Another day, another hack in Web3.
KyberSwap’s $50 million loss over the most recent Thanksgiving holiday is the latest installment in what seems like a never-ending string of hacks and frauds in the crypto space. Attacks are now so commonplace that industry onlookers have become desensitized while users’ losses mount into billions annually. Even government agencies look powerless, as almost all blockchain crimes go unaddressed.
An emerging Web3 project, Jurat, is poised to transform this landscape by releasing a base layer for legal recourse on blockchains. Similar to what TCP/IP did for computer networking to enable the internet to flourish, the Jurat protocol bridges blockchain networks to official legal systems so that on-chain activity can comply with the law.
Mike Kanovitz, CEO and one of Jurat’s founders, told Coinpedia that “adding the capacity to enforce official legal rights and requirements on-chain is transformative for Web3.” Consumers and other victims can now recover their digital assets after a theft or fraud. Court access is also key to new blockchain use cases that require legal recourse, such as regulated transactions and the tokenization of real estate. “Think of it as the most important blockchain technology you haven’t heard of yet,” he said.
Enabling users with the ability to protect and reclaim value is a critical component of any financial system. By bringing these capabilities to decentralized, blockchain-powered ecosystems, Jurat is providing the infrastructure financial systems need for true mainstream adoption.
The Jurat Network offers legal recourse using special transaction types that integrate its native coin, JTC, with existing state and federal court systems and procedures. JTC was fairly launched as a fork of BTC at block height 717808. The network follows the same release schedule as BTC and is subject to Bitcoin’s 21 million limit. Less than 10% of JTC coins remain to be mined.
“JTC shows that we do not have to sacrifice decentralization or privacy in order to transact in a system with legal rights,” according to Kanovitz. “The mission for JTC is to expand blockchain’s use cases and provide consumer protection.”
State and Federal Court Interoperability
Jurat’s protocol integrates with existing legal processes rather than requiring major court or legal system changes. Users with a dispute on the blockchain can provide courts with a hash of the transaction they believe the law requires. If the judge agrees then the transaction goes in the opinion on the docket where Jurat nodes can access it. The nodes provide the information to the miners so that the blockchain can execute the transaction autonomously.
“The process works without needing any intermediaries between the court and the blockchain, not even an attorney,” according to Kanovitz. “This leaves the enforcement process to the miners rather than empowering a government official. And putting the decisions in the judges’ hands ensures due process for the parties to every transaction.”
Giving courts the ability to impact on-chain operations is controversial to many in the crypto “old school”. Still, Kanovitz argues that on-chain legal enforcement is what is needed to achieve mainstream adoption.
“Expecting users to risk a substantial chunk of their savings by storing them on-chain where they have no access to legal recourse is unrealistic,” Kanovitz added, “so the lack of legal remedies is one of the most serious problems holding back the mass of people who could be using blockchain in their daily lives.”
The benefits of avoiding bank charges, cheap cross-border payments, and unbeatable transaction settlement speeds are obvious. However, banks can issue refunds in case of fraud or theft; for many people, that peace of mind is far more important than the advances of using crypto. The lack of legal recourse also tarnishes the sector’s image, and gives regulators ammunition to launch attacks against the industry’s most prominent figures, exchanges, and projects.
Kanovitz argues that providing legal recourse on-chain is consistent with the core principles of decentralization. “Satoshi used decentralization to ensure that no one can inflate Bitcoin’s monetary system – 21 million will always be 21 million. Jurat does not change anything about that. It adds a protocol to ensure justice at the transaction level, between individual users.”
Courts technically already have the jurisdiction to enforce the law following an on-chain hack or scam. However, there is usually no effective way to do so. A blockchain is unlike a bank, which can follow a court order. Jurat gives courts and users an effective means to exercise the existing jurisdiction; it does not alter legal rights.
“Satoshi never claimed that hackers and scammers should victimize blockchain users with impunity. The wild west aspect of crypto is not an intentional design feature,” explained Kanovitz. “Satoshi also wasn’t thinking of using Bitcoin for legally sophisticated transactions like tokenizing real-world assets or conveying copyrights in digital art. But that’s where blockchain is now,” he added.
“The fact is that no technology in history was born complete. There is always an evolutionary process. Every blockchain since Bitcoin is evidence of that process. Just like in biology, new protocols may succeed or fail. We think legal recourse is the sort of advance that evolution will favor. ”
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