Lex Mercatoria

= Lex mercatoria is Latin for “merchant law” and it is the body of commercial law used by merchants throughout Europe during the medieval period emphasizing contractual freedom and alienability of property. [1]

Discussion

Jon Matonis:

'Large financial system websites are some of the most lucrative online targets and bitcoin has the added dimension of a target-rich environment that rarely results in prosecution. Not only is it difficult to prosecute the individual or individuals responsible for the hack, it is difficult to prosecute the financial site itself for negligence due to the many disclaimers inherent in voluntary and unregulated service providers or due to complicated offshore circumstances (although New Zealand does offer a dispute resolution scheme for Bitcoinica retail clients). Additionally, there is always the possibility of an artificial hack staged by an insider. Therefore, self-regulation is the order of the day and in the sometimes jurisdiction-less environment of the Internet, bitcoin entities and their customers currently operate under their own brand of lex mercatoria to enforce accountability.

Lex mercatoria is Latin for “merchant law” and it is the body of commercial law used by merchants throughout Europe during the medieval period emphasizing contractual freedom and alienability of property. Like an air guitar, bitcoin is arguably the ultimate form of intangible alienable property. The difference being, of course, that air guitar transactions are not publicly recorded on a distributed and enforced ledger.

Merchants relied on this legal system developed and administered by them while shunning legal technicalities and deciding cases ex aequo et bono. We are actually in the midst of such a case right now as the leading Bitcoinica parties attempt to sort out the claims process to the best of their abilities with limited account records. There is no court. There is no judge. Bitcoin is not defined as legal property. Deliberation is currently focused on the most fair and just method of separating the legitimate claims from the fake claims. But this is new ground for a bitcoin-related settlement and undoubtedly it will set an early benchmark for future cases. The prior hack involving Linode servers was settled in full via Bitcoinica customer reimbursements.

As for the attacking hacker, it will most likely go unprosecuted since fungible bitcoins possess many of the characteristics of physical cash and even if the attacker had been sloppy, the amount involved does not really justify expensive network traffic analysis that would potentially link an IP or bitcoin address to a real-world identity.

...

Whatever becomes of the Bitcoinica margin trading entity in the future, it is clear that a sort of ‘digital’ lex mercatoria is emerging — one that recognizes the complete voluntarist nature of the bitcoin protocol in commerce. We don’t have to imagine The Enterprise of Law: Justice Without the State because we are living through it now.

Self-regulation may be the only available option as authorities are in a quandry. Specifically regulating bitcoin imbues it with legally-recognized value and that is something that the State will resist for as long as possible. So, happily we continue to trade our air guitars.

To the bitcoin detractors, these various security breaches are not a fault of the peer-reviewed bitcoin cryptographic protocol but a lapse of security experience and poor judgment by the respective administering companies. The beatings will continue until security improves. Trust in the overall connected infrastructure may have been fractured temporarily, but just as the guild structure flourished the improved lex mercatoria that evolves as a result will strengthen bitcoin in the end." (http://www.forbes.com/sites/jonmatonis/2012/05/28/lex-mercatoria-the-emergence-of-a-self-regulated-bitcoin/)