserted: “Transactions carried out within a
system organized according to a permanent and unfalsifiable
decentralized ledger of transaction blocks shall constitute
authentic instruments within the meaning of the second
paragraph of Article 1317 of the Civil Code. The Autorité des
marchés financiers authorizes the system to meet the conditions of
security and transparency defined in a decree issued by the Conseil
d'État”.
3 https://www.fiducial.fr/Notariat/Signature/Blockchain.
4 See, for example, the Factom project: https://www.factom.com/
solutions.
42 Blockchain
2.1.4. Smart contracts – a radically autonomous approach

to the contract
In French law, the recent reform of contract law has

strengthened the notion of good faith by formally extending
it to the entire contractual process (negotiation, training,
and enforcement)5. As such, if smart contracts were to
develop, it would be interesting to rethink the classic
opposition between solidarity doctrine and autonomist
doctrine. The doctrine of solidarity generally defends
contractual rebalancing by assuming an imbalance in the
respective strengths of the parties to the contract6. On the
other hand, the autonomist doctrine [FOU 16, GOU 12]
defends the idea that if a person is able to give his consent
freely to an act, this act fully engages him; it is the concept
of autonomy of will and results in an extensive approach to
the binding force of the contract.
The assessment of good faith remains largely unknown to

smart contracts and algorithms, although to some extent
artificial intelligence7 can help to identify the criteria for
assessing good faith through a large number of court
decisions.
To take a simple and concrete example, an Initial Coin

Offering (ICO) is based on smart contracts, defining, in
particular, the duration of the ICO, the price of a token, or the
minimum and maximum amounts that can be raised. An ICO
smart contract can also integrate a participatory dimension
with the integration of a decentralized autonomous
5 Article 1104 (new) and Article 1134 (old) of the Civil Code.
6 See, for example, [JAM 99, COU 06, and CÉD 03].
7 Smart contracts, or intelligent contracts, are not, despite their
name, contracts that use artificial intelligence; at least for the
moment, no functional project makes it possible to implement
aspects of artificial intelligence in these contracts running on
blockchain protocols.
organization (DAO) programmed to allow participants to vote

and to have the ICO canceled before it is completed. However,
a smart contract does not automatically make it possible to
return the sums received in the event of failure to comply
with an obligation set out in the ICO’s whitepaper. A
traditional contract, on the other hand, makes it possible to
foresee such a situation and define the methods for resolving
any disputes. Moreover, if the traditional contract is
surrounded, i.e. in the majority of cases, it is possible to have
recourse to a judge in the event of disagreement on the
interpretation or conditions of performance of a contract; in
the case of a smart contract, in the majority of cases, the
parties are not identifiable (even if this is not always the case
and legal proceedings are already underway against ICO
holders initiated by their contracting partners).
It should also be noted that for the time being, smart

contracts are at best adhesion contracts or at worst contracts
signed with persons unable to express informed consent.
Smart contracts are, for the time being, rarely negotiated

contracts: one party programs the smart contract or reuses a
pre-existing code, and the other has the option to join or not
join the contract by sending the tokens to the smart
contract’s address.
Moreover, in order to express consent, it is necessary to be

able to understand the content of the agreement, and
membership of smart contracts is not limited to those who
can understand the code. Such a case echoes the private
commitment of an illiterate individual8.
8 Court of Cassation, Civil Chamber 1., July 9, 2015, appeal no. 14-
21763: “But a person who is unable to have his signature preceded
by the handwritten statements required by Articles L. 341-2 and
L. 341-3 of the Consumer Code intended to ensure his protection
and informed consent, can only validly undertake to act as a
guarantor towards a professional creditor by an authentic act”.
44 Blockchain
Despite this observation, many smart contracts follow

standards (e.g. ERC20 tokens) and are transparent and
auditable by active cryptophile communities with the
knowledge of programming language.
2.2. Decentralized Applications (dApps) and Decentralized

Autonomous Organization (DAO)
Decentralized Applications (dApps) are programs with

several smart contracts and generally a user interface. These
are not Apps in the sense of mobile applications. To use a
dApp in the Ethereum ecosystem it is necessary to have a
specific browser such as Mist, the official Ethereum browser,
or a classic browser extension, such as MetaMask, or a
browser for mobile use, such as Trust browser.
Note that dApps are dependent on the blockchain on

which the smart contracts are implemented and the data
stored, so it is effectively decentralization in the weak sense
of the term (and not non-centralization) because if the
center, i.e. the main blockchain, fails, the dApp will suffer
consequences. However, it is possible to migrate a dApp from
one blockchain to another, if the old and new ones are
interoperable or from the same genesis block, and if this is
not the case, it is possible to replicate the blocks or the state
of the last block in a new blockchain, but this is in principle
costly in terms of energy usage.
2.2.1. Functioning and characteristics of dApps
In 2014, before the launch of Ethereum, Vitalik Buterin

defined the Decentralized Application [BUT 14] and
indicated that they were like smart contracts but with two
particularities: an unlimited number of participants and an
object that is not necessarily financial. He cited as examples:
BitTorrent, Popcorn Time, BitMessage, Tor, and Maidsafe.
Since this definition was proposed in 2014, the blockchain

ecosystem has evolved, largely due to Ethereum, and the use
of the term “Decentralized Application” has evolved. The
dApps currently created can thus be defined as applications
that need to be connected to a blockchain to work; they can
potentially, at least for some features, work without a
centralized web server.
The construction of a dApp shares with a traditional web

platform the front end, i.e. the elements visible via the
browser, but the use of an application program interface
(API) connected to a centralized database is replaced in a
dApp, at least for some features, by smart contracts
connected to a blockchain.
Beyond this strictly functional aspect, some authors have

identified characteristics that justify the qualification of a
dApp.
Among these typical features of dApps, the most

frequently mentioned9 are as follows:
— storage of data and operations in a blockchain;
— the use of pre-existing crypto-assets or specific tokens to
interact;
— decentralized consensus;
— resistance to server attacks;
— open source code.
There are dApps in many sectors. The State of the dApps

site10 lists a large number of dApps.
9 See, in particular, [RAV 16, p. 3].

10 https://www.stateofthedapps.com/.
46 Blockchain
Figure 2.1. The State of the dApps website. For a color version of this figure,
This site has determined the following typology in its

research system: games, exchanges, betting, finance, social,
media, development, storage, portfolio, security, governance,
identity, ownership, energy, insurance and health.
Many projects are exploring the potential of the

blockchain by crossing this technology with others such
as, for example, virtual reality (see, in particular,
Decentraland).
For the moment, the majority of truly functional dApps

are crypto-asset exchange sites or relatively simple games.
2.2.2. User access to dApps
In concrete terms, a website based on a dApp refuses

access to features as long as the user is not connectable to
the blockchain and not identifiable through their portfolio
address.
For example, in a dApp such as Ethlance, offering

assignments for freelancers or paid jobs in Ethereum, as long
as the user is not connected to the Ethereum blockchain, the

site is not accessible.
Figure 2.2. Ethlance homepage. For a color version of this figure,

To access the service, you must, for example, connect with

the MetaMask11 extension with your Ethereum address.
In the case of Ethlance, in addition to paying for Ether

missions, users pay Ether fees to create or update their
profile, or even to propose missions.
11 The MetaMask extension can be downloaded from:

https://metamask.io/.
48 Blockchain
Figure 2.3. MetaMask connection to Ethlance. For a color version of this

figure, see www.iste.co.uk/quiniou/blockchain.zip
At this point, the user is connected and can use the dApp,
whereas the number of Ether on his or her address is known.
Figure 2.4. MetaMasks connected to Ethlance. For a color version of this

figure, see www.iste.co.uk/quiniou/blockchain.zip
2.2.3. The economy and the monetization of dApps
The economic model for dApps is based on three aspects,

unlike the economic models at work on the Internet: lack
of control of the application by its creators, the frequent
ab initio hijacking of a substantial proportion of the
crypto-assets created specifically for the dApp, and the
multiplication of microtransactions generating fees.
The creators of dApps wishing to join the Blockchain

ecosystem and attract the community of users currently active
on dApps generally communicate on the open source dimension
and the implementation of a decentralized or non-centralized
system. However, some aspects of dApps may have a
centralized dimension, usually at the user interface level.
This lack of control over the application by its creators

partly justifies the monetization of these dApps, since
creators present themselves as first-time adopters who are
particularly deserving for their contribution to the dApp
and who can legitimately claim a substantial part of the
crypto-assets issued specifically (but not a blocking majority
in the case of DAO). These crypto-assets are generally issued
and distributed to potential users as part of an ICO and in
communication campaigns to make the project visible
(Bounty or Airdrop Campaign) and creators retain a
significant number of them partly to earn money and to
invest in project developments.
Another way for creators to monetize their dApps is to

take over part of the transaction costs. These transaction
fees are in addition to those required for the validation of
transactions and blocks. This method is effective in dApps
because many micro-transactions are required to operate the
database and smart contracts integrated into the blockchain,
thus allowing the dApp to be interactive. This method of
monetization, which is not generalized and generally
involves limited amounts, is in opposition to the logic of
50 Blockchain
disintermediation and reduction of transaction costs for

users.
In addition to these characteristic aspects of the dApps’

business model, they use generalized practices on the
Internet, such as advertising or subscribing to a premium
account with advanced features.
2.2.4. Decentralized Autonomous Organization
A DAO can be defined as an autonomous and

decentralized organizational system whose rules of operation
and participation are provided for by a smart contract
registered in a blockchain.
It should be noted that the Ethereum project, at the heart

of development, currently refers to DAO no longer as
Decentralized Autonomous Organization, but as Democratic
Autonomous Organization. This evolution of the term from
“decentralized” to “democratic” is a shift in polarity from a
technology-based perspective to a use-oriented one.
Figure 2.5. Ethereum DAO. For a color version of this figure,

Basic DAOs allow members (guests) to participate in

voting based on proposals submitted and identified from
addresses. Another form of DAO is referred to by Ethereum
as the Shareholder Association, this form of DAO is based on
specific crypto-assets (also called tokens), with voting rights
closely depending on the number of crypto-active assets held
by an address (portfolio).
DAO and ICO (Initial Coin Offering) smart contracts,

fundraising crypto-assets’, can also work together. This cross
between DAO and ICO is referred to as DAICO —
Decentralized Autonomous Initial Coin Offering — and allows
for the insertion of participation for first-time investors and
partial control of the fundraising process.
The use of DAO is deeply in line with the philosophy and

ecosystem of the blockchain. Nevertheless, the use of DAO
creates risks of takeover through the acquisition of a
sufficient number of crypto-assets. The first major project
involving a DAO on the Ethereum blockchain was The DAO,
a Stock.it company project which allowed participating
Ethereum holders to vote for the financing of blockchain
projects. The DAO project experienced significant piracy,
which imposed a hard fork of the Ethereum and the
appearance of the Ethereum Classic. Nevertheless, The DAO
made it possible to implement and highlight the
participatory potential of the blockchain.
2.3. Disintermediation and reduction of transaction costs
Disintermediation and reduction of transaction costs are

among the promises and opportunities associated with
the widespread use of blockchain applications. While
the blockchain structure makes it possible to achieve
these objectives, the actors generally seek to replace the
pre-existing intermediary, by taking another form and
making transaction costs less immediately apparent or more
52 Blockchain
acceptable because they are lower, or justified by an

allocation benefiting the platform’s developments.
2.3.1. Disintermediation by blockchain
The transforming economic and social impact of the

blockchain is largely due to the resulting disintermediation.
Disintermediation corresponds to at least partial elimination
of intermediaries, but not necessarily to the absence of
mediation, which can be automated12.
With the emergence of the mainstream Internet, an

important dynamic has been the gradual substitution of
physical intermediation by digital intermediation via
Internet platforms. Many traditional intermediary activities
have been weakened, such as marriage agencies, travel
agencies, or taxi companies, due to platforms that automate
their role, add digital functionalities, and involve customers
in generating added value and efficiency through the
creation of additional content or the sharing of data,
particularly the personal data. New organizational
technologies have also allowed intermediaries to emerge by
creating previously non-existent or poorly expressed needs,
such as food ordering applications, intermediaries between
the customer and network restaurants or cloud computing
services, and the intermediaries between the customer and
the storage equipment, previously directly owned by the
customer.
The disintermediation resulting from the blockchain

shares certain characteristics with the disintermediation
resulting from the emergence of the Internet for the general
public insofar as these two phenomena are based on
the simplification of the networking of consumers and
producers or suppliers. However, the disintermediation of
the blockchain is intended to be more profound by not using
12 See, in particular, [AZÉ 12], the notion of “Mediation”.

platforms published by private companies but by creating

peer-to-peer ecosystems that depend only, in economic terms,
on autonomous, non-centralized, and open source platforms.
The development of blockchain disintermediation is

all the more significant at the moment because of the
threshold effect undergone by traditional disintermediation
or re-intermediation web platforms, some of which have
become quasi-monopolistic and are developing their activity
and profitability through vertical integration strategies. This
is the case, for example, with Deliveroo, which creates its
own kitchens, with Netflix, which produces its own films,
and for Zillow, which carries out real estate transactions.
When the intermediary positions itself as a competitor, the
question of alternative ways of establishing contact,
particularly via blockchain, arises with greater vigor.
2.3.2. From control by intermediaries to control over

intermediaries
In the classic logic of a centralized or partially

decentralized platform, the platform is the intermediary that
has the database and the content hierarchy. This hierarchy,
often opaque, like Google’s search algorithm kept secret for
reasons of protection from competition and encouraging
unbiased natural referencing, is the main mode of control
exercised by intermediaries over users.
These centralizing platforms, which have become

monopolistic, are also centralized at the level of territorial
and fiscal affiliation, the majority of them being at the global
level of the American platforms and, for Southeast Asia,
Chinese platforms. Limiting dependence on these centralized
platforms and the use of mediation by the blockchain could,
thus, represent a geostrategic interest in Europe, South
America, or Africa.
54 Blockchain
In the blockchain logic, unilateral and opaque control by

centralized intermediaries over the promotion of data and
content deemed relevant is largely replaced by an open
source approach and methodological transparency. To take
Google’s example, a blockchain project called Presearch13
offers an alternative based on the transparency,
customization of search results ranking criteria, and
adaptation of the search engine to the wishes expressed by
the user community. This is also the case with the Brave
web browser14, which also aims to strengthen the privacy of
Internet browsing.
2.3.3. The blockchain and trusted third parties
The blockchain has important implications for a

particular type of intermediary: trusted third parties. The
State is the first trusted third party and other trusted third
parties are generally an offshoot or benefit from an approval
granted by the administration.
One of the main trusted third parties is the notary,

insofar as, in France for example, he has a monopoly to
produce authentic instruments with a probative value higher
than those drawn up by mutual agreement. The blockchain
storage is time-stamped in a way that allows documents to
be given a certain date, or at least to prove anteriority. The
question of proof of anteriority arises, for example, in
intellectual property law, and the authorities responsible for
this matter, particularly the National Intellectual Property
Institution (INPI) in France, allow applicants to prove the
date of their creation when they apply for protection or
simply wish to prove anteriority with a Soleau envelope.
13 https://www.presearch.io/. Note that for the moment at the Beta

stage Presearch relies on pre-existing search engines.
14 https://brave.com/.
The Bitcoin blockchain was created at the time of the

financial crisis, a time of significant loss of confidence in the
banking system and in the soundness of the banks. To
restore confidence in the banking system, many obligations
have been imposed on the banks, particularly with regard to
the holding of equity capital15. Blockchains are presented as
alternatives to the banking system and some blockchain
projects propose to replace this model, in which many people
have lost confidence, even in the conservation of the sums
deposited.
2.3.4. Crypto-asset vectors of disintermediation
If some blockchains can be designed without crypto-

assets, they are an important asset in disintermediation
logic. Indeed, crypto-assets make it possible to create an
ecosystem economy and to allow direct exchanges between
users, between peers.
The functions of crypto-assets are varied, and it is

possible to identify several categories: crypto-asset payment
instrument, crypto-asset right of use (network access tokens
or utility tokens), crypto-asset right of ownership (asset
tokens), and crypto-asset project shares (equity tokens or
security tokens) [QUI 18a]. These crypto-assets, thus,
represent various rights and can be transferred easily,
without recourse or by limiting the use of intermediaries.
The decentralization allowed by the blockchain allows
interactions at the individual level, thanks to the automated
tools that do not belong to the centralized operators, which
limits the power of these intermediaries [WRI 15].
15 See, in particular, in the European Union: Directive

2009/111/EC of the European Parliament and of the Council of
September 16, 2009, amending Directives 2006/48/EC, 2006/49/EC,
and 2007/64/EC as regards banks affiliated to central institutions,
certain own funds items, large exposures, supervisory
arrangements, and crisis management.
56 Blockchain
Tokenization also opens up potential in terms of a

collaborative economy and the redefinition of capitalism
[RIF 14].
The distribution of new crypto-assets as part of ICOs also

illustrates this potential disintermediation. In an ICO, the
project leader can, in principle, raise funds directly, without
using a third-party crowdfunding platform or a brokerage
firm. However, the still unstable legal framework of this
financing method and the legal risks associated with these
operations invite prudent players to call on technical,
financial, and legal experts. If disintermediation is not
complete, remediation with crypto-assets consists more in
support than in the complete takeover of the organization by
a third party.
2.3.5. A potential reduction in transaction costs
Blockchain technology could significantly reduce

transaction costs, mainly through disintermediation and the
limitation or control of traditional trusted third parties. In
addition, tokenization, i.e. the creation of a valuable digital
ecosystem, makes it possible to create incentives tailored to
each stakeholder. Other features of the blockchain, such as
limiting the disclosure of information not required to
carrying out transactions or timestamping operations, make
it easier to check operators’ operations, solvency, transaction
content and history.
Theories related to economic transaction costs derive from

Ronald Coase’s theory of the firm, according to which the
logic of internationalization of activities within the firms is
based on a reaction and comparison with the external
transaction costs associated with market transactions,
including the cost of product research, negotiation, and
dispute resolution [COA 37].
Transaction cost theories have gradually become an

important reading spectrum for analyzing the behavior of
economic actors. Transaction costs are, thus, at the heart of
the analysis of consumer behavior, in particular, to explain
the advantages of online platforms that provide product
rating systems for other consumers and profiling, the latter
facilitating the identification of the right product for the
consumer concerned and making the act of buying on the
market more immediate [SHO 01].
The reduction in transaction costs seems obvious with

blockchain technology, which allows, for example, an entity
to conclude a transaction directly with another entity that
has made an offer on the network in the form of a smart
contract.
An article published by the consulting firm McKinsey

indicated that the blockchain in reducing intermediaries
could have a profound impact on transaction costs and
competition16. In an article on the economy of the blockchain,
an international group of researchers shared this
observation by specifying that the blockchain could reduce
transaction costs both by referring to Williamson’s model
based on agent opportunism [WIL 93] and by referring to
Armen Alchian and Harold Demsetz’s model based on the
control exercised by the leader [ALC 72].
The firm’s theory and the question of reducing transaction

costs have been extensively analyzed under the prism of the
Internet. Analyses related to the emergence of free software
and the participatory economy can usefully be transposed to
the blockchain economy.
16 [GRE 17]: “In fact, the desire to avoid transaction costs such as
the negotiating and writing of contracts helps explain why firms
exist, according to Nobel laureate Ronald Coase. Since blockchains
can process transactions without intermediaries, their potential
impact on costs and competition is profound.”
58 Blockchain
In a 2002 article, Yochai Benkler highlighted the fact that

“commons-based peer production” could be conceived as a
third mode of production, distinct from the market or the
firm [BEN 02]. This approach seems useful for addressing
experienced models with blockchains, their financing, and
the participation of crypto-asset communities to produce the
content and enhance the value of a blockchain ecosystem.
Beyond the question of transaction costs and the firm’s

theory, another fundamental economic theory can be
discussed to understand the potential impacts of the
blockchain on society, the economy, and the nature of
organizations: namely, the Stakeholder theory. This theory,
made famous by Edward Freeman [FRE 10], contradicts
Milton Friedman’s approach that companies are owned and
operated exclusively in the interests of the shareholders. The
Stakeholder theory has been widely used to justify public
policies and impose corporate social responsibility.
The blockchain ecosystem and tokenization make it

possible via participation systems, such as the DAO and
multiple reward methods, to deploy an organizational
system that takes into account the diversity of stakeholders
and their contribution. In the Bitcoin blockchain, for
example, the miner is considered an important stakeholder,
to be allocated bitcoins in return for the provision of
computing power. In other blockchains focused, for example,
on sharing artistic works, it is the artists who are paid with
crypto-assets, which have also been distributed to people in
exchange for other crypto-assets during an ICO or allocated
to them as part of Bounty’s campaign, for having taken part
in communicating the project.
The resulting blockchain and tokenization thus function

as powerful vectors for disintermediation, reduction of
transaction costs, and involvement of user communities in
value production.
3
Blockchain Prospects and

Ongoing Improvements
Blockchain is a technology that is still at an experimental

stage. The main areas of blockchain research aim to ensure
scalability (section 3.1); to create interblockchain
interoperability in the face of the proliferation of projects,
blockchains, and crypto-assets (section 3.2); and to create
links between the blockchain and other promising
technologies, mainly the Internet of Things and artificial
intelligence (section 3.3).
3.1. Scalability
With an increase in the number of people who are

interested in the blockchain, the issue of scalability and
speed of transactions is an important technical issue for
mass adoption.
The Bitcoin blockchain confirms a limited number of

transactions (about seven per second), which is very low
compared to centralized systems such as Visa (about 24,000
transactions per second). This has created doubts about the
ability of the Bitcoin blockchain to meet the needs of mass
adoption.

62 Blockchain
In order to increase the transaction times for techniques

such as sharding, trust delegation and the hierarchy of
parallel chains have been proposed [CRO 16]. Other methods
have also been proposed with the Bitcoin Next Generation
(Bitcoin-NG) to break down the operations into two parts,
one for the designation of the validator (leader election) and
another to individualize the transactions (transaction
serialization) [EYA 16, ZHE 17].
Another approach is the use of a payment interface

operating outside of the blockchain, which is the method
proposed by the Lightning Network [POO 16]. The Lightning
Network enables open payment channels to carry out several
transactions, called off-chain, which will later be transcribed
on the blockchain, but only with final balances. This system
allows the blockchain to be decongested.
If the number of transactions validated per second is low

for the Bitcoin blockchain, improvements can be noted with
other more recent blockchains such as Ripple (1,500
transactions per second) or EOS (5,000 transactions per
second with the objective of 50,000 transactions per second
within a few months)1.
3.2. Blockchain interoperability
In 2018, there were several thousands of different crypto-

assets and hundreds of blockchains. A large proportion of
current crypto-assets has been created on the Ethereum
blockchain, the most widespread in terms of smart contracts
creation.
Ethereum has set up crypto-asset standards, particularly

the ERC20 standard, for crypto-asset contracts that
meet certain characteristics. This approach promotes
interoperability between the crypto-assets and allows the
1 Interview with Mike Novogratz on July 23, 2018, in The Street.

Blockchain Prospects and Ongoing Improvements 63
portfolios of the crypto-assets (e.g. MetaMask) to be

compatible with multiple crypto-assets. This interoperability
can be described as intrablockchain interoperability.
However, interblockchain interoperability is more

complicated to implement. Projects known as cross-chain
or atomic swaps aim to create this interoperability in a
non-centralized mode.
3.2.1. Atomic swap and Komodo
One of the notable projects in this field of atomic swaps is

the Komodo Project. With its distributed trading platform,
BarterDEX, the objective is to allow the exchange of the
crypto-assets from two different blockchains, without going
through a traditional intermediary that offers a purchase—
sale system limited to certain currencies and certain large
crypto-currencies, and that makes it necessary, for example,
to exchange Electroneum (ETN) for Komodo (KMD) to go
through a conversion into Bitcoin (BTC).
The atomic swap system thus makes interactions within

the blockchain ecosystem more dynamic, as they are based
on partially interoperable blockchains.
Figure 3.1. Source: https://komodoplatform.com/interoperability-cross-

chain-smart-contracts/. For a color version of this figure,
64 Blockchain
Atomic swap projects are still at an early stage of

development but represent a significant potential for
disintermediation and interoperability between blockchains.
3.2.2. Interoperability and partnership between Hyperledger

and Enterprise Ethereum Alliance (EEA)
Enterprise Ethereum Alliance (EEA) is a blockchain-

specific standardization structure2, initially dedicated to the
Ethereum blockchain, and Hyperledger is a collaborative
project led by the Linux Foundation to provide open-source
tools to facilitate developments in the blockchain field.
By combining their efforts, these two structures allow the

creation of the norms and standards of the blockchain
ecosystem3 to facilitate interoperability and scale-up of the
blockchains. The standardization process provides for the
participation of all its members in defining specifications for
the blockchains.
3.2.3. ISO and interoperability
It should also be noted that the International

Organization for Standardization (ISO) has set up a
technical committee dedicated to the blockchains and
distributed ledgers (ISO/TC 307) with a working group on
interoperability (SG 7 Interoperability)4, this interoperability
being envisaged both between different blockchains and
between the blockchains and third-party components.
2 https://entethalliance.org/wp-content/uploads/2018/06/EEA-Standa
rds-Key-to-Scaling-the-Enterprise-Blockchain-Market_6_1_2018.pdf.
3 https://www.hyperledger.org/announcements/2018/10/01/enterprise-
ethereum-alliance-and-hyperledger-to-advance-the-global-blockchain-
business-ecosystem.
4 https://www.iso.org/fr/committee/6266604.html.
These various initiatives should eventually lead to the

emergence of an ecosystem with interoperable and easy-to-
audit blockchains based on standards and good practices.
3.3. The junctions between the blockchain, the Internet of

Things, and artificial intelligence
Currently, in information technology, three fields are at

the heart of major use innovations: the blockchain, the
Internet of Things, and artificial intelligence. Many projects
use several of these technologies simultaneously.
3.3.1. Blockchain and the Internet of Things
A formula used by Richard Gendal Brown humorously

illustrates this junction between the blockchain and the
Internet of Things: “On the blockchain, nobody knows you’re
a fridge”. This formula refers to a formula by the press
cartoonist Peter Steiner: “On the Internet, nobody knows
you’re a dog”, which has given rise to many Internet memes.
But, unlike the dog on the Internet, the reference to the
fridge interacting on the blockchain is not fanciful, given the
state of technological progress.
Currently, connected objects operate mainly from cloud

computing services; using the blockchain, the connected
objects could operate in a distributed way without
interactions passing through a central server or a third-
party platform that is more exposed to attacks. The issue of
personal data protection is central to the Internet of Things5
and some blockchains operating with zero-knowledge proof
can provide structural solutions in this area. In addition, the
blockchain would provide Internet security [ABO 18] for
objects and track the history of embedded software
(firmware) [BAN 18, DOR 17, HUH 17]. Use of the
5 To find out more about this, see [TOU 18].

66 Blockchain
blockchain would, thus, bring confidence to users who are

sometimes reluctant to use connected objects in their daily
lives, as Samuel Szoniecky [SZO 18] points out in particular.
The junction between the blockchain and the Internet of

Things seems suitable for developing collaborative economy
ecosystems, allowing monetization around connected objects
[HUC 16].
The Internet of Things also allows the blockchain to have

access to certified data from the real world (see Oraclize and
Augur in Chapter 1). Indeed, connected objects can
potentially have an oracle role and even be designed
specifically to fulfill this role in the service of a blockchain.
Figure 3.2. Source: https://www.iota.org/get-started/what-is-iota. For a color

version of this figure, see www.iste.co.uk/quiniou/blockchain.zip
There are several distributed ledger projects for connected

objects, and one of the best known of these is the IOTA
Project6. The IOTA Project is not, strictly speaking, a

blockchain, insofar as the blockchain architecture
characteristic of blockchains is replaced by a Directed Acyclic
Graph (DAG). The objective of the IOTA Project is to enable
secure monetization of data from connected objects.
Other projects, such as IoTeX, combine the blockchain

and the Internet of Things, in particular by rewarding
innovations and applications in the field of connected objects
through the allocation of the crypto-assets.
The blockchain and the Internet of Things should by their

junction produce uses and allow connected objects to interact
with each other without third parties (humans or platforms)
in a secure way.
Despite the prospects for junction and complementarities

between these technologies, from a technical point of view,
as Professor Imad Saleh notes, the difference in latency
between the blockchain and the Internet of Things can pose
difficulties, as the technological constraints associated with
verifying the operations to be stored on the blockchain are
not compatible with the necessary reactivity in terms of the
Internet of Things [SAL 18]7.
6 See [POP 18].

7 For more on these issues, see also [DOR 17].
68
Blockchain
Figure 3.3. Source: https://iotex.io/. For a color version of this figure,

3.3.2. Blockchain and artificial intelligence
Many projects propose junctions between the blockchain

and artificial intelligence, yet the blockchain, unlike
artificial intelligence, is essentially based on a logic of
human collective intelligence expressed in a structurally
distributed way.
One of the most interesting approaches to the articulation

of these two technical fields is the Ocean Protocol Project,
which proposes to set up a decentralized data exchange
system to train artificial intelligence. This approach aims to
reduce the competitive advantage of GAFAM (Google, Apple,
Facebook, Amazon and Microsoft) and large data companies
and create an open data tool for artificial intelligence.
Figure 3.4. Source: https://oceanprotocol.com/#project. For a color

version of this figure, see www.iste.co.uk/quiniou/blockchain.zip
However, this approach raises the question of the

protection of personal data and the appropriateness of data,
particularly in light of the recent General Data Protection
Regulation (DGPS).
Unlike the Ocean Protocol Project, the SingularityNET

Project proposes more directly to address the issue of an
open market for artificial intelligence, by focusing on the
sharing of open tools related to artificial intelligence, rather
than focusing the solution on sharing data that may be
useful to generate artificial intelligence. These two
approaches can be complementary and are based on the
70 Blockchain
same fear, that of the absolute domination by some large

companies of artificial intelligence and its applications.
These two projects can be qualified as blockchains in the

service of artificial intelligence, in that they bring
potentialities of decentralization to artificial intelligence.
Another approach is to choose the opposite perspective;

this approach proposes to inject artificial intelligence into
blockchain ecosystems, particularly by creating artificial
intelligence algorithms integrated into intelligent contracts.
This approach is, for example, that of the Cortex Project.
Figure 3.5. Source: https://www.cortexlabs.ai/.
It is also worth noting the existence of a NeuroChain

Artificial Intelligence Project. This project plans to create
validator robots based on a distributed infrastructure to
operate the blockchain from “collective artificial intelligence”
[CHO 17].
Figure 3.6. Source: [CHO 17, p. 18]. For a color version of this figure,
Blockchain is a technology that has significant potential

for decentralization and disintermediation which could be
exploited, particularly through these links with other
emerging technologies.
Part 2
Blockchain Technology for a

New Socio-economic Paradigm
Introduction to Part 2
As it makes it possible to design a non-centralized

ecosystem and limit the use of trusted intermediaries, the
blockchain technology is a new paradigm in a world
characterized by a strong centralization of public and
economic authorities, and by an Internet dominated by a few
monopolistic players mainly located in the United States and
China.
In this context of experimenting with a parallel,

non-centralized mode of operation based on self-executable
open-source codes that can be stored in forgery-proof
registers, a renewal of the concept of social contract is
possible (Chapter 4) and an analysis of the multi-sectoral
changes resulting from the blockchain technology seems
useful for prospectively considering its impact on the social
and economic fabric (Chapter 5).

4
Toward a Social Smart-contract?
The blockchain paradigm is the paradigm of

non-centralization and disintermediation by digital
means/technology as such. The blockchain makes it possible
to rethink the social contract from a digital direct democracy
perspective (section 4.1) by using Decentralized Autonomous
Organization (section 4.2) and by changing the way public
registers are conceived (section 4.3).
4.1. Disintermediated direct democracy: perspectives

opened by the blockchain
4.1.1. The terms of the social contract: centralized

representative democracy or disintermediated direct
democracy
The social contract is one of the main arguments justifying

the exercise of political authority. If the concept of the social
contract does not have the same meaning for all classical
[HOB 85, LOC 80, MIL 59, ROU 62] and contemporary1
philosophers, in terms of the level of individual alienation
necessary for social functioning and its counterpart,
and if the currents of political thought are torn on its
1 See, in particular, [MUL 16] or indeed [SKY 14].

78 Blockchain
meaning2, it is nevertheless possible to extract a definition

from its essential and generally accepted characteristics.
The social contract could thus be presented as a concept,

frequently represented in the form of a historical fiction,
corresponding to a necessary and tacit renunciation by an
individual of part of his or her freedom of decision and
action, to enable a unifying authority to make a society
function in a peaceful and rationalized manner by serving
the interests of each individual through the pursuit of the
general interest.
Depending on the meaning adopted for the notion of social

contract, it can refer to a contract between the government
and the leaders, which is then a question of representative
governance (constitutional monarchy, representative
democracy, etc.); this approach derives globally from the
theories of Hobbes and Locke. The notion of social contract
can, under another meaning, refer to a contract between the
members of the society, compatible with a direct democracy;
this approach is in line with Rousseau’s theory.
In our contemporary societies, there is no direct democracy

in the full sense, at most there are semi-direct and
semi-representative democracies, Switzerland for example,
with tools such as popular initiative, optional referendums,
and mandatory referendums, with the involvement of Swiss
citizens four times a year on about 15 subjects3.
Other countries, such as France, have substitutes for

direct democracy, including participatory democracy,
presented by elected (or appointed) representatives as a
manifestation of citizen participation in decision-making.
However, this participatory democracy often only takes the
2 See, for example, [DUP 09].

3 “La confédération en bref”, Office fédéral de la statistique (OFS)
(French federal statistics office), 2017.
Toward a Social Smart-contract? 79
form of an often opaque and pre-balanced consultation whose

main objective is to strengthen the legitimacy of a
representative who has in fact retained full control over
actual decisions. An edifying example of this approach is the
blockchain-based participatory democracy system called
Direct Citizen in Russia’s Moscow4, which allows citizens to
make decisions about the city, but these decisions concern
trivial objects such as the name of a new train, the color of
the seats of a football stadium, the design of the Moscow
doctors’ badge, or the deployment of electronic equipment
charging areas in metros5.
One of the most virulent, but also the most constructive,

critics of direct democracy is the sociologist Emile Durkheim.
For this late nineteenth-century and early twentieth-century
author, the founder of a school of thought still represented
today, the exercise of power directly by the people in the
context of a direct democracy subjects all that is public to a
government by public opinion and the last passions of people
who do not have the intellectual capital to participate
meaningfully in public affairs. This elitist approach could be
justified at the beginning of the last century, particularly
because of the rate of illiteracy among the population and
the limited dissemination of any information that might
have allowed personal and thoughtful decision-making. In
an information society where the issue of illiteracy has
become very relative (in France, 7% of the adult population
aged 18—65 years and 4% of the 18—25 years age group6), the
almost total exclusion of citizens from political
decision-making and the definition of national strategies has
lost its main justifications.
The main argument still put forward to justify the

maintenance of representative democracy is the idea that
4 https://ag.mos.ru/#.
5 https://www.mos.ru/en/news/item/34873073/.
6 Figures from the Agence Nationale de la Lutte Contre l’Illettrisme.
80 Blockchain
representatives could succeed in transcending particular

interests in order to pursue a policy of general interest,
whereas this altruistic abstraction would be inaccessible to
the average person. This argument ignores the personal
interest of representatives as individuals and the weighting
of the collective interest of representatives, as an
interest-sharing group, in making decisions that are
supposed to correspond to the expression of the general will
or of the people.
Another argument often used is that of citizens’ political

apathy based mainly on observation of the low turnout not
only in the election of representatives but also in the rare
referendums held in representative democracies. The
argument that there is a lack of interest in politics seems
quite convincing, but it has been countered, for example,
with the notion of citizen mistrust [ROS 06] or committed
abstentionism, presenting these postures as political acts
that can turn into active participation in the elaboration of
norms in a system that we consider legitimate.
Developments in this area are being studied, even though

these initiatives often remain experimental. It should also be
noted that a movement in favor of “Civic Tech,” entitled
“Initiative for a Sustainable Democracy,” was announced at
the Internet Governance Forum in November 2018 with
France and Taiwan as founding states and Paris as the
founding city. Social movements could also be vectors for the
emergence of direct democracy through digital technology.
4.1.2. A path between direct democracy and representative

democracy: liquid democracy
As an American political advisor and author, Dick Morris,

pointed out at the dawn of 2000, American society was
already seeking to move from a Madisonian representative
model to a Jeffersonian direct democracy model, a
phenomenon explained by the reduction in information

asymmetry [MOR 99].
In addition, while the widespread use of the Internet has

for more than a decade potentially allowed widespread
access to firsthand information and remote citizen
participation from a technical point of view, the blockchain
currently makes it possible to make the functioning of the
participation model independent of a central body and to
ensure its security.
In this context of slow change in morals, several initiatives

have preferred, particularly for reasons of flexibility for
participants, to set up liquid democracy systems, i.e. allowing
them to choose between voting directly or delegating voting to
other voters for certain specific decisions.
The concept of liquid democracy is a recent one and aims

to adapt the mode of democratic expression to the
information flows linked to the mass Internet [KEN 17], new
mores, and new generations [BAS 13].
In this technological context, some direct or liquid

participation methods have been tested by technological
platforms (Liquid7, Democracy OS8, etc.) or by political
groups (the Flux Party9, but also the Pirate Party10 with the
Liquid Feedback11 platform). The five-star movement,
created by Beppe Grillo, which became one of the leading
political parties in Italy (32% of the votes in the legislative
elections in March 201812), also uses the Liquid Feedback
7 https://liquid.us/.
8 https://democracyos.eu/.
9 https://voteflux.org/.
10 https://partipirate.org/.
11 https://liquidfeedback.org/.
12 https://www.theguardian.com/world/ng-interactive/2018/mar/05/
italian-elections-2018-full-results-renzi-berlusconi.
82 Blockchain
platform to involve citizens in the decision-making process

[DER 13]. In France, the #MaVoix (MyVoice) movement,
based on a logic of drawing lots of representatives to
transcribe the thematic votes of platform participants, also
participated in elections, but could not really experiment
with its platform, based on the blockchain, in the absence of
an elected representative in parliamentary elections.
One of the main difficulties encountered by these

platforms remains the effective participation of the
population, even when it is carried out by political parties
dedicated to direct democracy. Two other important aspects
to consider, which are generally difficult to combine at the
same time, in addition to platform security, are voter
authentication and the possibility of keeping votes secret.
The blockchain offers useful solutions in this field for the
non-centralized deployment and security of these platforms.
4.1.3. Political disintermediation through blockchain and

the hypothesis of a social smart-contract
The idea of a social smart-contract corresponds to a new

possibility for democratic expression, allowed by the
certification and timestamping of actions performed in
interaction with open source algorithms running on
non-centralized networks. The aim is to improve voting and
democratic participation systems via the Internet with
devices that make it possible to verify the counting systems
or set up tokenization to enable anonymous identification
and prevent multiple voting.
The Flux party, an Australian political party, proposes,

for example, a liquid system of democracy based on the
blockchain. The model is simple and allows any Australian
citizen registered with Flux to participate in any vote
through the elected representative of the Flux party, with a
weighting of their vote according to the votes cast and
transmitted to the elected representative of the Flux party.
The elected representative of the Flux party is subject to the

votes cast on the platform, and his or her vote must reflect
the majority of the votes transmitted to him or her.
Figure 4.1. Source: https://voteflux.org. For a color version of this figure,

Figure 4.2. Source: https://voteflux.org/about/how/

84 Blockchain
4.2. Participation, voting, and DAOs
4.2.1. DAOs: new ways of participation
DAOs represent the organizational and participation tools

that can be implemented on the blockchain. As previously
mentioned, a DAO is an autonomous and decentralized
organizational system whose rules of operation and
participation are provided for by a smart-contract registered
in a blockchain. DAOs make it possible to consider a renewal
of participation in organizations, companies, or democracies.
The Ethereum Foundation has renamed DAOs from
Decentralized Autonomous Organizations to Democratic
Autonomous Organizations, thus highlighting the potential
role of these smart-contracts.
The design of the DAOs makes it possible to achieve a

high degree of flexibility in the rules governing shareholders,
making it possible to weigh voting rights according to several
parameters. DAO mechanisms are generally based on the
holding of tokens, each token corresponding, for example, to
a right to vote. Some DAOs cap the number of votes
available per token portfolio to ensure that holders of a very
large number of tokens do not have a strictly preponderant
vote.
DAOs are often used to involve first-time investors in

financing strategies when raising funds in cryptocurrency;
this method is called DAICO, Decentralized Autonomous
Initial Coin Offering. But DAOs can be used in a multitude
of fields, as soon as a position paper is required, for example,
to develop a system, change a code, or change the rules
governing a user group. DAOs could, for example, be usefully
set up to organize general shareholders’ meetings.
4.2.1.1. The secret smart-contracts

While blockchains are mainly designed to anonymize or
pseudonymize operators, conversely, the content of
operations is often public and transparent, in order to make

the register verifiable. As a result, DAOs do not easily allow
for the implementation of secret ballots due to this
transparency of operations and their validation. For certain
types of suffrage, particularly for political votes, secrecy is
generally conceived as a guarantee of the independence of
the vote and appears as a fundamental principle enshrined,
in particular, in Article 21 of the Universal Declaration of
Human Rights of December 10, 1948.
To ensure secret suffrage, secret smart-contracts have

been designed to be executed on distributed networks that do
not reveal data to nodes13. The Enigma project offers secret
smart-contracts, which are encoded in Solidity language, the
language set up by Ethereum, although Enigma is based on
a specific blockchain, distinct from that of Ethereum and
currently accessible on a test server14. The major difference
with Ethereum is based on two functions: callable and
callback, which schematically allow for the first to encrypt
each vote and decrypt the final result and for the second to
interpret the final result and make the result produce
consequences15.
4.2.2. The Token Curated Registries
The Enigma project also proposes to rely on registries

organized by tokens or Token Curated Registries (TCR).
These registers organized by tokens, mentioned earlier in
terms of incentives, also make it possible to structure the
voting mechanisms and enable the search for general
interest. Indeed, these registers give rewards in the form of
13 https://blog.enigma.co/private-voting-for-tcrs-with-enigma-b441
b5d4fa7b.
14 https://blog.enigma.co/the-code-is-here-announcing-enigma-test
net-1-0-release-accdaf051950.
15 https://enigma.co/protocol/SecretContracts.html.
86 Blockchain
tokens to people who vote like the majority and penalize

others. The incentive implemented in these registers is to
vote like the majority. The use of such a system to vote for
the listing of a restaurant in a list of quality hotels meeting
certain objective and predefined criteria is appropriate, but
this system seems more difficult to use, without adjustment,
in expressing a subjective opinion on public affairs. Indeed, it
would be necessary to question the meaning of the result of
such a vote in a case where the vote implies a subjective
assessment: collective expression of weighted individual
opinions? Expression of the general interest? Servile
transcription of polls and statistics? A vector by which
caricatured prophecies can become realized?
The blockchain makes it possible to renew the

participation and voting systems, in particular by making
certain forms of representation obsolete and potentially
limiting manipulations during the counting of the votes cast.
4.3. Registries, administration, and blockchain
4.3.1. Blockchain and e-Residency in Estonia
The Estonian e-Residency project is the first digital

“citizenship”16. The objective of this project is to provide fully
dematerialized administrative services and to partially open
Estonian citizenship and the benefits of Estonia’s
membership of the European Union to citizens of other
countries.
This e-Residency, formalized by an e-ID, does not grant

citizenship or a valid passport and has no direct effect on the
tax residence of e-Residents17, but companies created under
the e-Residency are taxed by Estonia. This project is,
16 https://e-resident.gov.ee.
17 https://e-resident.gov.ee/faqs/taxation/#e-residency-and-tax-resi
dency.
therefore, a way for Estonia to capture a significant share of

taxes from foreign companies wishing to access the euro area
market with a simple domiciliation or a strictly
administrative establishment in the European Union. In
addition, the e-Residency project provides digitized
administrative services and allows e-Resident companies to
benefit from a dedicated ecosystem.
Figure 4.3. Source: https://e-resident.gov.ee/
The e-Residency project also uses the blockchain and it

does not seem that the use of the blockchain is solely
dictated by a promotional will. This ecosystem is based on a
dematerialized administrative approach and a certification
service by the blockchain of official documents is proposed.
This use of the blockchain was designed in partnership

with Bitnation, a smart-contract and DAO-oriented
blockchain project to resolve disputes arising from
smart-contracts and implement organizational modes for
groups of individuals18. The implementation of the
blockchain by a State to structure key administrative
services goes beyond the usual divisions and makes it
possible to envisage new forms of identity outside the
traditional national straitjacket [SUL 17].
18 https://tse.bitnation.co/.
88 Blockchain
4.3.2. The blockchain and the opening of public data
As blockchain is a registry technology, it is by its nature

adapted to the administrative activity of registration and
filing.
The question of the openness of public data arises at the

international level, as evidenced by the Open Government
Partnership (OGP)19 created on the initiative of President
Obama in 2011, announced at the 66th General Assembly of
the United Nations. The main objectives of this multilateral
partnership are to promote transparent governance and open
up public data.
France is a member of this partnership for an open

government and the Etalab mission, which is part of the
Interministerial Directorate for Digital Technology and the
State Information and Communication System (DINSIC), is
at the heart of this system. In particular, Etalab has set up
an open license allowing the free reuse of data made
available to public structures.
19 https://www.opengovpartnership.org/.
The blockchain could be a tool to prevent some States

from reversing their commitments by deleting data and also
to facilitate the identification and proof of false or altered
data.
The European Data Portal focuses on the connections

between the blockchain and the opening of public data20.
This structure highlights two qualities of the blockchain in
terms of the data openness policy at European level: on the
one hand, the potential interoperability between distinct
organizations; and on the other hand, the security and
resilience of the blockchain against cyber-attacks.
Other structuring registers, particularly in the field of

urban planning and real estate, such as cadasters and
registers kept by notaries, are likely to be exposed to the
transformations brought about by the blockchain. These
specific issues will be discussed in more detail in the next
chapter.
20 https://www.europeandataportal.eu/fr/highlights/open-data-and-
blockchain-match-made-heaven.
5
Proteiform and Multi-sectoral

Transformations
5.1. Tokenization of the economy and bartering
In order to study the tokenization of the economy, it is

necessary to look at the qualification of crypto-assets in
relation to pre-existing categories and to identify the
different categories of crypto-assets.
5.1.1. Progressive evolution of the monetary approach to

crypto-assets
From a monetary, banking, and financial perspective,

crypto-assets could currently be described as digital units,
mainly fungible, issued by a multitude of mainly private
actors, to which users attribute a speculative value and/or a
future use value on ecosystems.
The classic functional definition of currencies is that a

currency must meet the following conditions: a unit of
account, a reserve of value, and a trading vehicle. The first
research on crypto-currencies, focusing on Bitcoin, mostly
denied the qualification based on this definition1. In the
1 See [YER 13].

92 Blockchain
early days of Bitcoin, it was very difficult to acquire it

without mining activity (in the absence of trading platforms)
and it was almost impossible to buy anything with; see, for
example, the story of an American engineer who had
difficulty buying two pizzas with 10,000 Bitcoins in 20102.
Currently, crypto-currencies and particularly Bitcoin have

become quite liquid and more and more people recognize
that some crypto-currencies at least partially meet the
functional criteria of currency3 and deserve to be taken into
account in the framework of monetary policies [FER 18,
STE 17].
5.1.2. The typology of crypto-assets
According to a functional typology, there are at least four

categories of crypto-assets: payment instrument tokens,
network access tokens or utility tokens, asset tokens, and
project shares (equity tokens or security tokens)4.
In summary, crypto-asset payment instruments are, like

Bitcoin, focused on the possibility of carrying out simple
digital transactions. Utility crypto-assets are designed to
allow a use or a purchase, generally in the future, on the
ecosystem deployed around a project operating with
a crypto-asset. Crypto-assets with property right rely on the
physical world to explain their value and display underlying
assets such as gold or oil; for example, the Petro,
a crypto-asset created by Venezuela, is included in this
category. The security tokens represent a category inspired
by shares and securities; these crypto-assets are designed in
such a way as to periodically remunerate the holders of
crypto-assets for their holding, and they are designed with a
2 https://bits.blogs.nytimes.com/2013/12/22/disruptions-betting-on-
bitcoin/?_php=true&_type=blogs&_r=0.
3 See [HAY 17] and [CLA 18].
4 See [QUI 18a, p. 41 et seq.].
Proteiform and Multi-sectoral Transformations 93
dividend mechanism and to allow these holders of

crypto-assets to take part in votes relating to the projects, as
may be the case at general shareholders’ meetings.
What is interesting about crypto-assets, compared to

pre-existing mechanisms, is that these categories are not
impervious and that the same crypto-asset can, for example,
serve as a payment instrument, a project share or a right of
use.
This multi-faceted approach to crypto-assets justifies the

interest in redefining the economic models linked to these
blockchain ecosystem projects and the notion of tokenization.
The fact of issuing and offering crypto-assets to the public

in exchange for currencies, other crypto-assets, or services
(provision of computing power, communication, etc.) makes it
possible to create an ecosystem that is both specific and
open, with its own rules and interoperability. The notion of
the consumer-actor, created to designate the emergence of a
category of consumers involved in the life of products and
brands by companies, finds with tokenization a potentially
increased form, the consumer-actor becoming in a way a
consumer-shareholder.
5.1.3. Crypto-assets and bartering
The use of crypto-assets to purchase consumer goods or

other crypto-assets is bartering, as crypto-assets are, for the
time being, generally not recognized by the States as legal
tender.
Bartering is often presented as an underground and

unregulated mode of trade between individuals or small
businesses. However, barter is legal in France, for example,
where it is designated under the category of sale by
offsetting, a method authorized for transactions between
companies, in compliance with accounting and tax
94 Blockchain
obligations, in particular, as regards value-added tax (VAT)5.

It should be noted that the French government is
considering exempting “crypto-crypto transactions” as part of
its draft laws on crypto-currencies, in particular the Pacte
law, as Minister Bruno Lemaire pointed out during meetings
of the Autorité des marchés financiers (AMF, French
financial markets authority) on November 13, 2018. In this
context, interposed crypto-asset bartering could potentially
be tax exempt.
With crypto-asset right-of-use, bartering is resurfacing in

a dematerialized and distributed economy.
The two terms used to describe these activities are

“barter” and “swap”. These two terms are widely used in the
Blockchain ecosystem, notably by the Komodo Project, which
proposes an atomic swap system of crypto-assets from
separate blockchains on a platform called BarterDEX. There
is a multitude of other projects taking this axis of barter and
tokenization, such as Cryptobarter, an e-commerce site in
cryptocurrency6; Bunz, an online barter site that uses
crypto-assets7; or the well-known OpenBazaar8.
Tokenized business models are still experimental, but are

developing, and recall recent developments in the economics
of video games. Video game companies have moved from a
model focused on the sales of supported games and game
licenses to an ecosystem economy model with various
subscriptions, purchases, and monetizations included in the
game (premium, purchase of additional content, purchase of
5 See, for example, “Le Guide des échanges interentreprises de

biens et service ou Barter” published in 2012 by the Direction
générale de la compétitivité, de l’industrie et des services.
6 http://cryptobarter.net/.
7 https://bunz.com/.
8 https://openbazaar.org/.
distinctive elements or game facilitators, etc.)9. According to

several studies, the turnover generated by the video game
market is increasing by an average of 10% per year to reach
nearly 140 billion US dollars in 201810. Video game
publishers have for many years already relied on virtual
currencies that are partially de-indexed from currencies to
transform the act of purchase, following some questionable
practices to justify purchases made by minors from the
accounts supplied by parents.
Aware of the benefit of tokenized business models for

their industry, the major players in this sector are strongly
involved in blockchain projects, such as Atari, which works
with Ethereum’s founders to create a video game ecosystem
platform, or the Twitch video game streaming platform,
which provides crypto-asset solutions for channel publishers.
A group of video game companies called the Blockchain
Game Alliance11 has been created to define the uses of
blockchain in the sector; the companies in this group include,
for example, Ubisoft, ConsenSys, Alto, and EverdreamSoft.
For some, it would also be from this sector that the spread
of the blockchain and the tokenized economy in the market,
in general, would come12.
5.2. Interbank transactions and blockchain
Interbank and clearing transactions were among the first

cases of blockchain usage involving the largest number of
9 See [GUO 15].

10 See: https://newzoo.com/insights/articles/global-games-market-
reaches-137-9-billion-in-2018-mobile-games-take-half/; https://www.
gamesindustry.biz/articles/2017-12-20-gamesindustry-biz-presents-
the-year-in-numbers-2017.
11 http://blockchaingamealliance.org/.
12 https://medium.com/wax-io/how-games-will-bring-blockchain-to-
mass-market-d0a80e524d.
96 Blockchain
institutional and large companies. Many patents have been

filed in this field by banks, such as JPMorgan Chase or Bank
of America, and technology companies, such as IBM13.
Among the projects in this area, the main ones include

Utility Settlement Coin, Ripple, and Stellar Lumens.
Utility Settlement Coin14 is a project launched by

Clearmatics Technologies and UBS that has succeeded in
bringing together in a few months a group of around 10
major banks. This crypto-asset is indexed to currencies (in
the same way as the Tether, mentioned earlier). The
objective of this project is to modernize interbank
transactions with the blockchain by making them faster and
less expensive. In practical terms, with this system, these
crypto-assets representing collateral would circulate directly
between banks without recourse to clearing houses, the
traditional trusted third party in this field.
Other projects are more visible in the blockchain

ecosystem than the Utility Settlement Coin, including the
Ripple project, which, although often considered contrary to
the philosophical foundations of the blockchain, has a large
community and one of the most valued crypto-assets on the
trading market.
Unlike the Utility Settlement Coin, Ripple has created a

deindexed crypto-asset currency, XRP, available on trading
sites. While this project focuses mainly on interbank
transactions, it also leaves room for individuals and
companies wishing to reduce their inter-currency conversion
costs.
13 See on the United States Patent and Trademark Office register:

https://www.uspto.gov/.
14 https://www.clearmatics.com/utility-settlement-coin-pioneering-
form-digital-cash/.
Figure 5.1. Source: https://ripple.com/. For a color version of this figure,

Ripple’s three services are xCurrent, xRapid, and xVia:

— xCurrent aims to facilitate cross-border interbank
transactions15. This solution is interoperable with xRapid.
— xRapid is designed for financial institutions wishing to
limit their liquidity, particularly in transactions in emerging
markets16. This solution uses the XRP crypto-assets
available on the exchange sites.
— xVia is intended for companies and banks wishing to
have an interface and enhanced tools, including monitoring,
in their international transfers17.
Another project, Stellar, partly the result of the work by

the members of the Ripple team, including co-founder Jed
McCaleb (also the creator of MtGox and eDonkey), has been
created. This project, initially based on Ripple’s blockchain
technology, still mainly aims to facilitate international
15 https://ripple.com/ripplenet/process-payments/.
16 https://ripple.com/ripplenet/source-liquidity/.
17 https://ripple.com/ripplenet/send-payments/.
98 Blockchain
money transfers, but is aimed more at individuals and

companies than at large financial institutions.
Figure 5.2. Source: https://www.stellar.org/. For a color version

of this figure, see www.iste.co.uk/quiniou/blockchain.zip
5.2.1. The Banque de France’s MADRE project
In July 2016, the Banque de France began a blockchain

experiment with the Caisse des dépôts et consignations and
the startup Labo Blockchain (now Blockchain Partner) with
the aim of using this technology to study the possibility of
“decentralizing the functions of the repository manager”
[BAN 16b]. This project was then refined and aimed to
decentralize the allocation of Creditor Identifier for SEPA
(ICS), an identifier requested from the Banque de France by
the banks on behalf of their customers, companies wishing to
issue direct debits as creditors. With this unique identifier,
this mechanism makes it possible to certify the origin of the
SEPA direct debit requested from the debtor’s bank and to
verify the mandate allowing the direct debit. To obtain a
SEPA Creditor Identifier, the creditor must meet several
conditions that the Banque de France must verify. As
explained by Blockchain Partner in an April 2018
communication, the objective of the Banque de France’s
MADRE project, launched in early 2018, is to decentralize the
ICS allocation mechanism by involving banks in verifying the
conditions to be met by the creditor and in maintaining the
register including these identifiers [BLO 18].
For some commentators, blockchain technology would not

be most effective in a context involving a limited number of
actors, as in the case of the MADRE project. Thus, according

to Lola Rigaut-Luczak: “a distributed database replicated
under the control of the Banque de France with a dedicated
API connected to partner banks was sufficient to meet the
project’s needs, while considerably reducing costs” and the
choice of the blockchain would be more communicational
than technical [RIG 18].
5.3. Fundraising and ICOs
Initial Coin Offerings (ICOs)18, mentioned earlier, are

among the most interesting and successful uses of the
blockchain ecosystem.
5.3.1. The concept of ICOs and other financing methods
ICOs are fundraising operations in crypto-assets (or

currency) that allocate to the investor (or contributors)
crypto-assets issued by the financed structure in return.
The term “ICO” is a reference to IPOs, Initial Public

Offerings. Nevertheless, the realization of an ICO does not
necessarily imply referencing of the crypto-asset created on
an exchange site, even if it is an important criterion for
investors and an important step in the development of the
project’s notoriety. Referencing a crypto-asset on an
exchange site can be very expensive and can cost several
hundred thousand euros. To justify this high cost in a
context of growing opposition from ecosystem players, the
leading exchange site Binance announced in October 2018
that the profits linked to referencing would be donated to
charities19.
18 On this subject, see [QUI 18] in particular.

19 https://support.binance.com/hc/en-us/articles/360017664751-
Binance-Listing-Fee-Update.
100 Blockchain
Another difference with IPOs is that, for the time being,

in the majority of cases, crypto-assets issued during ICOs do
not constitute shares in the capital of a company or dividend
rights. A Security Token Offering (STO), which could be
translated as a public offer of crypto-asset project shares, is a
sub-category of ICOs that is a little closer to the traditional
method of raising funds or listing on traditional stock
exchanges with open capital.
ICOs are similar to crowdfunding, which has developed

with the Internet, but the main difference is that ICOs
allocate crypto-assets to contributors and not services or
goods in development. Unlike participatory financing, the
sole objective of which is to make it possible to create or
carry out a product, service, or project, ICO is multi-faceted
and, above all, allows an investor-contributor to become
involved in a project’s ecosystem by holding crypto-assets
which are linked to it and the uses of which, generally in the
future, are sometimes only sketched.
In a November 2018 report, the AMF stated that “ICOs

can be a useful alternative source of financing for new or
innovative companies, which would have difficulty raising
capital through traditional financing channels, by being at
an early stage of their development or by being considered
too risky and/or too small” [LEM 18].
5.3.2. The functioning of the ICOs
Blockchain fundraising has evolved considerably since the

first experiences of ICOs. The first ICO was Mastercoin,
which dates from 2013. The first ICOs operated on dedicated
platforms and made it possible to and proposed to contribute
with several types of crypto-assets. These first experiments
raised convertibility problems, as in the case of the MaidSafe
ICO [DIN 17]. Before experiencing accelerated development
in 2017 with several billion euros raised during the year20,

the financing method by ICO was slowed down by several
events, the main one being the failure of The DAO, a Stock.it
project that led to significant piracy and a loss of confidence
in the crypto-asset ecosystem in June 201621. In 2018,
certain people and media outlets suggested that the decline
in the price of crypto-currencies against traditional
currencies was partly related to the conversion of amounts
raised in crypto-currency form (mainly in Ether) into foreign
currencies22.
The most notable development in ICO is the appearance

of Ethereum smart-contracts coded in the Solidity language
mentioned earlier. The Ethereum project, which also used an
ICO to develop, allowed the development of ICOs from other
projects directly on the Ethereum blockchain, creating
separate crypto-assets. The majority of the ICOs are
currently carried out on Ethereum and some of the projects
financed have a strong reputation despite the absence of
their own blockchain. The ICOs carried out with Ethereum
also make it possible to integrate reversibility and voting
systems for first-time investors during fundraising (for
example, to decide to increase the maximum threshold for
new crypto-assets to be issued)23.
20 See, for example, https://www.icodata.io/stats/2017; https://www.

coindesk.com/6-3-billion-2018-ico-funding-already-outpaced-2017.
21 The failure of The DAO resulted in a fork between Ethereum
and Ethereum Classic, in order to remove the effects of The DAO’s
piracy on one of the two blockchains from the fork.
22 See: https://www.bloomberg.com/news/articles/2018-08-13/ether-
tumbles-as-concern-increases-that-icos-are-cashing-out; https://www.
ccn.com/did-icos-cause-ethereum-to-drop-by-44-in-2-weeks-by-dum
ping-on-the-market/.
23 To go further on the specific question of ICOs, see [QUI 18a].
102 Blockchain
Figure 5.3. Source: Ethereum website, https://www.ethereum.org/
Despite their simplicity of technical implementation (for

basic ICOs), the implementation of ICOs is beginning to be
supervised and good practices, particularly by ecosystem
stakeholders, are being implemented. Most major projects
use external service providers or platforms specializing in
the organization of these operations, including the
registration and monitoring of investors (particularly with
the KYC — Know Your Customer — forms), the validation of
white papers (equivalent to IPO prospectuses), and the
drafting of contracts and discharges related to these
operations.
There are many reasons for using ICOs compared to other

financing methods, and the AMF has enabled them to be
ranked on the basis of a study conducted among French ICO
holders. The main reason would be the desire to create a
“community (platform)”, i.e. the desire to create an
ecosystem based on a platform that operates using a crypto-
asset, and that is specific to it, as a mode of exchange and
representation of value. Indeed, ICOs, a powerful method of
disseminating crypto-assets, make it possible to create a
sense of belonging to the project within a community that
holds crypto-assets.
Figure 5.4. Reasons cited by project leaders for launching an ICO (by a
number of projects). Source: French FMA [LEM 18]
ICOs are experiencing a real craze, especially among some

large companies wishing to refresh their image, such as
Kodak with the KodakOne24 project or Atari [ATA 18]. One
state has also taken the plunge, namely Venezuela, with the
ICO of its crypto-asset Petro, the geopolitical objective of
which is to circumvent the American financial embargo
[GOB 18].
5.3.3. Regulations still uncertain
ICO regulation is still under development at the state

level, and international regulatory projects, including
through G20 discussions, are currently at a standstill.
Like most states, France seeks to strike a balance

between encouraging innovation, economic attractiveness,
and consumer protection. However, while tax measures in
favor of holders of crypto-assets are limited, with a desire to
24 https://kodakone.com/.
104 Blockchain
apply the barely attenuated flat tax to the conversion of

crypto-assets into euros [FIN 18], the situation is different
for the ICO regulatory strategy. The French government and
parliament have recently adapted a position in favor of the
ICOs with the draft “Pacte” law25, which proposes, in
particular, an optional visa system granted by the AMF
under certain conditions to enable them to legitimize these
transactions and facilitate the opening of bank accounts,
which are sometimes difficult to obtain, even if the methods
for implementing these measures are still unclear and
discussed26.
Nevertheless, some countries adopt more extreme

positions, such as China, which has banned ICOs, and, on
the contrary, countries that are used to attractive measures,
such as Malta, which offer favorable conditions for the
deployment of ICOs, proposing regulations inspired by those
governing IPOs, but less strictly27.
5.3.4. Financing social innovation
The blockchain has been identified as one of the vectors of

social innovation by many actors, particularly institutional
ones, such as the European Union, which organized a
competition to finance this type of project28. The United
Nations Research Institute for Social Development has also
studied the value of financing social innovation through the
blockchain [SCO 16].
25 Draft law on the growth and transformation of enterprises

(ECOT1810669L); see, in particular, Article 26.
26 See, in particular, the statements of the Caisse des dépôts et
consignations opposing the role it is intended to play in opening
accounts for ICO holders.
27 Parliament of Malta, Bill no. 44, Virtual Financial Assets Bill.
28 https://ec.europa.eu/digital-single-market/en/news/5meu-prizes-
social-innovations-using-blockchains-social-good (see figure 5.5).
Figure 5.5. Source: https://ec.europa.eu/digital-single-market/en/news/

5meu-prizes-social-innovations-using-blockchains-social-good
ICOs thus appear to be a powerful vector for transforming

private finance, public financing, and the charitable sector.
5.4. Legal and judicial evidence and timestamping by

blockchain
The blockchain technology allows events and operations

on registers to be timestamped, potentially in an unalterable
way29, and as such it makes it possible to rethink the way in
which registers are organized. In addition, because of these
characteristics, the elements archived on the blockchain are
likely to be recognized as having a high probative value.
29 Except in the case of an architecture that is different from the

blockchain, a security flaw, or a decision within a fork.
106 Blockchain
5.4.1. Method of legal proof by blockchain
The blockchain technology allows data to be marked with

a certain date; in this respect, it meets a probative need in
many administrative or litigation files [QUI 18b]. This
question is similar to that of the probative value of contracts
implemented on a blockchain (smart contracts) compared to
that of authentic instruments.
It is possible to consider replacing the blockchain with the

ASSEMBLACT® system, used by many notaries and
lawyers, which ensures the inviolability of a document and
prevents any substitution or addition of pages with
self-adhesive tape. Similarly, the INPI’s (French National
Institute of Industrial Property) Soleau envelopes,
mentioned earlier, which it possible to prove a prior artwork,
can find a simple equivalent in the blockchain.
There are many blockchains and service projects in this

area.
The Fiducial project, mentioned earlier, makes it possible,

for example, to guarantee through the blockchain the
subsequent conformity of a document with the original that
was sent as an attachment to a third party30.
The blocknotary project uses blockchain and fingerprint

signature technologies to certify the ownership, integrity,
and existence of a digital file.
30 https://www.fiducial.fr/Notariat/Signature/Blockchain.
Figure 5.6. Source: https://www.blocknotary.com/timestamp
It should be noted that the blocknotary project has made

efforts to meet the specific needs of the State of Vermont
law, which has explicitly opened up to the Blockchain
technology in terms of judicial evidence31.
Figure 5.7. Source: https://www.blocknotary.com/vermont-law
31 State of Vermont’s H.868: An act relating to miscellaneous

economic development provisions (Act 157), 2016, https://legislature.
vermont.gov/assets/Documents/2016/Docs/ACTS/ACT157/ACT157
%20As%20Enacted.pdf.
108 Blockchain
In the same way, the stamped project allows us to easily

mark files on several blockchains (Bitcoin, Ethereum,
Bitcoin Cash, or Dash).
Figure 5.8. Source: https://stampd.io/
5.4.2. First receipts by the judicial systems
In many legal systems, it is not necessary to legislate for

legal and judicial evidence by the blockchain to be
recognized. Nevertheless, it is still necessary for the courts to
recognize this mode of proof in practice, and it would be
interesting to take into account the technical specificities of
the blockchain in order to attribute to this mode of proof an
important value, for example by creating a category of
authentic electronic instruments.
In states such as Estonia, which have established or are

experimenting with the operation of the public registers by
the blockchain, the question of the recognition in principle of
the value of legal or judicial proof by the blockchain seems
implicit insofar as it is also implemented by the State.
In a country such as France, for example, Article 1358 of

the Civil Code states that: “Except where the law provides
otherwise, proof may be provided by any means”. The data
entered on blockchain can therefore in principle be
submitted in the context of a dispute. However, the specific
question of the probative value of blockchain evidence is only
addressed in an embryonic way32. This subject, and even the
much more ambitious subject of disintermediation in the
field of justice, was nevertheless pointed out by the Senate,
in an April 4, 2017, report on the renovation of justice
according to which the blockchain could potentially
guarantee independence and impartiality in a judicial
context: “Based on the principles of independence and
impartiality, which no technological device can guarantee
like the intervention of the judge — except perhaps that the
blockchain can be applied to the justice system — the court
decision retains its full value”33. Although legislative issues
and state experiments in France are currently focused on
ICOs and the taxation of crypto-currencies, this analysis by
the Senate reveals the acuity of this institution in this area.
The Chinese judicial system is the first to have taken a

formal position. The Supreme Court of the People’s Republic,
whose power is quasi-legislative for its interpretations34,
32 See, in particular, the draft amendment, cited earlier, on the

question of blockchain and authentic instruments: Draft law on
transparency, the fight against corruption and the modernisation
of economic life, No. 3623, tabled on March 30, 2016, No. 3785,
Amendment No. 227 (Rect).
33 Senate, Information report prepared on behalf of the Committee
on Constitutional Laws, Legislation, Universal Suffrage, the Rules
of Procedure and General Administration by the Fact-Finding
Mission on the Restoration of Justice, No. 485, April 4, 2017,
pp. 116—136.
34 L. Wei, “Judicial interpretation in China”, Willamette Journal
of International Law and Dispute Resolution, vol. 5, no. 1,
pp. 87—112, 1997 or C. Wanh, “Law-making functions of the
110 Blockchain
indicated on September 7, 2018, that digital data collected

and recorded via a blockchain with a digital signature could
be submitted as evidence before courts35. This opinion follows
a decision on June 28, 2018 by the recent Hangzhou Internet
Court, which accepted evidence from the blockchain in a
counterfeiting36 case. China is thus a pioneer in the field of
blockchain timestamp recognition, even though the Chinese
authorities’ positions on the blockchain, for example on ICO,
are very strict.
In other countries, such as England, experiments are

being conducted to validate this technology. The British
Ministry of Justice, for example, is studying this question on
an experimental basis as a follow-up to an intervention by
Sadek Ferdeous of Imperial College on the applications of
Hyperledger Fabric and Hyperledger Sawtooth in this field
[ANB 18].
5.5. The renewal of the cadastral system by the blockchain
Blockchain projects aim to provide faster, more efficient,

and flexible decentralized authentication than that of the
land registers maintained by public administrations with the
assistance of notaries.
Blockchain as a registry technology is fundamental in a

context of data multiplication on the territory and in the real
estate sector, with the dynamics of City Information
Modeling (CIM) and Building Information Modeling (BIM)
which allow a digital representation of cities and buildings,
useful at the construction stage, for component and flow
analysis or for decision-making.
Chinese courts: Judicial activism in a county of rapid social

changes”, Frontiers of Law in China, vol. 1, no. 4, pp. 524—549,
2006.
35 http://www.court.gov.cn/zixun-xiangqing-116981.html.
36 https://mp.weixin.qq.com/s/W4HhYfwM8JUtBlWpQi2kqQ.
Blockchain projects relating to land registration mainly

concern the countries whose development is lagging behind,
particularly in terms of administrative management. While
these projects are often part of a logic of social and
solidarity-based development, they are nevertheless easier to
experiment with in countries with a structural need than in
countries with only a possible need for modernization.
Indeed, the modernization of functional cadastral systems
will require investments, particularly in staff training, and
could give rise to opposition from the representatives of
regulated professions. It should be noted, for example, that
in France, the report “Pour une modernisation de la publicité
foncière” (the case for modernizing advertising fees) by the
Commission de réforme de la publicité foncière (French
commission for reforming registration fees) headed by
Professor Laurent Aynès, submitted in November 2018 to
the Minister of Justice Nicole Belloubet [AYN 18], does not
mention BIM, CIM, or the blockchain.
5.5.1. The first experiments
The Bitland37 project aims to deploy non-centralized

registers operating with blockchain technology in countries
without a cadaster. The first experiment carried out by
Bitland involves Ghana and proposes the implementation of
a cadastral system. This project, which is still in its early
stages, was launched in 2016 and aims to provide a
transparent and secure framework to prove rights to land
and to facilitate land transactions. This access to a secure
title deed would facilitate access to mortgage credit and
would be a way of boosting economic activity in general.
Nevertheless, one of the difficulties encountered by this

project and highlighted by Chris Bates, the IT Security
Director of the Bitland project, is the problem of limited
37 http://landing.bitland.world/.
112 Blockchain
access to the Internet (and therefore to the blockchain) in

these countries without a cadaster [BAT 18].
The use of the blockchain to organize land and cadastral

registers is interesting and attractive from a social
innovation point of view, but the deployment of these
projects seems difficult and long, even when the initiative is
supported by the State. In Honduras, for example, two
companies, Epigraph and Factom, are carrying out an
experiment with government support to deploy a cadaster
operating with a blockchain to meet the important needs of
the Honduran civil society [CON 16].
While some commentators point to the difficulties and

many steps required to deploy blockchain-based cadasters,
particularly in developing countries [GRA 18], others even
consider that this application would be inappropriate and
that blockchain and cadasters would be incompatible
[THO 17]. In the field of cadasters, as in the field of identity
certification, the difficulty lies mainly in the origin and
importance of the certification of basic data (identity, the
title of ownership, etc.), the oracle mechanisms being still too
limited and of an unproven level of reliability. For this
reason, the projects likely to develop as a priority seem to be
projects carried out by administrations that already have
digitized registers, an approach that may be of interest in
terms of security and accessibility, but nevertheless seems,
for the time being, to be incompatible with a non-centralized
approach.
5.6. The use of blockchain in the entertainment industry
The culture and entertainment industry, which is largely

dematerialized, increasingly relies on platforms and
ecosystems to enhance the value of works. Unlike
intellectual property rights such as patents or trademarks,
copyright is not registered in all legal systems, particularly

in French law.
The first case of use in the field of intellectual property is

the modular filing in the field of disclosure and
timestamping (see the developments relating to the Soleau
envelope mentioned previously).
Another case of use identified in the field of copyright

management is related to the monitoring of works by oracles
and the automated distribution of rights to right holders,
without the use of an intermediary. This possibility has been
highlighted in France by the Ministry of Culture, which
published a report in early 2018 on the state of play of the
blockchain and its potential effects on literary and artistic
property38. It should be noted that among the first structures
to have taken an interest in implementing this mechanism
via blockchain are collecting societies, including traditional
trusted third parties. As early as 2016, Christophe Waignier,
Director of Resources and Strategy at SACEM, indicated, for
example, that a test was being carried out with hyperledger
to disseminate ISO standards for the identification of
International Standard Recording Code (ISRC) and
International Standard Musical Work Code (ISWC) works39.
In addition, the tools used to control the distribution of

works, such as DRM (digital rights management), are based
on rigid approaches to the protection of intellectual property
rights. The blockchain is a very effective tool for
transforming the non-rival property into the rival property
and, thus, creating rarity with immateriality. With
38 Report of the Higher Council on Literary and Artistic Property

(CSPLA) of the Ministry of Culture on the state of play of the
blockchain and its potential effects on literary and artistic
property, 2018.
39 https://societe.sacem.fr/actualites/innovation/les-blockchains-une
-opportunite-economique-pour-le-droit-dauteur.
114 Blockchain
smart contracts, it is easier to assert ad hoc rights, for

example, by deciding on the desired Creative Commons
License according to the work concerned.
Several actors have crossed the blockchain with the

potentialities opened by artificial intelligence via web
crawling robots that roam the web in search of data to index.
Artificial intelligence, in its state of development,
particularly with deep learning, makes it possible to identify
similarities between visual, textual, and audial elements.
Tools such as IBM’s Watson, or more specifically Shazam

for audio recognition or Compilatio for text identification,
have entered the ecosystem. These tools, initially restricted
to closed and limited databases, open up and become more
efficient, thanks to web crawling robots, and allow copies
and their place of publication and distribution to be traced
with some precision. Several projects aim to certify works by
the blockchain through the use of large-scale artificial
intelligence recognition on the Internet, using
indexing/identification robots which explore the web. The
Kodak Company, with the KodakOne project, or the
COPYTRACK company are pioneers in this field and should
certainly attract many authors concerned about respecting
their rights in the medium term. Sony is also working on the
use of blockchain technology for copyright management40. In
this context, collecting societies are faced with new actors
who are often better prepared for these new techniques for
protecting right holders.
Authors are also rethinking the monetization of their

works, along the lines of the Bowie Bonds created by
financier David Pullman41 with David Bowie (and later other
artists such as James Brown), to securitize the artist’s future
40 https://www.sony.net/SonyInfo/News/Press/201810/18-1015E/
index.html.
41 http://www.pullmanbonds.com.
copyright. This mechanism is all the more interesting

because it makes it possible to monetize, at the time of the
issue of the vouchers, certain revenues that will only be
collected after the artist’s death (copyright being collectible
until 70 years after the author’s death). A particularly
notable artist in this field is Gramatik, who, after having
been one of the first artists to systematically make his
albums free to download as soon as they were released (on
the website of another artist, Pretty Lights), decided to
create his own crypto-asset, named GRMTK, and to realize
an ICO with the support of SingularDTV, a project to create
blockchain ecosystems dedicated to the entertainment
industry. This approach is part of a strong logic of
disintermediation and emancipation of music majors.
Figure 5.9. Source: https://singulardtv.com/. For a color version of

this figure, see www.iste.co.uk/quiniou/blockchain.zip
The application fields of the blockchain are numerous, as

are the projects of the cultural industry sector. However,
from idea to feasibility and from feasibility to mass public
adoption, many steps still need to be taken for this
technology to effectively redefine the structural lines of our
society and its economy.
Conclusion
While the question of the blockchain, as an emerging

technology, does not lend itself to a conclusion in the strict
sense of the term, it nevertheless seems useful to identify its
prospects and the elements that will be decisive in its
generalization or not to entire segments of society and the
economy.
Although the blockchain is largely, for the time being,

experimental in its most innovative uses, this technology
appears to have a rare potential for social and economic
transformation. The disintermediation allowed by its
decentralized architecture puts users at the heart of the
system in terms of both governance and value distribution.
The encouragement of maintenance, development and
communication around the platform and first investment are
strong drivers for the deployment of blockchain projects
designed with a tokenization strategy. This tokenization
appears as a structuring element of public blockchains and
the essential tool for their expansion.
The blockchain offers a new paradigm, disintermediated,

open, and secure for the Internet and more generally for
human interactions. Many blockchain projects promise to
radically transform current business models and replace
meta-platforms, hegemonic intermediaries of digital 2.0.

118 Blockchain
However, beyond the essentially commercial projects and the

possibilities opened up in terms of interbank transactions
and fundraising, the blockchain opens the path to new ways
of thinking about societal and social projects, by renewing
the ways in which votes are organized and the involvement
of communities in projects of general interest.
The institutionalization and regulation currently at work

in the blockchain ecosystem is a sign of a real gain in
interest in this technology. However, some large institutions
and companies, including banks, show a preference for
private blockchain projects with limited use of crypto-assets.
Regulations in the sector vary from one country to another,
and despite a race for attractive regulations in some
countries (Malta, Switzerland, etc.), the major world powers
are still displaying a certain caution with regard to trading
sites or crypto-assets fundraising.
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Index
A crypto-assets, 4, 11, 21, 24,

39, 45, 46, 49, 51, 55, 56,
anonymity, 11, 18, 22, 25, 58, 61–63, 67, 91–97,
35, 82, 84 99–104, 115, 118
artificial intelligence, 42, cypherpunk, 3, 14
61, 65, 69, 70, 114
atomic swap, 63, 64, 94 D
B DAO, 43, 44, 49–51, 58,

77, 84, 85, 87, 101
bank, 14, 20, 21, 55, 91, dApps, 37, 44–46, 49, 50
95–99, 104, 118
democracy
Bitcoin, 3, 4, 9–16, 18, 19,
21–25, 31, 38, 55, 58, direct, 77–80, 82
61–63, 91, 92, 108 liquid, 80–82, 92
blockchains disintermediation, 1, 4, 5,
private, 11, 25, 118 18, 29, 35, 37, 50–53, 55,
56, 59, 64, 71, 77, 82,
public, 18, 22, 25, 26, 117 109, 115, 117
b-money, 4 distributed architecture,
business secrets, 18, 27 10
C E
cadaster, 89, 111, 112 encryption, 4, 11, 16–18,
coinbase text, 14, 15, 24 22–24, 28, 85

134 Blockchain
e-Residency, 86, 87 S
Ethereum, 4, 10, 16, 23, scalability, 5, 61
32, 37–39, 41, 44–47,
50, 51, 62, 64, 84, 85, sharding, 62
95, 101, 102, 108 smart contract, 4, 10, 16,
32, 37–40, 42–45, 49–51,
I 57, 62, 63, 77, 82, 84, 85,
87, 101, 106, 114
ICO, 16, 21, 23, 42, 43, 49,
51, 56, 58, 84, 99–105, social, 77, 82
109, 110, 115 standardization, 41, 64
interoperability, 5, 44,
61–65, 89, 93, 97 T
ISO, 64, 113 timestamping, 4, 11–14,
16, 28, 40, 41, 56, 82,
J, M, O 105, 110, 113
judicial proof, 108 token (see crypto-asset),
16, 31, 32, 42–45, 51, 55,
mining rig, 13 56, 58, 59, 82, 84–86,
oracles, 32, 66, 112, 113 91–95, 100, 117
Token Curated Registries,
P 31, 85
peer-to-peer, 3, 4, 10, 12, transaction costs, 37, 38,
34, 53 49–51, 56–59
personal data, 18, 19, 21,
22, 24, 52, 65, 69 V, W, Z
video games, 94, 95
R
whitepaper, 16, 21, 43, 102
registry Zero Knowledge Proof, 18
distributed, 7, 9, 11
non-centralized, 11, 111
rights, 16, 24, 26, 28, 34,
51, 55, 84, 85, 92–94,
100, 111–114
Ripple, 62, 96, 97
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The Advent of Disintermediation

ISTE Ltd John Wiley & Sons, Inc.

© ISTE Ltd 2019

Library of Congress Control Number: 2019936981

British Library Cataloguing-in-Publication Data

Part 1. The Blockchain: a Tool for Non-centralization

Chapter 1. Non-centralized Architecture . . . . . . . . . . . 7

Chapter 2. The Dynamics of Disintermediation . . . . . . 37

Chapter 3. Blockchain Prospects and Ongoing

Part 2. Blockchain Technology for a

Chapter 4. Toward a Social Smart-contract? . . . . . . . . 77

Chapter 5. Proteiform and Multi-sectoral

5.4.1. Method of legal proof by blockchain . . ..... 106

The blockchain’s current visibility is due to the intensity

Nevertheless, the blockchain technology and the first uses

Before studying in detail the uses resulting from the

Blockchain technology is particularly in line with ledgers

Beyond the type of need to which the blockchain

with colossal computing power to achieve a collision with the

In the same vein, some researchers have been interested

Within the technical information system, the blockchain

The blockchain technology responds to a need for

1 Details of the experience can be found at: https://

were designed, patented2, and partially [PRE 96] tested in

Solutions such as PayPal, a company created in 1998 and

2 See, in particular, Patent of November 14, 1989 (filed July 30,

criterion to be taken into account was the speed of the

The difference with these technical currency transfer

Currently, an ecosystem of transaction and operation

3 B. Harris, former President of PayPal, August 14, 2018, CNBC

fields of activity. If this innovation did indeed lead to

The gradual de-indexing of the currency, of the crypto-

The blockchain represents a new step in Internet-related

5 See, for example, [MAR 94].

blockchain could have a significant societal impact by

Some intermediaries, whose added value was more due to

The place of trusted intermediaries or trusted third

Nevertheless, significant acculturation would be

By reasoning from a Western perspective, where the

From an Asian perspective, particularly from a Chinese

It therefore seems useful to identify current or potential

The aim of this book is to discuss the possible uses of the

The Blockchain: a Tool for

As a secure, non-centralized, peer-to-peer ledger

Even if many of the Blockchain projects, including the

Several articles have been published by this group of

“Computer technology is on the verge of providing

Blockchain: The Advent of Disintermediation, First Edition. Matthieu Quiniou.

decade. The methods are based upon public-key

Projects such as those by Wei Dai with b-money [DAI 98]

Since the creation of the Bitcoin protocol in 2009, the

1 [DAI 98]: “One of the more problematic parts in the b-money

blockchain projects, focus on scalability, interoperability

The main characteristics of the blockchain and the

The blockchain and the distributed registry technology

The term “decentralized”, frequently used to refer to the

The blockchain architecture is not decentralized; it is part

This typology, which is very frequently used not only on

Blockchain: The Advent of Disintermediation, First Edition. Matthieu Quiniou.

is generally associated with a diagram that presents the

The diagram depicting centralization shows only one

This schema is, wrongly, regularly used to present the

Figure 1.2. Decentralized system. For a color version of this figure,