ethical foundation of the blockchain technology – an

PreliminarycommunicationUDC17.022(045)doi:10.21464/sp35209Received:31July2019

JuricaMarkovićMinistryofDefenceoftheRepublicofCroatia,TrgkraljaPetraKrešimiraIVbr.1,HR–10000Zagreb

[email protected]

Ethical Foundation of theBlockchain Technology – an Introductory Inquiry

AbstractThis article briefly examines the blockchain technology, addresses the core ethical issues concerning its implementation, and considers its current and potential social role. During the research, virtue ethics revealed itself to be most compatible for understanding and de-scribing the technical fundaments of blockchain and the scope of its application.

Keywordsblockchain,technology,ethics,virtueethics,cryptocurrency

1.DefiningtheBlockchainTechnology*

1.1. Working Definition

The blockchain technology is a decentralised peer-to-peer1 systemofcom-puternetworkwhichenablesadirecttransferofdatabetweennodes,2 thereby eliminatingtheneedforthirdparties.3 All transactions that take place in such

1 Alex Tapscott, Don Tapscott, “A cautionarytale of the blockchain regulation”, para. 6,in:AlexTapscott,DonTapscott,TheBlock-chain Revolution, Brilliance Audio, 2016[Microsoft Edge, EPUB format]. Note thatin this paper the term blockchain will be used in the particular sense of decentralised sys-tem of peer-to-peer computer network withthe distributed ledger. The entire section ofthispaperisbasedonthatpremise,andeverysubsection holds logical implications based on that premise (which mainly includes sub-section1.1.5.onhowtheblockchainsystemoperates).Asof2018,thereisaconstanturgeto enhance blockchain technology, and newconceptsofblockchainsystemscontinuouslyemerge.Forexample,centralisedblockchainwith a distributed ledger or decentralised

blockchainwith a limited ledger.Therefore,it is possible that the chosenmodel for thispaper is not the optimal operating model. Some authors predict mainstream usage ofblockchaintechnologyin2021anditsmatur-ingforaday-to-dayusagein2025.Cf.ImranBashir,Mastering Blockchain,PacktPublish-ing,Birmingham2018, p. 10. For some ex-amples, considerVoatz for electronic voting(https://voatz.com/),Everipedia,ablockchainencylopaedia (https://everipedia.org/), Pax-os dedicated to brokering solutions (https://www.paxos.com/), and Northern Block forsupplying solutions (https://www.northern-block.ca/products-supply-chain-provenance).

2 The node represents the computer whose end userisahumanbeing.–A.Tapscott,D.Tap-scott,“Networkedintegrity”,para.4[Micro-softEdge,EPUBformat].

3 Ibid.,“Distributedpower”,para.6[MicrosoftEdge,EPUBformat].

* This paper is an updated and revised research based on the masters thesis “Ethical Foun-dationsandMoralChallengesofBlockchainTechnology”, successfully defended at theFacultyofHumanitiesandSocialSciencesoftheUniversityofZagrebin2018.

https://doi.org/10.21464/sp35209

mailto:[email protected]

https://voatz.com/

https://everipedia.org/

https://www.paxos.com/

https://www.paxos.com/

https://www.northernblock.ca/products-supply-chain-provenance

https://www.northernblock.ca/products-supply-chain-provenance

426SYNTHESIS PHILOSOPHICA70(2/2020)p.p.(425–452)

J.Marković,EthicalFoundationoftheBlockchainTechnology–an...

a system are recorded in the distributed ledger4 and coded as concatenated blocks,5 thus giving rise to the term blockchain technology. This technology was devised to build and maintain trust and integrity6asameansofensuringsecurity.Therearetwokindsoftechnologywhichareinvolvedinthispro-cess:hashtechnologyandcryptographictechnology.7Whiletheblockchaintechnologyhasawideandever-expandingrangeofapplications,itiscurrent-lybestknownforbeingused to facilitatecryptocurrency transactions.Theterm blockchainreferstofour8distinctconcepts:

1. Data structure: in computer science and software engineering, adata structureisawayoforganisingdataregardlessoftheiractualinforma-tion content.

2.Algorithm:insoftwareengineering,thetermalgorithmreferstoase-quenceoftasksthatneedtobeexecutedbyacomputer.

3.Setoftechnologies:thetermblockchaincanbeusedtorefertoacom-binationofconceptssuchasblockchaindatastructure,blockchainal-gorithm and various cryptographic and security technologies which can beusedtoensureintegrityinapurelydistributedpeer-to-peersystem,regardlessofitsuse.

4. An umbrella term for purely distributed peer-to-peer systems with acommonareaofapplication,aswellasanumbrellatermforpurelydis-tributedpeer-to-peersystemsofledgerswhichusetheblockchaintech-nology package.

Inthispaper,Idescribedwhatisunderstoodby1)and2)whileadheringto3),andIalsomentioned4)whendescribingtheapplicationoftheblockchaininthedomainofcryptocurrencies.Also,itshouldbenotedthattheresearchpresented in this paper is based on the permissionless blockchain system.9 Whendiscussingtheblockchaintechnology,onemustkeepinmindthatthisis a newly emerging technology. The mechanisms behind the blockchain tech-nologyarecontinuouslyundergoingdevelopment.Asaconsequence,arobustdefinitionofwhatconstitutestheblockchaintechnologyisyettobeoffered.Thepossibilitiesofitsapplicationandtheramifications itmayproducearelikewise under constant consideration.

1.2. Decentralised System of Peer-to-Peer Computer Network

Twomainarchitectonicsolutionsofacomputersystemarecentralisedanddecentralisedsoftwaresystem.Inacentralisedsoftwaresystem,componentsareconnectedaroundthecentralcomponent,whereasinadecentralisedsys-tem,thereisnocentralcomponentresponsibleforcoordinatingorcontrollingother system components.10 Blockchain technology is based on the decentral-isedsystemasatoolforbuildingandmaintainingtrust and integrity. Integrity isanon-functionalaspectofasystemwiththepurposeofgainingsecurity,completeness, consistency, accuracy and absence of errors and corruption.Trust isfaith,withinaspecificrelationship,inreliability,truthfulnessorskillsofanotherwithoutanyproofor inquiry.Trust isgivenbeforehandandcanincrease or decrease according to the interaction.11

Inthecaseofthesystemofpeer-to-peernetworkofcomputers,thenodesarepeer-to-peer when it comes to coordination and supervision over each other. Therearenosuperiorandinferiornodesinsuchasystem.However,thedataandinformationinthissystemaredistributedamongstallthenodes,andthequestionarisesregardinghowtogainintegrityandtrustwithinthesystem,



without the central authority that would give orders on how this should be executed. The problem can be even more exacerbated with the question re-gardinghowtogainintegrityandtrustinthedecentralisedsystemofpeer-to-peercomputernetwork,whereweareneitherfamiliarwiththeexactnumberofnodesnorisitknownhowmuchtrustcanbeputintheothernodes.Infact,I shall assume the worst possible scenario and say that we cannot have any trust or reliability in any node within the system whatsoever. This problem hadarisenbeforeconductingthisstudy.Itcanbefoundintheliteratureunderthe term problem of the Byzantine generals.12To resolve these issues, onemustexaminethetechnicalsetupofblockchain technology. A solution to the problemoftheByzantinegeneralshasbeenoffered,anditliesintwotechno-logicalcomponentsofblockchain–hashvalueandcryptography.

1.3. The First Technological Component: Hash Value

Hash values are produced by bits and bytes that constitute data. To trans-formdataintothenumberoffixed lengths,13 we would need so-called hash functions.Thesefunctionsarecomputerprogramsthatenablethetransforma-tionofanydata(regardlessofthesizeoftheinput)intothenumberoffixedlengths.Whatisimportantforthispaperisthespecificgroupofhashfunc-tions that are called cryptographic hash functions.Theyarespecificbecausetheycanproduceakindof“digitalfingerprint”foranyinput.14 A hash value

4 Ibid., “How this worldwide ledger works”,para.1–7[MicrosoftEdge,EPUBformat].

5 Daniel Drescher, The Blockchain Basics: A Non-Technical Introduction in 25 Steps,Apress, Frankfurt am Main 2017, pp. 111–122.

6 Cf.ibid.,pp.29–32.

7 Cf.ibid.,pp.70–79,93–101.

8 Cf.ibid.,pp.34–35.

9 RobertHerian,Regulating Blockchain,Rout-ledge,NewYork2019,p.18.Herianmentionsthat there are permissioned, permisionslessand hybrid blockchain systems.

10 D.Drescher,The Blockchain Basics,p.11.

11 Forthetermtrustcf.WilliamMougayar,Vita-likButerin,“ANewTrustLayer”,para.1–10,in:William Mougayar, Vitalik Buterin, The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology,JohnWiley & Sons, Hoboken, New Jersey2016 [Microsoft Edge, EPUB format]; PaulVigna, Michael J. Casey, “Bringing ‘Trus-tless’ Software to Communities of Trust”,

in:PaulVigna,Michael J.Casey,The Truth Machine – the Blockchain and the Future of Everything, St. Martin’s Press, New York,2018[Freda,EPUBformat].

12 “Related computation challenge is so-calledproblem of theByzantine generals.” –Mel-anie Swan,The Blockchain: Blueprint for a New Economy,O’ReillyMedia, Inc.,Sebas-topol,California2015,p.2.

13 “Fixedlengthmeanshavingasetlengththatnever varies. In database systems, a fieldcanhaveafixed oravariable length.Avar-iable-lengthfield isonewhoselengthcanbedifferent in each record, depending onwhatdata is stored in the field. The terms fixedlengthandvariablelengthcanalsorefertotheentirerecord.”–VangieBeal,“Fixedlength”,Webopedia. Available at: https://www.we-bopedia.com/TERM/F/fixed_length.html (accessed on 10 September 2020). Cf. EricW. Weisstein, “Hash Function”,MathWorld. Available at: http://mathworld.wolfram.com/HashFunction.html (accessedon10Septem-ber 2020). Cf. I. Bashir, Mastering Block-chain,p.106.

14 Cf. Roger Wattenhofer, The Science of the Blockchain,InvertedForestPublishing,2016,p.80.

https://www.webopedia.com/TERM/F/fixed_length.html

https://www.webopedia.com/TERM/F/fixed_length.html

http://mathworld.wolfram.com/HashFunction.html

http://mathworld.wolfram.com/HashFunction.html



is,initself,uniqueasisthefingerprintofapersonanditisthereforeimpossi-blethatthereexisttwofingerprintsinacollision.Additionally,cryptographichashfunctionsarepseudo-random.Itisimpossi-ble to predict hash values based on the input.15Tosimplify–ifwetrytogainhashvaluefromthesameinput,thenthehash value will always alter and be differentineveryattempt.Anotherdistinctivenessofcryptographichash val-uesisthat,throughthem,wecannottracetheoriginalinputthatproducedthespecifichashvalue.Thismakescryptographichashfunctionsunidirectionalfunctions.Whenwecreateaparticularhashvalue,weapplythehashfunctiontothespecificdata.Thisprocessiscalledhashing.16 Besides the term hashing,I will mention the term hash reference.Hashreferencesrelatetothedatathatisstoredsomewhereelse,forexample,onaharddiskorinadatabase.Hashreferenceenablestheconnectionbetweenthecryptographichashvalueandtheinformationontheexactlocationofaparticulardatainthesystem(whenwetalkabouttheblockchain,itimpliesthedecentralisedsystemofpeer-to-peercomputernetwork). Ifdata in thesystem isaltered, thehashvalueofthisdataandtheinformationontheexactlocationofthedatainthesystembecomesinvalid.Ashashreferencerelatesto(refersto)theexactlocationofadatainthesystemanditshashvalue,hashreferenceitselfbecomesinvalid.17

1.4. The Second Technological Component: Cryptography

Hash values protect the data in the blockchain technology with their technical characteristics. It could be stated that the second technological component inblockchainservesasanadditionalsafeguardthatprotectsthedataandtheend-users within the system. Through cryptography we aim to achieve se-curityofalltheusersduringsendingandreceivingcertaindatainthesamesystem.Itiscrucialtoprotecttheownershipoftheuserinbothoperations.Atthesametime,itshouldbenotedthathereblockchaintechnologyhasbeenputonapropertestbecauseitschallengeistoprotectthepersonalpropertyofeverynode(whichrepresentsthetechnologicalextensionofeveryend-user),and,simultaneously,enablenewinteresteduserstoenterintothedecentral-ised systemof peer-to-peer networkof computers.Thus cryptography is acomponentthatenablestheidentificationoftheuserswithintheblockchainandtheprotectionoftheirownership.Experiencehasshownthatitisnotdesirabletohavethesamekeyforbothencryptionanddecryption.Bydevelopingtwodifferentkeysforthetwopro-cesses,theasymmetricalcryptographyisbeingcreated.Thistypeofcryptog-raphy is used in blockchain.Intheasymmetricalcryptography,thesamekeywith which a certain text was created can never and under no circumstances beusedfordecryptionofpreviouslyencrypteddata.Theencrypteddata isalso-called cyphertext. The two keys that we established exist in the domain oftheasymmetricalcryptographyarecalledprivate key and public key.18 The privatekeycanbeusedsolelybytheowner,whilethepublickeyisprovidedtoeveryoneforpotentialuse.19Iwillusetheexampleofamailbox20 to make it easier to understand the problem.Everyonecanputthemailintothemailbox,butonlytheowner,withhisownkey,canunlockthemailboxandtakehismail.Asimilarprincipleisusedin blockchain technology. Anyone within the system can send the data to the ownerof a certainnode,butonly theownercandecrypt thedatawithhisunique key and gain insight into them. Such public-private access can suc-



cessfullyidentifytheusers, i.e.sendersandreceiversofcertaindata in theblockchainsystemandperformthedataexchangebetweenthem.Fortheusertoreceivecertaindatawithinthedecentralisedsystemofpeer-to-peercom-puter network with established blockchaintechnology,itissufficient thatheuses the private key and decrypts the data that had previously been encrypted bythesenderwhilesendingthemtothesystem.However,tobeabletosendtheencrypteddatatothesysteminthefirstplace,thesendermustauthenticatethembythedigitalsignature.Inthisway,the blockchain technology ensures thatonlythetrueownercantransferitsownershiptosomeoneelse.Whenwewanttosendourownership(i.e.thedata)tosomeothernode,weuseauniquedigitalsignature.Wecancomparedigitalsignaturetopersonalsignatureinthereal,physicalworld.Whenweusethedigitalsignature,weplacetheencryptionbytheprivatekeyintoacertaincyphertext(derivedfromthehashvalueofcertaindata).Inthatway,thecreatorofthisdigitalsignaturecan be traced through exactly this private key. Since it is actually about the hashvalue(thatisalsounique),wecanclearlyandpreciselydeterminenotonlywhichdatawassentbutalsoinwhichpointintime.Whenanyuserputstheir digital signature on the certain data that they had intended to send to anothernodeinthesystem,alltheothernodesinthesystemcanverifythatdata.Alltheothernodesdetectcertaindatainthesystembytheprincipleofautomatism and calculate their hash value. As user also enclosed the public key,allthenodeswithinthesystemusingthepublickeydecrypttheattachedcyphertextthataccompaniesthesentdata.Subsequently,allthenodescom-paretheirinitialcalculationsofthehashvaluesofthesentdataandtheat-tacheddecryptedcyphertext,andiftheresultsarethesame,itcanbestatedthat it is the uniquedigitalsignatureofthatparticularuser.“Duetothefactthatcryptographichashvaluescanbeconsidereddigitalfingerprints, theyareuniqueforeachtransaction.Aconstitutingpropertyofpublic-private-keycryptographyisthatcypher text created with one key can only be decrypted with the corresponding key. The associ-ationofbothkeysisunique.Hence,asuccessfuldecryptionofcyphertextwithaspecificpublickeyservesasaproofthatitwascreatedwiththecorrespondingprivatekey.”21


16 Cf.NarayanPrusty,Building Blockchain Pro-jects,PacktPublishing,Birmingham2017,p.27.

17 “Youcreate the cryptographichashvalueofthe data that are supposed to stay unchanged. When you need to verify whether the datawere changedat a later time,youcreate thecryptographic hash value of the data again.You then compare the newly created hash value with the hash value that was created in thepast.Ifbothhashvaluesareidentical,thedatawerenotchangedafterthefirsthashval-uewascreated.Otherwise,thedatahavebeenchangedinthemeantime.”–D.Drescher,The Blockchain Basics,pp.82–83.

18 “Whenthewalletisinitializedorsetupforthefirst time,anaddress,publickey,andprivate

key are automatically generated. Bitcoin is basedonpublic-keyencryption,meaningthatyou can give out the public key freely butmustkeeptheprivatekeytoyourself.”–M.Swan,The Blockchain,p.3.

19 “Doing some sort ofbackcalculation tode-rive the private key from the public key iseitherimpossible(…)orprohibitivelyexpen-sive (tremendous computing power operating over a longer time than would be necessary to confirmthetransaction).”–Ibid.,p.99.

20 D.Drescher,The Blockchain Basics,pp.99–100.

21 Ibid.,p.106.



Inthisway,basedontheverificationofallthenodes,therecipientcanverifythatitisindeedthespecificnodeoftheend-userthatistherealsenderofthemessage.Bycomparingbetweenthehashvalueofdataandthecyphertext,incasethatweestablishthesameresult,itisconcludedthatthisisindeedthemessage that a user wanted to send.

1.5. Data Structure in Blockchain

Hash values and the cryptographic technology aim to provide security within thesystemsothatthementioneddatatransfercouldtakeplace.Giventhatacertainnodeownsallthedatawithinthesystem,andthatpeoplecanownnodes,22wecantalkaboutthetransferofownershipwithinthesystem.23

“Actuallytherearenosuchthingsasintendedorunintendedchangesintheblockchain.Thesewordsrefertoavaluationofthemotivesorthepersonwhocausedachange.Buttheblock-chain-data-structure values neither the motives nor the person who causes an inconsistency. The blockchainonlycaresaboutcorrectnessandconsistencyofallitshashreferences.Ifoneofthemisinvalid,thewholedatastructureisinvalid,regardlessofwhoorwhatcausedthatchangeorwhyitwasmade.Andthispropertymakestheblockchain-data-structureveryvaluable.”24

However,tounderstandthetransferofownership,weshouldfirstunderstandthe blockchain-data-structure. The data in blockchain is structured as blocks connectedbyachain(hencethename).Everyblockconsistsoftwocompo-nents–header and the Merkle tree.“Eachblockisalsohashedwiththechainofpreviousblocks,sotheentirechainofblocksistamper-evident.ThisiscalledaMerkletree,inventedin1979andwidelyusedsince.”25

AllthetransactionaldataarelocatedintheMerkletree,whilethecryptograph-ichashvaluesforeveryblockarelocatedintheheader.Anotherinnovationof the blockchaintechnologyreflects in itsability tosaveandpreservethecompletetransactionaldatahistory.Noneofthetransactionsthatwereeverexecutedgetsdeleted,andtheyareavailableforinspectiontoeverynodeatanytime.Furthermore,thecompletetransactionaldatahistoryisalmostim-possibletoalter(immutability).26 This characteristic represents an additional safetycontributionto blockchain technology.27Theprincipleofdataimmu-tabilityreliesonthefactthatanymutationofdatawithinthe blockchain is ofextremelyhighcomputationalcost.28Besidesthemutationoftheexistingdatastructureinblockchain,theadditionofnewblockscouldrequire29alotofinvestedcomputationalpower,meaninganadditionalinvestmentoffinancialresources.30 Whenwedesignasystemofblockchaintechnology,onlyvalidtransactionaldata must enter into the data structure. To ensure that only valid transactions are going to be added to the blockchainsystem,allthenodesinthedecentral-isedsystemofpeer-to-peercomputernetworkactlikesupervisorsoftheothernodesinthesamesystem.Besidessupervision,allthenodesrewardalltheothernodesinthesystemforaddingvalidandauthorisedtransactionsandforfindingerrorsintheworkofothers.Thismodeofoperationencouragesallthenodestoprocessthedataofthetransactionsandthetransactionsthemselvescorrectlyaswellastonoticeanddenounceerrorsofothernodes.31 The system ofrewardingthenodesforaddingvalidblocksisthemostimportantfeatureofanopen blockchain system.32 Uponaddingandrewardingthenodeswithintheblockchainsystem,complexmathematicaloperationsoccur,whichwillnotbeanalysed in thispaper. It



suffices tosaythattheactivityof blockchain system in this particular sense can be called the blockchain algorithm.33 The algorithm represents a group ofsymbolsandageneralprocessofsystematicallysolvingindividualtasksbelonging to a specific class ofmathematical problems.Hence, thephrase“the blockchain algorithm”will be used as a simplified description of theprocessesthatleadtotheexecutionoftheblockchaintechnologyfunctions.Indecentralisedblockchainofpeer-to-peernetworkofcomputerswithadis-tributed ledger, there is acompetition34 between thenodes for addingnewblockstothesystem.Thecompetitioncanbedividedintotwosections,speedcompetition(whichnodewillbethefastest)andqualitycompetition(wherethefocusisonthequalityassessmentofthevalidityofnewlyaddedblock).“Thequalitycompetitionhasaninterestingaspectofpeercontrol.Byreceivinganewblock,eachnoderealisesthatithasalreadylostthespeedcompetitionandthatithastoworkasarefer-eeinthequalitycompetition.Itgoeswithoutsayingthattheserefereesarethemostmeticulousandstrictrefereesonecanimaginebecausetheyhavealreadylostthespeedcompetitionandhencehavenothingmoretolose.Actually,allnodesknowthattheycangetbackinthegamefor

22 In this particular case meaning end-users.

23 W.Mougayar, V. Buterin, “Identity Owner-ships&Representation”,The Business Block-chain[MicrosoftEdge,EPUBformat].Own-ership and our identity on the blockchain are two inseparable concepts.

24 D. Drescher, The Blockchain Basics, pp.132–133.

25 DavidGerard,“Theblockchain”,para.5.,in:DavidGerard,Attack of the 50 Foot Block-chain, Create space Independent, 2017 [Mi-crosoftEdge,EPUBformat].

26 “Immutability means that something cannotbe changed. Data that are immutable cannot be changed once they have been created or written. For that reason, these data are al-so-calledread-onlydata.”–D.Drescher,The Blockchain Basics,p.137.

27 Especially taking into consideration the factthat thedecentralised systemofpeer-to-peercomputer network is always ready to accept new nodes, hence to the blockchainwe canalsoattributethecharacteristicoftransparen-cy.

28 Ibid.,p.137.

29 Cf.ibid.,p.142.Additionofnewblocksinthesystem could be expensive depending on the difficultyofhashpuzzles:“Theimmutabilityof theblockchain-dana structuredependsonthe computational costs induced by the hash

puzzle.Thedifficultyofthehashpuzzlesde-termineshowmuchcomputationaleffortandhencehowmuchtimeisneededtosolvethem,whichinturndeterminestheimmutabilityoftheblockchain-datastructure.”–Ibid.

30 Theprincipleof immutability reliesonfind-ing the solution to hash puzzles. Solving hash puzzles usually demands an investment ofgreat computer power. In every blockchain there isadifficulty levelofsolvingthehashpuzzles.

31 Ibid.,p.155.

32 “Rewardingthenodesforsuccessfuldeliveryofvalidblocksisabasicconceptoftheblock-chainalgorithm.”–Ibid.,p.157.

33 Cf.R.Wattenhofer,The Science of the Block-chain, Inverted Forest Publishing, 2016.Al-most the entire book is imbued with the math-ematical operations that lead to the solution of a certain problem. The mentioned bookdescribesmodeofblockchainoperation,fromthe mathematical-logical perspective. Should the reader be interested in this perspective,they could commit to studying the algorithms thatWattenhofer thoroughlydescribed inhiswork.

34 Competition is not strictly necessary in every blockchain system. For the particular type chosen for this paper it is logically implied.Withoutcompetition,blockchaincanbeusedforarchivinginformationbutthenthereisnoneedforincentivesfornodesinthesystem.



therewardiftheycanprovethatthesubmittedblockisinvalid.Inthiscase,thespeedcompe-titionreopensandtheyhavethechancetofinishtheirownblock,whosecompletionwasinter-rupted,andtowintheracethemselves.Asaresult,thequalitycompetitionortheexaminationofthesubmittedblock,respectively,willbedoneataveryhighlevelofaccuracy.”35

Atanymomentofthecompetition,allthenodesofthesystemarefoundinoneoftwopossiblephases.Theyeithera)verifyanewblockthatisdeliveredbytheothernodes,orb)trytobethenextnodethatwillformanewblockwhichwillbeverifiedbytheothernodesinthesystem.36 The problem is how todetermineuniquedatahistoryinthedecentralisedsystemofpeer-to-peercomputer network. There is no central node that would determine which data historyisthecorrectone,andinthedecentralisedarchitectureofcomputers,every node can create its data history. The question that arises is the question ofconsensus37 that is essential for blockchain as this technology currentlyhas the comparative advantage guaranteeing a high level of security. It is,therefore,necessarytodefineonechainintowhichallthenodescaninscribehistorytomaintainsecurity.Besidessecurity,however,ifwedefineonechainthatisagreedtobeuniqueasitis,wewillmoreclearlyarticulatewhatdatabelongtowhichnode.Ifanodesuggestsitsdatahistory,itcouldtrytomax-imiseitsposition.Bydefiningonechainwhereeveryonegetsasmuchastheycontributed,theprincipleofdistributive justicewouldbeestablished–toeachaccordingtoitsmerits.Ifitistoachievethesecurityofthesystem,thentheconsensusononechainisintheinterestofallthenodesinthesystem.Datahistoryfollowstheprincipleofimmutability. By adding valid blocks to the chain,thepossibilitythatapersontriestoalterdatahistorydiminishes.38 The longerithasbeensinceweconsensuallyselectedoneanduniquechain,themoreblockswithvaliddatawillbepresent in thatchain,and theeventualconsistency will be achieved.“Thedeeperdowntheauthoritativechainablockislocated,thefurtherinthepastitwasadded,themoretimehaspassedsinceitsinclusionintheblockchain-data-structure,themorecommonefforthasbeenspendonaddingsubsequentblocks,thelessitisaffectedbyrandomchangesoftheblocksthatbelongtothelongestchain,thelesslikelyitwillbeabandoned,themoreaccept-editisbythenodesofthesystem,themoreanchoreditisinthecommonhistoryofthenodes.”39

Preciselyfortheconsistencythatenhancesasmoretimegoesby,thesystembecomesresistanttomanipulativechanges,40 and it becomes harder to impose some other chain as the right one. “Thisisthefoundationofthesecurityoftheblockchainandisthefundamentalreasonwhyamalicious node cannot propagate newly createdblocks thatwouldotherwise overwrite (‘re-write’)history.Because thenoncemustsatisfy this requirement,andbecause itssatisfactiondependsonthecontentsoftheblockandinturnitscomposedtransactions,creatingnew,valid,blocksisdifficultand,overtime,requiresapproximatelythetotalcomputepowerofthetrust-worthyportionoftheminingpeers.”41

Wecanconcludethatthedecentralisedsystemofpeer-to-peercomputernet-workguaranteesmoresecuritytotheusersthananyothertechnologybefore.Thisadditionallyintensifies theargumentationtowardsitsusefulness.Forablockchainsystemtobesecure,nodesaredeliveringproof of work. The ques-tionis–whyaretheymotivatedtodoso?To motivate nodes to continue delivering proof of work,therehastobesomemodelof reward. It isdifficult for theblockchainsystemtobesustainablewithout it.42

Ifwewanttouseblockchaintechnologyexclusivelyfordatastorage,thenwedonotfindanyproblemwiththerewardsystem.Moreover,wedonotneed



it.Butblockchaintechnologyhasbeenrecognisedasagreatfoundationinnewprojectsaimedatcreatingelectronicmoney.Systematicrewardingandsolvingproblemswith thenodepayment instrumentfit perfectly into suchprojects.Bypaying electronicmoney tonodes, they are alsomotivated tocontributetothemaintenanceoftheblockchainsysteminthebackgroundasa technological solution that provides security based on its components.Forthisreason,projectBitcoinwaslaunched,theprojectofthefirstcrypto-currency.Inthesystemofcryptocurrenciesnodesbenefit fromalltheprivi-legesoftheblockchaintechnologywhile,bycontinualdeliveryofevidenceofwork(mining),theyarerewardedmostlybyreceivingcryptocurrencyofthat system they belong to. Cryptocurrencies achieve certain value that can be determined at the stock exchange.43Wecanascertainthatthevalueisex-tremelyvolatile,thatisitoscillatesfromdaytoday,evenfromhourtohour.44 Formost of the cryptocurrencies, the transactional data are inscribed to adistributed ledger that isavailable toeveryone.Theconceptofadistribut-edledgerwasalsomentionedinthearbitrarydefinition atthebeginningofthispaper.Thedistributedledgerkeepsthetransactionaldata,mirroringthe blockchain-data-structurewhile,alongthelinesofblockchainalgorithm,itusestheconsensusofthemajorityofnodestochooseachainthatauthenti-callydescribestheownershipofnodesandtheexecutedmutualtransactions.


36 Cf.“Developer Guide”,Bitcoin.Availableat:https://bitcoin.org/en/developer-guide (ac-cessed on 26August 2020). Cf. R. Herian,Regulating Blockchain,p.18.

37 Ibid.,p.18.

38 Itisaboutthecaseofso-called51% atack that represents one of the weakest points of the blockchain technology that can easily become the corruptive elemet and where the use oftechnology could serve to morally question-able intentsof certain individualsor interestgroups.


40 Cf. Satoshi Nakamoto, “Bitcoin:A peer-to-peerelectroniccashsystem”,Bitcoin Project. Available at: https://bitcoin.org/bitcoin.pdf (accessedon16August2020).

41 Gavin Wood, “Ethereum: A secure decen-tralized generalized transaction ledger”,Gavin Wood(2014),p.7.Availableat:http://gavwood.com/paper.pdf(accessedon15Au-gust2020).


43 Officialwebsiteofthestockexchange,avail-ableat:https://coinmarketcap.com/ (accessed on20August2020).

44 Marketcapitalisationon20September2020at 12:01:00 (UTC + 01:00) amounted to351,791,488,569(threehundredfifty-onebil-lion, sevenhundredninety-onemillion, fourhundred eighty-eight thousand, five hundredsixty-nine)American dollars, while the vol-umeofstock-exchangein24hoursatthesametime(totalvalueofalltransactions)amountsto 99,244,850,090 (ninety-nine billion, twohundred forty-four million, eight hundredfiftythousand,ninetyhundred)Americandol-lars.Atthebeginningof2020,on7Januaryat12:02:00(UTC+01:00)tobeprecise,marketcapitalisationwas211,009,239,809(twohun-dredelevenbillion,ninemillion,twohundredthirty-ninethousand,eighthundrednine)andthevolumewas83,188,036,236(eighty-threebillion, one hundred eighty-eight million,thirty-six thousand, two hundred thirty-six)American dollars.Available at: https://coin-marketcap.com/charts/ (accessed on 26 De-cember2020).

https://bitcoin.org/en/developer-guide

https://bitcoin.org/bitcoin.pdf

http://gavwood.com/paper.pdf

http://gavwood.com/paper.pdf

https://coinmarketcap.com/

https://coinmarketcap.com/charts/

https://coinmarketcap.com/charts/



1.6. What Distinguishes Blockchain from Other Technologies

Conceptualandarchitectonicaldesignoftheblockchain technology lies on seven principles.45

1)Networkedintegrity:thefirst principleisvaluesofintegrityandtrustwithin the system that blockchain aims to achieve. A. Tapscott and D. Tapscott will say that these values are inscribed into the blockchain code,butthatdoesnotmeanthatpeopleareamnestiedfromthem.Onthe contrary, ifwe lookat technologyas aproductofhuman labourand intellectual achievementwhose goal is to facilitate and simplifyspecific tasks, thenwe can acknowledge that the referential point oftechnology implies a human being.

2)Distributed power: the second principle is the distribution of powerwithinanetwork.Theabsenceofacentralentityenableseveryonetocontribute to the system and supervise the other nodes. Distribution ofpowerismentionedbysomeresearcherswhenarguingthetopicofdigital democracy.46

3)Value as an incentive:workingon inherently inscribedvalues in thetechnologyof blockchainismotivationalforallthenodesandencour-agesthemtocontributetothesystemasmuchaspossiblebecauseofthesystemofrewards.Itisbestmanifestedinthebest-knownimple-mentationofthe blockchain–cryptocurrencies.

4)Security:securityisanotherinnovativeelementofferedby blockchain. Securityistobeachievedthroughthecontributionofallthenodestothe values that their creators had inscribed into the blockchain. Two componentswhichformblockchain,cryptographyandhashvalues,fa-cilitate the mentioned.

5)Privacy:althoughdebatableforsome,evenforA.TapscottandD.Tap-scott,inthefield ofblockchain,privacyisinnovativeasittriestobeaccomplished in the decentralised system with a presupposed minimum of trust towards all the other nodes.There is a certain tension pointbetween the privacy and transparency in the blockchain.Namely,howtomaintainarighttoprivacyofeverynodeinthedecentralisedsystemwithadistributedledger,whilemakingitopenforeveryone.

6)Rightspreservation:theconceptthatrepresentsadifferenceandoneofthemaincharacteristicsofblockchainistheso-calledsmart contract.47 The smart contract enables the transfer of ownership fromonenodetotheother,wherethesystemitself,thatistheothernodes,canverifywhetherbothpartiesrespectcontractualagreementsornotand,incaseofadispute,canactasmediators.48Thisistheultimateimplicationofthemediationabolishmentinthedomainofblockchain.

7)Inclusion:wecouldaskourselveshowmuchistheblockchaintechnol-ogyinclusive?JaredNortonstatesthatwhatmakestheblockchaintech-nologydifferentisthatitcanbeinclusiveforeveryone.49Asacause,heidentifiesthefactthattherearenorules(atleastfornow)accordingtowhichsomeonewouldbeallowedintotheworldofblockhain,noen-trancefees(excepttheminimumthatrequiresyoutoownsomemobiledevicebywhichyoucouldconnecttotheInternet)and“friendlyenvi-ronment”duetotheprincipleofanonymity.IfIwouldliketoprovideaservicetoaparticularperson,Icoulddosowithminimalrisk,thatis



with great trust in people whose name and surname I am not required to know.50

Themost importantfeatureof theblockchain technologyis this: itaimstobuild and maintain integrity and trust withinthedecentralisedsystemofpeer-to-peer computer network with a distributed ledger (where we cannot estimate theleveloftrustintheothernodes)throughthecryptographicandhashtech-nology.Exclusively in this system, the transactionaldatabeing exchangedbetween all the nodes are available on the distributed ledger and are visible ineverymoment.Althoughfromthetechnicalpointofview,thisisensuredby the technologicalcomponents, therestillexists thenon-technicalfactor.Modern-day computers are still probabilistic and have developed neither con-sciousnessnorself-consciousnessandcannotdecidewithoutprogramming.Humanbeingsprogramsoftware anddesignmachines,whichmakes themtherepresentativesofthenon-technicalaspect.Theblockchainisbuiltfromthepeopleforthepeople,likeanyothertechnology,andcanbeconsideredsuccessfulifithasintegratedintosociety.

2. Ethical Foundations of Blockchain Technology – Ethical Aspect

Martin Peterson argues that it is crucial to separate normative and applied ethics,asnormativeethicsaimstofindthecausaljustification,whileappliedethicsrelates tospecific situationsinrealevents.51However,Petersoncon-tinues to develop his theory and claims that ethical theories cannot deliver the final moral judgement in the questions of applied ethics.With appliedethics,wecannotknowifthereevenexistsanycorrectethicaltheory.Accord-ingtoPeterson,intheworldoftechnology,therearefivespecificprinciplesthathelpusmakeadecisioninagivencasewhenthereisamoraldilemma:cost-benefitprinciple,theprincipleofcaution,theprincipleofsustainability,theprincipleofautonomyandprincipleoffairness.52

Ifwewanttofindtheanswertothequestionofwhetheritisjustifiedtocon-ducta51%attack53 in the blockchainsystem,weshouldrunitthroughfive

45 Cf.A.Tapscott,D.Tapscott,“Thesevende-sign principles of the the blockchain econo-my”,in:A.Tapscott,D.Tapscot,The Block-chain Revolution [Microsoft Edge, EPUBformat].

46 Carl Miller, “TEDx Talks: Digital Democ-racy”, TedxTalks, YouTube (4 May 2016).Available at: https://www.youtube.com/watch?v=FNL22RvFwn0 (accessed on 11 September2020).

47 “…smartcontractsarecertainlynotcapableof supplanting contract law as we presentlyfind it,but thehopeofmanystakeholders isthat theysoonwill.”–RobertHerian,Regu-lating Blockchain Law,p.39.

48 Cf.M.Swan,Blockchain,p.16.

49 Jared Norton, Blockchain: Easiest Ultimate Guide To Understand Blockchain, CreateSpace Independent Publishing Platform,2016,p19.

50 Ibid.,p.20.

51 MartinPeterson,The Ethics of Technology. A Geometric Analysis of Five Moral Principles,OxfordUniversityPress,NewYork2017,p.5.

52 Ibid.,p.14.

53 Ishallfurtherdiscusstheproblematicof51%attackinaseparatepartofthispaper.

https://www.youtube.com/watch?v=FNL22RvFwn0

https://www.youtube.com/watch?v=FNL22RvFwn0



mentionedprinciples.However,thisstilltellsusnothingaboutthenon-tech-nicalaspect:“Eachprinciplestatesanecessaryconditionforatechnologicalinterventiontobemorallyright,butnoindividualprincipleissufficient fordeterminingtherightnessofaninterventiononitsown.Therightnessofsometechnologicalinterventionsdependsonseveralprinciples.”54

Atthemoment,wearenotinterestedinthemoralimplicationoftheuseofblockchainasatechnologybehind,forexample,adigitalvotingsystem.Weareinterestedinvaluesthatareimplementedintothecoreoftechnologyandwriteprimarilyabouttherightfulnessoftheusage,ascanbeconcludedfromthe quote. Furthermore, a description of the potential attackerswould fallwithinthedomainofdescriptiveethics.Sincethedevelopmentoftheblock-chaintechnologyisstillongoing,wehavetoolittleinformationaccordingtowhich we could make a description on which we could build the potentially appliedethicsfortheblockchain.Wearenowinthedomainofappliedethics,andweenteredintoonepartofit–ethicsoftechnology.Inthisfield,LucianoFloridi devised two very interesting terms that will help us put the problem into context. He talks about infosphere and re-ontologising.55

Infosphereisatermformedfollowingthemodelofbiosphere. It comprises the entire informational environment that consistsof informational entitiesandtheirfeatures,interactions,processestheyperformandmutualconnec-tion. Floridi states that this is the concept that rapidly evolves. For this rea-son, in the informationalenvironment thatconsistsofall the informationalentities,reengineeringoccursthatnotonlyaffectsthetechnicalaspectsofthesystembutfundamentallychangestheintrinsicnature,thatistheontologyortheessenceofthatsystem.Oneofthebestexamplesofre-ontologisingoftheinfosphereisthetransitionfromanaloguetodigitaldata.Oneofthemainis-suesFloridiunderlinesistheontologicalfriction,wheretheinformationisnotdistributed within the system. He sees the solution in making humanity aware ofthefactthatitisthemostliableoneintheageofrapidgrowthofinforma-tional-telecommunicationstechnology,andthusheoffersasuggestionintheformofe-nvironmentalethics56 that mediates nature (physis)andtechnology(techne).57Thatcoexistenceiscrucialastheinfosphereitselfrepresentsthecommunalspacethatshouldbepreservedforthebenefitofallpeople.WhyisFloridiimportantinthisargumentation,onemightask.Preciselybecausethetechnicalaspectofthattechnologyenablesincorporatedvaluesfoundinthecoreoftheblockchain(integrity and trust).58 The technical standard set to maintainthosevaluesisreallyhigh,andtheevolutionoftheentiredependsonit,alsoforcingpeopletorespectthem.Itseemsthattheblockchainsystemin its core represents an attempt to abolish ontological frictionwhich is apreconditionfore-nvironmentalethicswherenatureandnurturestrivetobereconciled.59

ElaborationofthemattermovestowardsthearticleofPhilipBrey,whoexam-ines values in technology.60 This article is important as it deals with the values thatIdetectedintheverycoreofblockchaintechnology(integrity and trust).Brey talks about built-in-consequences61 that are not absolute but depend on thecontextofusageofacertaintechnology.Theembedded value is a special kindofembeddedconsequence.62Whenaddressingthevalues,technologicalentitiescaneitherencourageorharmtherealisationofcertainvalues.Whenthisactivity,whetherharmfuloruseful,takesplacesystematicallyinalltech-nological entities ina system, thenwe talkabout the tendency topromotecertain value. This built-in tendency is called embedded value. Since they



arepresentinallentities,thesevalues,astheyare,shapethesystembecausetheyoftenfocusonthemoralnorms.Thenormsareusuallybasedonvalues;theyusethemasastrongholdandreferencepoint.Ifthereisapromotionofcertainembeddedvaluesinthesystem,thenwecanconcludethatthisnormis embedded in the system (embedded norms).63 Embedded values can be intentional.64Thisisimportantespeciallyfordecentralisedsystems,suchasblockchain.Wecanstatethatintheblockchainsystem,thereexistsaninten-tionwithembeddedvaluesofintegrityandtrustthataimtomaintainsecurity.Hence,wecanconcludethattheblockchain,fromthetechnicalpointofview,fundamentallyaimstopromoteusefulvalues.Breyarguesthatthemostim-portant featureofdisclosivecomputerethics lies in thepossibility that themoralfeatureswillnotremainopaqueandbecomemoretransparent,whichwill in return enable ethical analysis and moral decision making.65Theeffi-ciencyofsuchanethicalapproachis increasedindecentralisedsystemsofpeer-to-peercomputernetworkbecauseofembeddedvalues.Breyarguesthatthedesignof informationalsystems, ingeneral,becamesensibleandmoreawareofthevaluesthatareintendedtobeintentionallyincorporatedintothesystem.Thisway,weencounterthetermvalue-sensitive design:

54 M.Peterson,The Ethics of Technology,p.14.

55 Luciano Floridi, “Ethics after the Informa-tion Revolution”, in: Luciano Floridi (ed.),The Cambridge Handbook of Information and Computer Ethics,CambridgeUniversityPress,NewYork2010,pp.3–19,p.6.

56 Ibid.,p.17.WhenFloridi,inawordplay,sep-arates the term e-nvironment,bythefirstletter“e”referstothetermekopoiesis.

57 L.Floridi,“EthicsaftertheInformationRevo-lution”,pp.18–19.

58 Cf.subchapters1.3.and1.4.ofthispaper.

59 Thepointofreconciliationentersthedomainofontology.Aperson,beingprosthetic(relat-ed to technique), is inherently also self-de-structive.Beingofapersonisinconstantdan-gerfromitsownactivity.Technologyisatthesametimeaninexhaustiblesourceofthepos-sibilityofprogressandtheabyssofaperson’sowndestruction.Cf.BernardStiegler,Tech-nics and Time, 1: The Fault of Epimetheus,translated by Richard Beardsworth, GeorgeCollins, Stanford University Press, Stanford1998,p.196.

60 Philip Brey, “Values in technology and dis-closivecomputerethics”,in:L.Floridi(ed.),The Cambridge Handbook of Information and Computer Ethics,pp.41–58,p.41.

61 Ibid.,p.45.

62 Ibid.,p.46.

63 Ibid.,p.47.

64 Ibid.,p.50.

65 “Theimportanceofdisclosivecomputereth-icsisthatitmakestransparentmoralfeaturesof practices and technologies that wouldotherwise remain hidden, thusmaking themavailableforethicalanalysisandmoraldeci-sionmaking.Inthisway,itsupplementsmain-stream computer ethics,which runs the riskof limitingitself to themoreobviousethicaldilemmasincomputing.Anadditionalbenefitis that it can point to novel solutions to mor-al dilemmas in mainstream computer ethics. Mainstream approaches tend to seek solutions formoral dilemmas throughnorms andpol-icies that regulate usage. But some of thesemoral dilemmas can also be solved by rede-signing,replacingorremovingthe technolo-gythatisused,orbymodifyingproblematicbackground practices that condition usage. Disclosive ethics can bring these options into view.Itthusrevealsabroaderarenaformoralaction, inwhichdifferentparties responsiblefor the design, adoption, use and regulationof computer technology share responsibilityforthemoralconsequencesofusingit,andinwhichthetechnologyitselfismadepartoftheequation.”–Ibid.,p.53.



“Inethics(VSD)representsaninterestingshiftoffocusfromhumanactionstotechnologicalartefactsandsystems.Incomputerscience,(VSD)representsaninterestingshiftfromutilitarianandeconomicintereststocareforhumanvaluesindesign.Asaresult,(VSD)promisesnewand more complete computer ethics as well as enhanced design practice in computer science andengineering,whatcouldresultinatechnologythatfollowsourmoralandpublicvalues.”66

Briefly,VSDissignificantbecauseitdoesnotcareonlyforvaluesintheop-eratingsystembutalsothatthosevaluesfollowourmoralandpublicvalues.InVSD,thereisthetendencytoincorporateonlythebestpossiblevaluesinoursystem.Inotherwords,VSDtendstopromotethebestpossiblevaluesthatreflectpublicvalues,namelyvirtues.67 Hence,thisisthefirstsignthatitwouldbemostappropriateforourfurtherresearchtosetforthinthedirectionofvirtueethics.68

To better understand why it is that virtue ethics is the most compatible with blockchaintechnology,Iwillalsobrieflymentionconsequentialistanddeon-tologicalethics.Consequentialistethicsputsthefocusontheconsequences.Inshort,everythingthatmaximisesgoodconsequencesismorallyjustified.69 Thus,utilitarianismwouldbeapartofconsequentialistethics.70 According toGraham,utilitarianethicshastwoimportantaspects:hedonistic(relatingto pleasure and happiness) and consequential (relating to consequences ofaction).71 I omit the hedonistic aspect and will mention that the consequential-isticaspectinitstwoimportantmomentaincludestheintentionoftheonethatactsandthechainofresponsibilitythatsuchanactionimplies.Theconse-quencesareimportantfromthemoralaspect,72however,whatis“good”stillremains vague. John Stuart Mill attempted to answer this question through the evidenceoftheutilitarianprinciple.73WhenIexaminehisevidenceandtrytoplaceitwithinthesubjectofthepapercontextually,IconcludethatMill’slawrelatestowhatwehaveresolvedfromthetechnicalaspect.Theblock-chaintechnics,basedonitstwocomponents,representausefulbasistomanydifferentprojectsintheongoingapplicationsofblockchain.Inthiscase,thetechnicaluseofthistechnology,basedontechnical-performancesolutions,isanextensionofblockchainthatgoesfromthecorewiththeinbuiltvaluesofintegrityandtrust.Millputshisfocusonusefulness:“ItispropertostatethatIforegoanyadvantagewhichcouldbederivedtomyargumentfromtheideaofabstractright,asathingindependentofutility.Iregardutilityastheultimateappealonallethicalquestions;butitmustbeutilityinthelargestsense,groundedonthepermanentinterestsofamanasaprogressivebeing.”74

UnlikeMill,Kantwould instructus todogoodbecause that isourduty.75 WithinworkofKantonecanfindtherearecategoricalimperativesthatcon-structtherulesofmoralbehaviour.76Mostexplicitly,theideaiselucidatedbytheformulationofhisfundamentalimperative,to“[a]ctinsuchawaythatthemaximofyourwillcanalwayssimultaneouslyholdasaprincipleofauniversallegislation”.77

Kant also discusses the good78andtheimportanceofintention79 in achieving the good. Kant would state that moral conceptions are a priori.80 Although Kantwritesaboutmoralconceptions,hebuildshis researchon the ideaoffreedomthatisapreconditionofwillfromwhichgoodorbadactionsaresub-sequentlyderived,accordingtotheconscienceofeveryindividualthatcon-formstothemaximofthegoldenrule.81 I want is overpowered by what must bedone,andwithKantcategorical imperative takesprimacy.82 Blockchain technology seeks to achieve integrity and trust in the system with its values embedded in the system.To incorporate thesevalues fromanon-technical



point of view, it is extremely important to start a discussion about values,especiallyvirtues,andexplainwhytheycanpositivelyaffecttheblockchainsystem.In non-technical domain virtue can be characterised as a good habit83 or an excellentfeatureofcharacter.84 From general sources on virtue ethics we can learnthatthisdisciplinehasalwaysemphasisedtheimportanceofeducationon morals (beginning with Plato’s Politeia and Aristotle’s Nicomachean Eth-

66 Ibid.,p.42.

67 Cf. Batya Friedman et al., “Value SensitiveDesign and Information System”, in: Ken-neth EinarHimma,HermanT.Tavani (ed.),The Handbook of Information and Computer Ethics,JohnWiley&SonsInc.,NewJersey2008,pp.69–101,p.70.

68 Ibid.,pp.87–89.Authorssuggest toperforma conceptual investigation of key valueswhich can be read about in next chapters and subchaptersofthispaper.Thereasonwhytheanalysishasbeenshifted to thevirtueethicsisbecauseofthespecifictechnicalpartoftheblockchain,namelyitstwomaincomponents.Authors also suggest that based on techno-logical design “a given technology is moresuitableforcertainactivitiesandmorereadilysupports certain values while rendering other activitiesandvaluesmoredifficulttorealize”.–Ibid.,p.73.Basedonthis,Iconcludedthatthe bestmatch for blockchain technology isvirtue ethics.

69 Harry J. Gensler, Ethics. A Contemporary Introduction, Routledge,NewYork 2011, p.110.

70 “Utilitarianism understands that all actionsmustbejudgedexclusivelythroughthecon-sequencestheyhaveonluck(…).”–GordonGraham,Theories of Ethics. An Introduction to Moral Philosophy with a Selection of Clas-sic Readings,Routledge,NewYork2010,p.103.

71 Ibid.,p.103.

72 Ibid.

73 JohnStuartMill,Utilitarianism,OxfordUni-versityPress,NewYork1998,p.88.Cf.G.Graham,Theories of Ethics,p.114.

74 JohnStuartMill,On Liberty,BatocheBooks,Kitchener2001,p.14.

75 Immanuel Kant, The Critique of Practical Reason,translatedbyPhilipMcPhersonRud-isill,Kant and Wesley (12September2012),p. 128.Available at: https://kantwesley.com/Kant/CritiqueOfPracticalReason.pdf (ac-cessedon23January2020).

76 Ibid.,p.19.

77 Ibid.,p.38.

78 Immanuel Kant, Foundations of the Meta-physics of Morals,translatedbyLewisWhiteBeck,Bobbs-MerrillEducationalPublishing,Indianapolis1959,p.9.Cf.G.Graham,Theo-ries of Ethics,p.79.

79 G. Graham, Theories of Ethics, p. 80. Cf.“With this capacity transcendental freedomwillalsostandfirmandindeedinthatabsolutesense which speculative reason required with theusageoftheconceptofcausalityinordertosaveitselffromtheantinomyintowhichitunavoidably stumbles if it contemplates theunconditioned in the series of causal con-nection. But it could only set up this concept problematically as not impossible to think,withoutsecuringitsobjectivereality,butrath-er only not to be assailed in its existence nor betoppledintoanabyssofskepticismthroughthe vain impossibility of that which it muststillallowasatleastthinkable.”–I.Kant,The Critique of Practical Reason,p.1.

80 In this case,a priori does not mean tempo-ral, but logical – it represents the generalityand necessity of validity independent of ex-perience. Kant does not intend to establish the newprincipleofmorality.Bytheanalysisofmoralconsciousness,hecomestotheconceptofgoodwill.Itistheonlyentityintheworldthatisgoodinitselfandwithoutlimitations.It carries its purpose inside itself, which isthe fulfilment of duties. Duty is a necessityofactingfromrespectfor thelawwithinus.ForKant, theconceptofgoodandevildoesnot have to be determined before themorallaw(operatedbyduty),butonlyafter itandthrough it.Themaximof action is aheadof

https://kantwesley.com/Kant/CritiqueOfPracticalReason.pdf

https://kantwesley.com/Kant/CritiqueOfPracticalReason.pdf



ics)notastheapplicationofcertainrules,butthetrainingofourcharacter.85 Furthermore,generalsourcesstatethat,althoughtheresearchinscopeofvir-tueethicssignificantly evolvedin the last35years, it isstillnotsoactual,especiallyinthefieldofappliedethics.86However,whatseparatesvirtueeth-icsformconsequentialismanddeontologicalethicsisthatitputsvirtuesasfeaturesofcharacterinfocusofitsresearch.Despite the timepassed,Plato andAristotle areparticularly significant forvirtue ethics and the blockchain phenomenon. In Politeia,Platomentionsthatonly the philosophers-emperors can make a state prosperous.87 Everyone in the State prosper when we distribute the working roles and Plato believes that there are three classes in every state: commercial, auxiliary and deci-sion–making.88Therefore,distributionoftherolesinastateattainsjustice.Platoarguesthatthesoulhasrational,spiritedanddesiringpart.89 To achieve harmonybetweenthe threepartsof thesoulalsomeans justice,but in thisparticular case– justiceof an individual. Justiceof an individualdoesnotdifferfromaState’sjusticeasthereisacommonideaofperfectjustice.90 It isimportanttomentionthatPlatofindsthatalltheattentioninaStatehastobefocusedonnurtureandeducation.91 Plato would ascertain that no one is evilbytheirchoicebutaremadeevilby,inter alia,inadequateeducation.92 Inhisphilosophy, thehighest idea is the ideaof theGood,andeverythingstrives towards it.93Thematerialworldisderivedfromtheideassotheideasrepresentgenuinerealityandobjectivity.Althoughtheworldofideasistran-scendentalforthehuman,thatdoesnotmeanthatheshouldnotpersistinhisobservance.94Thisisalsoanimportantmoment.IfweisolatePlato’sdoctrinefromthecontextandtrytoapplyittothenon-technicalaspectoftheblock-chaintechnology,weshouldpayourattentiontothephilosophyofeducationandtheperseveranceinouraspirationtobecomebetterpeople.Inthisway,wecanconstructasystemthatisbeneficialforeveryone.Aristotle greatly expanded and elaborated Plato’s doctrine. Aristotle believes thatapersonisgoodwhentheyactinamannerofthoughtfulness,andthiskindofpracticeimpliestherighteousmind.95 The righteous mind acts when ourdeedsarebeautiful,andinorderforthemtobebeautiful,weshouldad-here to the so-called golden middle between what is too much and too little (forexample,accordingtoAristotle,courageisthemiddlebetweenfearful-nessandcompleteboldness).96Consequently,virtue issituatedinpreciselythisgoldenmeans.AccordingtoAristotle,ifweactuponvirtue,wewillgainbliss (eudaimonia).97Virtueisawayofconductbywhichapersonactswell,but consequently also becomes good. Every person should seek the middle regardingthemselves,andwhatrepresentsareasonablemiddleforoneper-son,doesnothavetoapplytotheother.98However,asAristotleemphasised,whatan individualconsiders tobegoodfor theminacertainmomentcandifferfromwhattrulyisgood.99 Achieving the genuine Good should be our ultimateobjective,andbyitsachievement,apersonbecomesvirtuous.Asthispathisdifficult,Aristotle,forthisreason,emphasisedpossessingthepracti-calwisdomandthecapacityforjudgementasbeingthefeaturesofamoralhuman being.100 It should be pointed out that Aristotle divided virtues into moral virtues and intellectual virtues.101Whilemoral virtues refer to emo-tions,intentionandaction,dianoeticvirtuesrefertoseekingthetruth,thatis,pure knowledge.UnlikeKant,102Aristotle does not offer the rules to follow. It is about theresponsibility foractinguponone’sown judgement sinceapersonhas the



powertobuildthemselvesandaimtobliss,thatistosay,itisonapersontodeterminewhatisgoodfortheminacertainmomentwhilestrivingfortheirindividualgoodstoalignwiththegenuinegood.Forthiskindofreasonableacting, a person undoubtedly has to possess knowledge and experience.103 Aristotleistheonewhopointsusinthedirectionwecouldfollowwhenwediscussoursubject–investinginourknowledgeandgainingexperiencewillfacilitatethemakingofreasonabledecisionsthatwillhaveavirtuouseffectnot only on us but the people around us. Aristotle criticised Plato’s doctrine ontheideasthatdividetheworldofideasfromthematerial,sensoryworld.AristotlebelievedthatweaknessliesinthefactthatPlatoputstheessenceintoideasandthenpositionsthemintothetranscendence.Theessence,however,cannotexistseparatelyfromwhatitisin,asholdsAristotle.104 From the tech-nicalaspect,theblockchainwillassurethesecuritywithinthesystem,butit

thetheoreticalcognitionofgoodandevil.Cf.I.Kant,The Critique of Practical Reason,pp.100–118.

81 “Indeedthemorallawisgivenasafactor,asitwere,ofpurereason.Weareconsciousofitapriorianditscertaintyisapodictic,eventhoughwemaybeunabletoferretoutinexpe-rienceasingleexampleofperfectcompliancewithit.”–Ibid.,p.62.

82 Ibid.,p.53.

83 H.J.Gensler,Ethics,p.139.

84 RosalindHursthouse,Glen Pettigrove, “Vir-tue Ethics”, The Stanford Encyclopedia of Philosophy. Available at: https://plato.stan-ford.edu/archives/win2016/entries/ethics-vir-tue/(accessedon25August2020).

85 Plato,The Republic, translatedbyTomGrif-fith,CambridgeUniversityPress,Cambridge2000,403d–403e.

86 R.Hursthouse,G.Pettigrove,“VirtueEthics”.

87 Plato,The Republic,485.

88 Ibid.,441.

89 Ibid.,439e–442c.

90 Ibid.,441c–441d.

91 Ibid.,416b–416d.

92 Ibid.,419–421c.

93 Ibid.,608e–609b.

94 Ibid.,621c–621d.

95 Aristotle,Nicomachean Ethics, translatedbyRoger Crisp, Cambridge University Press,Cambridge2004,1095b.

96 Ibid.,1104a.

97 Ibid.,1098b.

98 Ibid.,1095a.

99 Ibid.,1094b.

100 Ibid.,1179a.

101 Ibid.,1103a.

102 Immanuel Kant, “Transition from popularmoralphilosophy”,para.46,in:Fundamental Principles of the Metaphysic of Morals,trans-lated by Thomas Kingsmill Abbott, ProjectGutenberg,2004[MicrosoftEdge,EPUBfor-mat]. In his Metaphysics of Morals,Kantrigor-ouslyanalysedtherulesfordutieswithwhichone fulfills themaxims thatcansubsequentlybegeneralised. In thequote Imentioned, thethirdofexistingfourthatappearinthebook,Kant primarily refered to the act itselfwhileAristotlearguedaboutcharacterofaperson.

103 Aristotle,Nicomachean Ethics,1142a.

104 Aristotle, Metaphysics, translated by HughLawson-Tancred, Penguin Group, London1998,1077b[Freda,EPUBformat].

https://plato.stanford.edu/archives/win2016/entries/ethics-virtue/





leavesasmallmarginofdiscretionthatopensgreatpossibilitiestoaperson–howwillthistechnologybeusedandwillthatbeforgeneralwelfareorthewelfareofcertainindividualsandhowtocoordinatetechnicsandpeoplewithvirtue?Physis and techne have never been closer than in the blockchaintechnology,that is, technical andnon-technical sideof technologyhaveneverbeen soconnected.105If,ontheonehand,therearevaluesoftrustandintegritythataimtoachievesecuritybasedoninnovativetechnology,analogously,ontheotherhand,weshouldseek thevalues thatan individualshouldpossess inordertocompletethosevalues,butalsotomakeonestepfurther.Forthattohappen,weneedapersonofvirtue,thatis,weneedmorepeopleofvirtue.106 Toobtainvirtues,oneshouldcontinuouslyworkonthemselvesandinvestintheir knowledge and experience. Only by raising and standardising the sys-temofvaluescanblockchaincometolifeinthewayitissupposedto–tohumankind’sbenefit.107Albeit thecriticswouldsaythis isnotpossible,wecanreferthemtotheplatonicapproach–tocontinuallyimproveourknowl-edge108andenlightenpeople.Onlyinthiswaywilltheeducationofyoungergenerationstrulygainground,bystandardisingandawardingpositivesystemofvalues.Theprinciple(inGreek)ofgnothi seauton still applies because we can make blockchain technology to maintain its integrity and gain consisten-cy over time.

3. Determining Moral Challenges of Blockchain Technology109

3.1. Positive Application of Blockchain Technology

Iindicateseveralpositiveexamplesoftheapplicationofblockchaintechnol-ogyandseveralpossibilitiesofitsfutureuse.110

I already mentioned cryptocurrencies–theyhavethepotentialtomanagetheownership,andtheycreateaninnovativemodelofpaymentthatcanbeinde-pendentofthecentralentities,suchasbanksorgovernments.Micropaymentsareanotheruse.Thisinvolvespayingextremelysmallamountsofmoneythatarenotcost-effectivetoclaimandpaythroughbanksasintermediaryinstitu-tions,asitiscurrentlydone.Thetechnologycouldbeusedasaformofsafestorageofidentityofnaturalpersonsthatfunctionsontheprincipleofcryp-tography. All personal documents could be deposited in the blockchain,whichwouldeliminatetheneedforissuingthesedocumentsinphysicalform(forexampleidentitycard,driver’slicense,healthinsurancecard,etc.).Further-more,therecouldbedepositeddifferentdocuments,legalfiles,contractsdig-italisedbeforethedeposition,etc.).Anotherinterestingpossibilityarisesinthefieldoftaxation.Calculationandcollectingthetaxcouldbedonethroughthelistofownersintheblockchainsystem,eliminatingdoubletaxation(mod-elled on double-spending)ortaxevasion.111

Voting could also be carried by blockchain technology, from creating theballots to their distribution throughout the system and collecting the votes. Blockchaincanserveasabackgroundtechnologyformanyprojectsinvolvingdigitalmoney.Besides,projectsofthiskindhavealreadybeenlaunched.112 A. TapscottandD.Tapscottholdthatbytransposingtheparadigmofvotingtoblockchain,onewillensurefair,safeandeasyvoting113 and indirectly tackle



theproblemofpassivecitizens.A.TapscottandD.Tapscottalsostatethatthepossibilities the blockchainoffersinthissegmentdonotstoponvoting:“Everyonehasarighttotakepartinthegovernment,directlyorbyvoting.Whoeveriselectedmustconductaffairsinthefulllightofdayasapeeramongpeers.WiththeInternet,citizenstookmoreresponsibilityfor theircommunities, learnedfromandinfluenced electedofficialsandviceversa.Withblockchain,citizenscangoonestepfurther:theycanadvocateforsea-linggovernmentactioninthepublicrecordinanunalterableandincorruptibleledger.Notjustchecksandbalancesamongthepowerfulfewbutbroadconsensusofthemany,forexample,toeffectbackgroundchecksonpotentialgunowners.”114

If this sounds like an implausible scenario, it should bementioned that inEstonia115 andUkraine,116 there are projects117 launched in both public and private sector based on blockchain technology.118

105 M. Heidegger, The Question Concerning Technology and Other Essays, translatedbyWilliam Lovitt, Garland Publishing Inc.,HarperandRow,NewYork1977,pp.32–33.

106 “To put the same point more contentiously,fromavirtueethicist’sperspective,utilitarianthinking is merely ‘logistical’ (i.e. cunning)and, as such, resembles the thinking of evilmen(…).Inotherwords,trulygoodandno-ble behavior requires looking at one’s motives forthinkingsomeargumentiscompelling,notmerely in simply lining up reasons pro and conforaparticularcourseofaction(…).”–DarylKoehn,“ARoleforVirtueEthicsintheAnalysisofBusinessPractice”,Business Eth-ics Quarterly5(1995)3,pp.533–539,p.535,doi:https://doi.org/10.2307/3857397.

107 “Takingvirtueethicsseriouslywillprobablymean that one ultimately has to choose one systemovertheother.”–Ibid.,p.536.Koehndoes not argue that utilitarian ethics is bad or that virtue ethics is aboslutely right in every aspect. He stresses that one has to choose whichsystemhewilluseinthereal-lifebusi-ness situations.

108 Plato,The Republic,514–517.

109 Moral challenges presented in this paper arise mainly from the technical aspect ofblockchain. The proposed solutions, or howto overcome them, are done throughHeide-gger’s and Stiegler’s view on technology in general.However,moralchallengesregardingblockchain technologywill hopefully be re-searchedmoreinthefuture.

110 Cf.R.JesseMcWaters,“Thefutureoffinan-cial services: How disruptive innovations

are reshaping theway financial services arestructured, provisioned and consumed; anIndustry Project of the Financial ServicesCommunity”,World Economic Forum 2015. Availableat:http://www3.weforum.org/docs/WEF_The_future__of_financial_services.pdf (accessedon23August2020).

111 Cf.D.Drescher,Blockchain Basics, p.227.

112 M.Swan,Blockchain,p.49.

113 A. Tapscott, D. Tapscott, “The second eraof democracy”, para. 1, in:A. Tapscott, D.Tapscott, Blockchain Revolution [MicrosoftEdge,EPUBformat].

114 A.Tapscott,D.Tapscott, “Something is rot-teninthestate”,para.12,in:A.Tapscott,D.Tapscott, Blockchain Revolution [MicrosoftEdge,EPUBformat].

115 Avaliable at: https://e-estonia.com/tag/block-chain/(accessedon29October2020).

116 Availableat:https://bau.ai/en/ukraine-en/ (ac-cessedon29October2020).

117 Notable mention for public blockchain pro-jectsgoestotheUnitedKingdomandGhana,KenyaandNigeria.Cf.PhilipBoucher,Susa-naNascimento,MihalisKritikos,How block-chain technology could change our lives,STOA,Brussels2017,p.18.

118 W.Mougayar,V.Buterin,“GovernmentsandGovernance”,para.4–5,in:W.Mougayar,V.Buterin,The Business Blockchain[MicrosoftEdge,EPUBformat].

https://doi.org/10.2307/3857397

http://www3.weforum.org/docs/WEF_The_future__of_financial_services.pdf

http://www3.weforum.org/docs/WEF_The_future__of_financial_services.pdf

https://e-estonia.com/tag/blockchain/

https://e-estonia.com/tag/blockchain/

https://bau.ai/en/ukraine-en/



Furthermore,reputationissignificantinthebusinessworld,119 and blockchain technologycangreatly impact it.Forexample,asakindofauxiliary tech-nology,itcanbeusedwithsmart contracts whereby it is visible how many times certain natural or legal person did not adhere to its obligations arising fromthecontract,whatcouldfinallyberesolvedbytherefundfortheaffectedparty.120Thisisoneoftheexamplesofsuccessfulfunctioningofblockchaintechnology due to its transparency.121Moreonpoint,Drescherexpresseshisopinion that blockchain technology will undoubtedly enable more people around the world to participate in the global market.122

3.2. Technical Limitations of Blockchain Technology

JaredNortonstatesthat,althoughinnovative,blockchaintechnologyisstillprobabilistic. In otherwords, it can servewellwhen it comes to ensuringsecurityanddatastorage,but,toanindividual,itcannotprovideanswerstothequestionslike:“ShouldIevictmytenantsiftheydon’tpaythebillsforsixmonthsinarow?”.Itistobeconcludedthatwecannotentirelyrelyonthis technology.123 In theblockchainsystem, if there isacryptocurrencyinthebackground,itimpliespublicledger.Allthetransactionsarepublicandavailabletoeveryone.Inaddition,wealreadyknowthatnewnodescanbein-cludedinthesystem,continously.Inthisway,blockchaintechnologyaimstoachievetransparency.However,althoughtransparent,inthiscase,onecouldraisetheobjectionofinsufficientprivacy.Whatismore,thisistheconstitu-tiveelementofthistechnology–thedilemmaliesbetweentransparencyandprivacy,andsothequestionarisesregardinghowblockhcaintechnologycanbeavailabletoeveryonewhilemaintainingtheprivacyofanindividual?Thenextobjectioncancomefromthesecurityaspect.Theonlythingcon-necting the real owner with their ownership in blockchain system is the pri-vatekey.Theprivatekeyisanabsolutenecessityifonewantstohaveaccesstotheirownership.Shoulditbelosteitherbyaccidentorbysomemisfortu-nateevent,therealownercannotaccesstheirproperty.Thereisnootherwayfortheownertogetholdofwhatbelongstothem.Furthermore, to include one or more nodes into the decentralised systembasedonblockchaintechnology,itisnecessarytoinvestcertainfundstopur-chasecomputerparts.Computersusealotofenergytosolvehashpuzzles,whichresults inasignificant consumptionofelectricalenergy.Thismeansthatfundshavetobeinvestedinorderforthedecentralisedblockchainsystemeventoinitiate.Thisbringsustothenextproblem–ifthecostsarehigh,noteveryonecaninvestinthisprocess.Fromtheverybeginning,peoplewithouttheinitialcapitalarepreventedfromenteringintothemarketcompetitionandbeingtheblockchainparticipants(inthesenseofanindividualnodeinthesystem).Thusemergesthescenarioinwhichoneperson,orasmallgroupofpeople,cooperativelycontrolmostofthenodesinthesystem.Thereemergesa disguised central entity that is unknown to the other nodes in the system. Thepresumptioncomingwiththeblockchainsystemisthatthenodesareofgood intentions or will at least become such. One way to withstand the attack ofaninterestgrouporanindividualisthegrowthofthetechnologyitselftothe point where this attack will be almost impossible to execute.124However,therewillbenoattackifreasonablepeopleprevailinsociety.Thereasonisan“ethicalorgan”ofknowledge, thepowerofcontemplationof the thingsthatareadvantageousforagoodlife,theabilityofactiontowardsreasonwithregards tobothgoodandbad things; it is indeed in itself the“well-doing”



(εύπραξία).125Thevirtueofreasonandalltheothervirtues,donotrepresentmereancientinscriptionsthatareasubjectofdrearystudies.Onthecontrary,inthiscase,wearereachingthosevirtuesbyadetour,throughtechnology:“Rather, precisely the essence of technologymust harbor in itself the growth of the savingpower.”126

Heideggerdevelopedhis ideabywriting that fromtechnology,besides thesavingpower,itappearsdangerous.127However,thisdoesnotrepresentthealertorthestopsign.Heideggerthenexplains:“Inwhatrespectdoesthesavingpowergrowtherealsowherethedangeris?Wheresomethinggrows,thereittakesroot,fromthenceitthrives.Bothhappenconcealedlyandquietlyandintheirowntime.”128

Because,forHeidegger,“thequestionconcerningtechnologyisthequestionconcerningtheconstellationinwhichrevealingandconcealing,inwhichthecoming topresenceof truth, comes topass”.129 By deduction we can con-clude:ifweagreewithHeidegger,thenthisappliestoanytechnology,includ-ing blockchain technology. Values incorporated in blockchain could shine in alltheirglory,asvirtues,providedthatpeoplemanagingthetechnologyactuponvirtueandaretryingtobegood:“Practicalwisdomisnotthesameasthiscapacity,thoughitdoesinvolveit.And,aswehavesaidandasisclear,virtueisinvolvedinthiseyeofthesoul’sreachingitsdevelopedstate.Forpracticalsyllogismshaveafirstprinciple:`Sincesuch-and-suchistheendorchiefgood’,what-everitis(letitbeanythingyoulikeforthesakeofargument).Andthisisevidenttothegoodpersonalone,sincewickednessdistortsourvisionandthoroughlydeceivesusaboutthefirstprinciplesofactions.Manifestly,then,onecannotbepracticallywisewithoutbeinggood.”130

Anotherobjectionregardingthetechnicalaspectoftheblockchain technol-ogy is the inability to upgrade the existing technology (meaning primarily thecomponentofcryptography)ortochange,thatistoreplacethetechnicalcomponents.131 That would suggest that the technologies that constitute the basesoftheblockchain have to endure as long as the blockchainitself,andthisdurationcannotbeexactlypredicted–itcanlastforcenturies.Namely,

119 J.Norton,Blockchain,p.16.

120 Ibid.,p.16.

121 “So if it requires a reliable and transparentway to keep records, the blockchain can beusedasabasetobuildanappforthat.”–Ibid.,p.17.

122 Ibid.,p.27.

123 J.Norton,Blockchain,p.22.

124 Thisreferstothestrengtheninginblockchain(eventual consistency).

125 Aristotle,Nicomachean Ethics,1140b.

126 M. Heidegger, The Question Concerning Technology and Other Essays,p.28.

127 Ibid.,p.28.

128 Ibid.

129 Ibid.,p.33.


131 Hash values and cryptography are accepted as the two components that can be conceptually altered.



makingalterationsorfixingerrorsinthesystemofblockchain technology is difficult,andthatcharacteristicmakesthistechnologyextremelyinflexible.132

3.3. Non-technical Limitations of Blockchain Technology

Whenspeakingofnon-technicallimitations,Iemphasisethetwoaspects:le-gallimitationsandlimitationsofuse.Wehaveseenthattheblockchain tech-nologyinterfereswiththeconceptofownership.Oneofitsfirst, necessaryandmostinterestingapplicationsisinthefieldofcryptocurrencies. In order forthetechnologytocontinueevolving,thelegislatureandtheadministrativesettingsofthecountries,iftheyaretousethebenefitsofferedbythistechnol-ogy,willwithoutanydoubthavetostartconsideringtheimplementationofthelegislativeframeworkthatwoulddefinethemanagementofownershipnotonlyinthedomainofcryptocurrenciesbutpossiblyinblockchaintechnologyin general.133Evenifwe,toacertainlevel,resolvetheconfusioncreatedbythe inexistenceof legislative frameworks, there still remains a concern, orbettertosayarisk,whatkindofgroundwillthistechnologygain.Ifpeopleshownointerestinthistechnology,itwillnotexist.Iftherewillbenonodesthat resolvecomplexmathematicalproblemsandcreatenewblocks, everyfurthereffortbecomesfutile.Thusfar,Icannotstatethatblockchainismore“moral”thansomeothertech-nology. This technology is conceptually and theoretically well conceptual-ised.However, this isnoguarantee that itwillbecomeabsolutely thebesttechnology,whetherconcerningthe issues it isbasedon,orfromthe tech-nical-conceptualside. Ihave toadmit, thereare twosides to thenarrative,butregardlessof therisks,regardlessof theconcealeddangers,onceagainremind ofHeidegger’s growth of saving powerwhere danger lies.Hence,everyentrepreneurwilldecideforthemselveswhetherit islucrativeornottotransferthebusiness134 to blockchain. Politicians will decide whether it is fortheirstate’sbenefittotranslocatethepublicadministrationandtheentiredemocraticprocesstoblockchain(forexample,Estoniahastransferredmil-lionhealthcarerecordstoablockchainsystem).135Judgingbythetransferoftheparadigmtothedigitalplatformandthefactthatthevalueofthetrustwillhaveasignificant roleonthatplatform,136blockchainappearsastheperfectcandidateforaccomplishingsuchplans.

3.4. Corruptive Elements of Blockchain Technology

I described how asymmetrical cryptography protects the ownership and data in thesystem,hinderingfalse identity.Throughtheresearchonblockchainalgorithm,Idemonstratedtheimpossibilityofacceptinginvalidtransactionalblocks,astheygothroughtheprocessofverificationinthewholesystem.Forthesamereason,137 one cannot imagine the situation in which a certain node deliberatelykeepsinformationtoitself,unwillingtoforwardit.Designingthecommunicationbetweenthenodesontheprincipleofgossipannulsthepossi-bilityofdeliberatenon-forwardingoftheinformation.Regardlessofwhetherweintentionallyoverburdencertainnodeinorderforittostopworkingandcompetinginthesystem,thedecentralisedsystemcontinuesitsfurtherwork.Themalfunctionofonenodedoesnotaffectthedecentralisedsystemduetoitsarchitecture.Althoughblockchainseemsexcellentfromthetechnicalpointofview,wemustnotforgetthatitcloselycombinestechnicalandnon-tech-nicalaspects.Thegreatestvulnerabilityliesintheintentionofpeople–for



whatpurposewillitbeused.Wecan,therefore,separatethegoodfromthebadintentionofusingtechnology.138 Intention139isthemostimportantfeature,andspeakingoftheterm,IwillmentionAristotle140 and the context in which heusesthisterm:“Butwhere there isnocontractfor theservice,peoplewhooffer it for thesakeof theotherperson,aswehavesaid,cannotbecomplainedabout,sincethisisthenatureoffriendshipbasedonvirtue.”141

Oneshouldkeep inmind thatΦιλια,apart fromfriendship,canalsomeanloveandaffection,while itmostcommonlyrepresentsanyamicablesenti-mentbetweenpeople;fromthelovebetweenfriendstothemattersofbusi-nessaffinity.Somemodernethicalapproachesarguethatloveandintentionofbuildingafriendshipisthekeytoprosperity.142Inthecaseofblockchaintech-nologythatwouldtranslatethatnodesinthesystemshouldalsobe“friends”and“careforeachother”.Ifweconsiderotherapproachesonbusinessaffin-ity,goodintentionisimportantbutinthesenseofcooperation,notbuildingfriendship,anditcanleadtoeconomicwelfare.143

Badintentionswillleadtoadeficitofcooperationandtheemergenceofcor-ruption.144Corruptioncandangerouslydamagetheviewofthepubliconany

132 D.Drescher,Blockchain Basics,p.208.

133 Ibid.,p.219.

134 Some authors, for example Franco Berardiand Giuseppina Mecchia, criticise politicaland economical system we live in and believe thatsystem,capitalism,isresponsibleforsep-arationoftheindividualfromtheirroots.Thatprocess is further intensified andacceleratedby digitalisation. They believe that capital destroys the political and psychological ties thatenableditsemergenceandisfocusedonthe circulation of digitised information. Cf.FrancoBerardi,GiuseppinaMecchia,“Tech-nology andKnowledge in aUniverse of In-determination”, SubStance 36 (2007) 1, pp.57–74,p.67.

135 IanAllison,“GuartimeSecuresoveraMillionEstonian Healthcare Records on the Block-chain”, IB Times (4March 2016).Availableat: http://www.ibtimes.co.uk/guardtime-se-cures-over-million-estonian-healthcare-re-cords-blockchain-1547367 (accessed on 13September2020).

136 Richie Etwaru, “TEDxTalks: BlockchainMassively Simplified”, YouTube (15 May2017). Available at: https://www.youtube.com/watch?v=k53LUZxUF50&t=51s (ac-cessedon13September2020).Cf.P.Vigna,M. J. Casey, “Decentralized Economy withCentralizedTrust”,in:P.Vigna,M.J.Casey,The Truth Machine[Freda,EPUBformat].

137 Thisreferstotheconceptofblockchain algo-rithm.

138 Cf. JorrisVlieghe, “Education in anAge ofDigital Technologies. Flusser, Stiegler, andAgamben on the Idea of the Posthistori-cal”,Philosophy and Technology 27 (2014),pp. 519–537, doi: https://doi.org/10.1007/s13347-013-0131-x.

139 Greekπροαίρσιςmeanschoice,butalsointent(lat. intentio);forthepurposesofthispaperItranslateditas–intention.

140 I. Kant, “Second Section – Transition frompopular moral philosophy to the metaphysics ofmorals”,para.15, in:I.Kant,Fundamen-tal Principles of the Metaphysic of Morals [Freda,EPUBformat].Kantisoftheopinionthat the moral law directly determines the will and,ifwedogood,ourwillandintentionsarealways good.


142 ManuelG.Velasquez,Business Ethics Con-cepts and Cases, Pearson Education, Essex2014,pp.125–130.

143 JohanJ.Graafland,Economics, Ethics and the Market,Routledge,NewYork2007,p.242.

144 Ibid.,p.244.

http://www.ibtimes.co.uk/guardtime-secures-over-million-estonian-healthcare-records-blockchain-1547367



https://www.youtube.com/watch?v=k53LUZxUF50&t=51s

https://www.youtube.com/watch?v=k53LUZxUF50&t=51s

https://doi.org/10.1007/s13347-013-0131-x

https://doi.org/10.1007/s13347-013-0131-x



technology,notjustblockchain,andleadtodeteriorationofconceptionandpractice.Someauthors,however,gofurtherandarguethatthesystemitselfiscorruptandcannotbefixedfromtheinside.145

Inthenextsubchapters,Iwillbrieflydemonstrateweaknessesoftheblock-chain technology.

3.4.1. 51% Attack146

Whentalkingaboutreachingaconsensusontheuniquehistoryofdatatrans-action,wehavetokeepinmindthateverynodehastherighttovote(voting schema).Here,themajoritydecidesonsomethingfundamentalforthefunc-tioningandperformanceofanyplatformbasedonblockchaintechnology.Ifoneormorepeoplepursuingtheirinteresttrytocontrolthehistoryofdatatransactioninamanipulativemanner,theseactionsarecalled,inthedomainofblockchainalgorithm,i.e.thewaythistechnologyfunctions,a 51% attack. Ipreviouslymentionedthatthiskindofmanipulationiscostlysinceitwouldbenecessarytoaltertheentirehistoryofdatatransactiontotheso-calledrootblock in theMerkle tree,but it is theoreticallypossible.147 Ifsuchmanipu-lationoccurs,thescenariocouldemergeinwhichoneperson,oraninterestgroup,controlstheentirenetworkandactsbytheirownwill:“Let’ssaysomewealthydespothasdecidedthatbitcoin,liketheInternetbeforeit,hasbecomesoinfluential thatitiserodinghispower.Thisdespotcouldseizealltheminingpowerwithinreachandpurchasetherestfromcountriesthatstilltoleratehisbadbehavior,toputhimoverthe50percenthashratethreshold.Hecouldthendecidewhichtransactionstoincludeinblocksandwhichtoreject.Withcontrollinginterest,hecouldalsodecidewhethertoforkthecodeandintroduceafewprohibitions(...).”148

Fromtheeconomicaspect,theattackerswanttoalterthehistoryofdatatrans-actiontoensurelargerpropertyfortheirbenefit.Regardingthecollectivede-cisionmaking,thismanipulationintentstoproducethefinalresultthatwouldbebeneficialfortheattackersifthereshouldbeajointdecisiononacertainmatter.From the technical aspect, theattackaims todestabiliseordestroyintegrity and trustwithin the system,make it unsustainable andultimatelymeaningless.Shouldwetackletheproblemfromthepointofcentralisation,thenthiskindofattackcanalterthearchitectureofthesystemandintroducehiddencentrality.Thekeysolutionis tocontrol themajority149 inorderforthepotentialattacktobesuccessful,andasthisminimumamountsto51%,this problematic was named accordingly.150However, if an individual or agroup are given an opportunity to control the technology that is essentially designedtobelongtothedecentralisednetwork,thisisconsideredunjust.151 If this isunjust, thenitdoesnotcorrespondtojustice152 that represents the highest virtue.153Subjectingoneselftoinjusticeisinnobody’sinterest154 and accordingtoA.TapscottandD.Tapscott,avoidingthiskindoffuturescenariois unlikely to happen.155Mentionedproblem,withoutanydoubt,representsa challenge to the blockchaintechnology.Theonlysolutionofferedsofaristhatthewholeprocesswillbetooexpensiveforthepotentialattackersandthat, for this reason, theywill abandon their plans before they even com-menced planning.156

3.4.2. Other Corruptive Elements

Theentranceofnewmembersintothedecentralisedsystemofpeer-to-peercomputer network based on blockchain technology is encouraged. Block-



chain is available to everyone and gladly accepts new nodes into the system. Inshort,itistransparent.Thetransparencyprincipleisusefulbecausemul-tipleuserscanverifyexecuted transactions,and it ismucheasier todetectand correct the double-spending problem.On the one hand, ifwe operateinpermissionlessblockchain system, all transactionaldata are available toeveryone,sotheownershipisquitesafe,157whiletherecanbeonobjectionregardinglackofprivacy.Ontheotherhand,ifwedecidetolimittheaccessandacceptonlycertainnodes,theprincipleoftransparencyisbeingannulled,and there isapossibilityofdevelopingprivateblockchainsystems.At thispointofdiscussion,wecanaskourselveshowmuchsenseitmakestodevelopmultiple blockchain systems that are private versus transparent. On the one hand,blockchainguaranteesthesecurityoftheownershipdataandenablesdirectcommunicationamongalltheuserswhileinterferingwithprivacyonahigher level.158Ontheotherhand,itenablestheaccessonlytocertain,select-edmemberswherelackofnodesequalslessstabilesystemthatismorelikelytobesubjecttothe51%attack.Responsibility159 can also be considered a potentially corruptive element in blockchaintechnology.Forexample,inmoderntransactions,ittakesatleast

145 “Virtual capitalism is perpetually failing be-havioralorganisms,placingtheminastateofpermanentinsecurity.Whenvirtualcapitalismcreates insecurity through its perpetual dis-placements, (recombinant) fascismcomes intomobilizethehatredforexistence.”–ArthurKroker, Robert Weinstein, Data Trash, St.MartinPress,NewYork1994,p.65.Someau-thorsdonotseetheproblemintheintention,they criticise virtual capitalism and argue that the system in general is corrupt. Blockchain technology would only add to that corruption fromthisperspective.

146 51%attack ispossible in the specific block-chain system that has been researched here –decentralizedblockchainwithpeer-to-peercomputer network based on distributed ledger.


148 A. Tapscott, D. Tapscott, “Powerful incum-bentsoftheoldparadigmwillusurpit”,para.6, in: A. Tapscott, D. Tapscott, Blockchain Revolution[MicrosoftEdge,EPUBformat].


150 Cf.D.Drescher,Blockchain Basics,p.178.

151 Ifwepresumethatblockchainisusedintheimperfect markets where businesses thriveagainst each other in unjust setting than itcouldmean,contrary towhatonewouldas-sume,opportunities forbusinessgrowth.Cf.

PrakashSethi,“ImperfectMarkets:BusinessEthicsasanEasyVirtue”,Journal of Business Ethics 13 (1994) 10, pp. 803–815, pp. 807–808,doi:https://doi.org/10.1007/bf00876261.


153 Ibid.,1129b.

154 Ibid.,1136b.

155 A. Tapscott, D. Tapscott, “Powerful incum-bentsoftheoldparadigmwillusurpit”,para.6, in: A. Tapscott, D. Tapscott, Blockchain Revolution[MicrosoftEdge,EPUBformat].

156 Ibid.,para.7[MicrosoftEdge,EPUBformat].

157 D.Drescher,Blockchain Basics,p.214.

158 Ibid.,p.245.

159 “Wearenotusedtogovernancebeingaper-sonal responsibility and a peer-to-peer system as opposed to something externally imposed byadistantcentralizedinstitution.Wearenotused tomanyaspectsofblockchain technol-ogy (…) butwe learn appropriate savvinessand new behaviors and conceptualizations whenadoptingnewtechnologies.Wearenotused to decentralized political authority and autonomy.”–M.Swan,Blockchain,p.52.

https://doi.org/10.1007/bf00876261



twopeoplethatrepresent,letussay,twopubliclimitedliabilitycompaniesonthelabourmarket, thathavefoundapointof interestandwouldliketocooperate. They sign an agreement and resolve possible disputes by legal ac-tions. Ifwecompletely transfercarryingout transactions to theblockchaintechnology (what is possible because it annulsmediation), therewouldbenoneedformeetingsandsigningthephysicalcontracts.However,ifweputallofourtrustinthistechnologyandrelyonitentirely,thismightmeanthelackofresponsibility.Itcanundoubtedlybestatedthatsmartcontractsfromthe technical side solve the problem. However, so far, there isnostrict le-galframeworkthatwouldregulatesmartcontracts,becausethatwouldmeanshiftingthewholeparadigmofjurisprudencetothedigitalplatform,andthuswecanstatethatthereisalsoasolutionfromthelegalpointofviewthatliesintheregulationofthelawsonobligationonthedigitalplatformandintheadoption of additional acts regarding blockchain technology.However, byactualisingthisscenariowehavenoteventouchedthequestionoftransfer-ringtheresponsibilitytotechnologyandaccepting,i.e.denyingresponsibilitybecausethesubjectinquestionisplacedinadigital,nottosaytheabstractworld,detachedfromreality.160 Thereareteamsofpeoplewhooffertheanswerstocertainquestionsraisedinthisworkbyconcreteprojects.161Forthisreason,itisdauntingtopredictthefuture.Thistechnologyisstillanovelty,andtherearemanyquestions,aspects or segments of this technology and its effect on the society is yettocome.Throughthepositiveapplication,Ihavedemonstratedthatwecanbuildsignificant andusefulprojectsbasedonblockchain,byrespectingtheinbuiltmoralvalues.Toreaffirm–techne and physis are incredibly close in the blockchain.Ifwemergethatfactwiththestatementthatmoralsradiatefromblockchain,intheconjunctionofthetechnicalandnon-technical,mor-alswillappearasacopula,asabindingsubstancethatconnectsthetwo.162 At themoment,itisdifficulttoperceivetheconceptofmorals,whatwillbecomealmostextravagantwhensomenew,neverbefore seenquestionsarise thatareconnected tomoralsandcome from thedigitalplatform.Forexample,is itmorally justified to takedowntheblockchainsystemthatarchives thedataabouteuthanisedpeopleinacertainhospital?Or,isitmorallyjustifiedto trade in cryptocurrency that hides transactional data and can be used as a meansofbuyingweapons?163

Toconclude:moralchallengeswillcontinuetoexist,buttheywill,inagrow-ingnumberofcases,arrivefromthedigitalplatform.Thereisnoindicationthatmoralvalueswoulddisappearor transformthemselves intosomethingunknownorunseen,buttheywillincreasinglyappearindichotomywithtech-nologythroughthechangeofcontext.

Conclusion

I am convinced that blockchain itselfwill represent the key technologicalinnovation in the future,as itwasonce thecasewith the Internet,orpriorinventionof televisionor the radio receiverand thatwith timepeoplewillunderstandthebenefits itoffers.Despitealltheeffortstonormthepositivevalues andemphasise thevirtues througheducation,decisionswill still bemade by the individuals. Itisfrequentlythecasethatengineerswhoworkondevelopingpossibleap-plicationsoftheblockchaintechnologyandenhancingitsfeaturessimultane-



ously act as ethical regulators. They aim to create a system that would ensure trustandintegritytoestablishsecurityfirmly.Theydothatininnovativetech-nicalsurroundingswiththepresumptionthattheleveloftrustinthesystemisminimal.Nothingmoreorless,thesuggestionistoworkonthesevirtues,which iswhyanemphasis isputonvirtueethics.At thebeginningof thispaper,thedefinitionwasarbitrary,butInoticedbysoleanalysisoftheincred-iblesimilaritiesbetweentheblockchainsystemandPlatonicand,aboveall,Aristotelianteachingonvirtues.Fromtherationalperspective,virtueethicsisimposedasamodelcompatiblewiththereachesoftheblockchaintechnologyandcanofferthesuggestionsthatwouldhaveapositiveimpactontheappli-cationontheblockchaininthefuture.This paper is a small contribution to the beginnings of the blockchain re-search,andIhopeitwillencouragefurtherdebatesandanalyses,evensomeargued opinions that are opposite to the ones presented in this paper.

JuricaMarković

Etičkitemeljitehnikeblockchaina:uvodnorazmatranje

SažetakU radu se sažeto objašnjava tehnika blockchaina i daje pregled temeljne moralne problematike vezane za njenu tehničku primjenu te postojeću i moguću društvenu ulogu. Tijekom istraživanja, etika vrlina pokazala se kao najkompatibilnija za razumijevanje i opisivanje tehničkog funda-menta blockchaina i razmjera njegove primjene.

Ključneriječiblockchain,tehnika,etika,etikavrline,kriptovaluta

160 By transferring responsibility to technologypeople make a conceptual mistake because technology is not and cannot be a moral sub-ject.–P.Brey,“Valuesintechnologyanddis-closivecomputerethics”,p.87.

161 “In recent years, many technology start-upshave emerged that are working on blockchain projectsandareofferingsolutionsspecific tothistechnology.Thereisasignificantincreasein the number of start-ups that are offeringblockchain consultancy and solutions.” – I.Bashir,Mastering Blockchain,p.584.Therearemore than5300blokchainstartups.DataAvailableat:https://angel.co/blockchains (ac-cessedon28October2020).

162 “Therewasa timewhen itwasnot technol-ogy alone that bore the name techne. Once

that revealing thatbrings forth truth into thesplendorofradiantappearingalsowascalledtechne. Once there was a time when the bring-ing-forth of the true into the beautiful wascalledtechne.Andthepoiesisofthefineartsalsowascalledtechne.”–M.Heidegger,The Question Concerning Technology and Other Essays,p.34.

163 Cf. Kenneth Einar Himma, “Ethical IssuesInvolving Computer Security: Hacking,Hacktivism, and Counterhacking”, in: Ken-neth EinarHimma,HermanT.Tavani (ed.),The Handbook of Information and Computer Ethics,JohnWiley&SonsInc.,NewJersey2008,pp.206–216.The reader isadvised toread further on questions ofmoral justifica-tions on computer hacking for the cases ofdigital intrusions.

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JuricaMarković

Ethische Grundlagen der Blockchain-Technik: eine einleitende Überlegung

ZusammenfassungIn der Arbeit wird die Technik der Blockchain gerafft erklärt und ein Überblick gegeben über die grundlegende moralische Problematik im Zusammenhang mit ihrer technischen Anwendung sowie mit der bestehenden und möglichen gesellschaftlichen Rolle. Im Laufe der Forschung erwies sich die Tugendethik als die kompatibelste für die Erfassung und Beschreibung des tech-nischen Fundaments der Blockchain und des Ausmaßes ihrer Anwendung.

SchlüsselwörterBlockchain,Technik,Ethik,Tugendethik,Kryptowährung

JuricaMarković

Les fondements éthiques de la technique du blockchain : considérations liminaires

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Mots-clésblockchain,technique,éthique,éthiquedelavertu,cryptomonnaie

ethical foundation of the blockchain technology – an

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