My new book “Bitcoin Nation” was published on the 15th anniversary of the Bitcoin Whitepaper, October 31, 2023. You can read it below, one chapter per week. Or buy it here:

Since at least the time of the ancient Greeks and Romans, law codes were public documents, with the purpose of giving people guidelines to live lives that do not create conflicts. If conflicts still arise out of violation of the law codes, the ancients tried to compose comprehensive processes to resolve the conflicts.

In this sense, Roman law was an evolution from previous purely religious law codes, in that it assumed that laws were not to be dedicated by a god and interpreted by prophets. Instead, the Romans recognized that there is natural law, which can only be discovered and is ingrained in the nature of our universe and man made-law.

Natural law is essentially what I described in the previous chapter as “ethics”. Every action that conflicts with the ethics – which result from the properties of consciousness – conflicts with natural law.

An ideal law code would be in complete harmony with natural law. Unfortunately, this is not practically achievable. To understand why, we need to take a look at the praxeological aspect of inter-person conflict.

Let’s say Person A accidentally or intentionally destroys Person B’s favorite art piece. To reverse the violation of B’s natural property rights, A would have to replace the art piece to B, plus pay B for the damages that occurred to him while he was devoid of his property.

Let’s assume the artist who created the work is long dead. Thus, necessarily A can only reimburse B with another good or service, not an exact replica of the artwork.

The conflict is unresolvable if A and B don’t find a good or service that B values as high or higher than the artwork, while A values it lower or as high as the artwork. If no good can be found, where the valuations meet, one of the two will always feel betrayed. So, while in theory every person has their individual ordinal valuation of goods, in this conflict, a man-made law is required on how to resolve such unresolvable subjective valuation conflicts in a manner that is most satisfiable.

Another aspect is the practical consideration of preventing repeat offenders. From a purely natural law perspective, it would always be enough, if the offender restores the damage he has done. Since crimes are not always discovered and not always justly resolved in practice, it is necessary to oversize the compensation in cases where intent is suspected.

Now here again multiple problems arise. Intent is only known to the individual and cannot be proven or disproven beyond doubt. Furthermore, the exact proportion of crime to punishment is hard to determine.

Let’s assume a thief is caught stealing 1 Bitcoin. Should he be fined 1 Bitcoin, 2 Bitcoin, 10 Bitcoin?

Well, obviously this depends on multiple variables. One is, how much Bitcoin the thief already has in possession and how often he gets away with crimes.

A first-time offender, who steals out of boredom and opportunity, might be prevented from becoming a repeat offender, when sentenced with a fraction of his net worth.

A professional thief who stole 100 Bitcoin before being caught, stealing another, will laugh about any sentence less than 100x his latest catch.

The mother who is trying to feed her starving child will likely not be stopped by any fine.

As you can see, there are several hurdles one needs to overcome to create a “just” law code:

  1. The discovery of natural law through scientific philosophy is incomplete.
  2. Valuations are subjective and some conflicts thus unsolvable.
  3. Intent and crime detection rate need to be taken into account to prevent repeat offenders.

If you agree with the logic of the previous chapters, then you surely have a hunch, what my suggested solution to these issues is?

Of course, the free market.

In a society comprised of Bitcoin Nations, law will likely improve over time for two reasons:

Firstly, people can easily switch legal systems, if they are not satisfied with their current legal framework.

And secondly, competing legal systems will need to find arbitration methods to resolve conflicts that arise from differences between people who subscribe to incompatible law codes.

This necessarily forces each legal system to continuously outcompete others and requires that any nation who wants to grow their membership numbers negotiates treaties with other nations, where it is specified how conflicts between their members shall be resolved.

To see how all the market processes described in this book could play out in real life, let’s have a bit of conjecture time.