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A Transatlantic Perspective on Blockchain Voting Systems Stanford – Vienna Transatlantic Technology Law Forum A joint initiative of Stanford Law School and the University of Vienna School of Law TTLF Working Papers No. 49 The Limits of Blockchain Democracy: A Transatlantic Perspective on Blockchain Voting Systems Yoan Hermstrüwer 2020 TTLF Working Papers Editors: Siegfried Fina, Mark Lemley, and Roland Vogl About the TTLF Working Papers TTLF’s Working Paper Series presents original research on technology-related and business-related law and policy issues of the European Union and the US. The objective of TTLF’s Working Paper Series is to share “work in progress”. The authors of the papers are solely responsible for the content of their contributions and may use the citation standards of their home country. The TTLF Working Papers can be found at http://ttlf.stanford.edu. Please also visit this website to learn more about TTLF’s mission and activities. If you should have any questions regarding the TTLF’s Working Paper Series, please contact Vienna Law Professor Siegfried Fina, Stanford Law Professor Mark Lemley or Stanford LST Executive Director Roland Vogl at the Stanford-Vienna Transatlantic Technology Law Forum http://ttlf.stanford.edu Stanford Law School University of Vienna School of Law Crown Quadrangle Department of Business Law 559 Nathan Abbott Way Schottenbastei 10-16 Stanford, CA 94305-8610 1010 Vienna, Austria About the Author Yoan Hermstrüwer is a Senior Research Fellow at the Max Planck Institute for Research on Collective Goods in Bonn, Germany. Prior to his academic career, he passed the First State Exam (J.D. equivalent) and the Second State Exam (bar exam equivalent). From 2014 to 2016, he worked as a law clerk in Germany, South Korea, and at the World Bank in Washington, D.C. He received a Licence en droit (LL.B. equivalent) from Université Panthéon-Assas (Paris 2) and a Ph.D. from the University of Bonn. During his doctoral studies, he was a Visiting Researcher at Yale Law School. His research focuses on technology law, administrative law, constitutional law, matching markets, auctions, (experimental) law and economics, and empirical legal studies. Yoan has been a TTLF Fellow since 2018. Acknowledgements My thanks to Jens Frankenreiter, Justin McCrary, Krishna Gummadi, and the participants of the 2018 International Seminar on the New Institutional Economics in Florence (JITE 2018). All errors are mine alone. General Note about the Content The opinions expressed in this paper are those of the author and not necessarily those of the Transatlantic Technology Law Forum or any of its partner institutions, or the sponsors of this research project. Suggested Citation This TTLF Working Paper should be cited as: Yoan Hermstrüwer, The Limits of Blockchain Democracy: A Transatlantic Perspective on Blockchain Voting Systems, Stanford-Vienna TTLF Working Paper No. 49, http://ttlf.stanford.edu. Copyright © 2020 Yoan Hermstrüwer Abstract Should political elections be implemented using blockchain technology? Blockchain evangelists have argued that it should. This article sheds light on the potential of blockchain voting procedures and the legal constraints that need to be accommodated. I first identify the upsides of the distributed ledger technology and the normative principles guiding electronic voting systems. Specifically, I elucidate some of the major normative constraints for blockchain voting systems in a transatlantic comparison of U.S. and German constitutional law. I then discuss the technological, economic and normative limitations of blockchain voting procedures. On the one hand, these limitations result from the rules and incentives set by different consensus mechanisms. On the other hand, it is far from clear whether blockchain technology provides sufficient safeguards to ensure identity verification, the secrecy of ballots, and a verification that ballots are cast as intended, recorded as cast, and counted as recorded. Building on principles from constitutional law, I contend that blockchain technology may not provide sufficient safeguards to satisfy the requirements of democratic voting procedures, at least not in the near future. Table of Contents Introduction ...................................................................................................... 1 I. Blockchain Democracy ................................................................................. 5 A. A Problem and a Solution .................................................................... 5 1. Vulnerable Voting ...................................................................... 5 2. Blockchain Voting ...................................................................... 8 B. Principles of Election Law ................................................................... 10 1. United States ............................................................................... 10 2. Germany ..................................................................................... 13 C. Principles of Cryptoeconomics ............................................................ 15 1. Blockchain Mechanism Design .................................................. 16 2. Distributed Ledger Technology .................................................. 18 II. The Virtues .................................................................................................. 23 A. Immutability ......................................................................................... 23 B. Political Equality .................................................................................. 26 C. Quadratic Voting .................................................................................. 28 III. The Limits .................................................................................................. 31 A. Ensuring Integrity ................................................................................ 32 1. Eligibility .................................................................................... 32 2. Inclusion ..................................................................................... 36 3. Accuracy ..................................................................................... 38 B. Preserving Privacy................................................................................ 46 1. Polling Secrecy ........................................................................... 46 2. Ballot Secrecy ............................................................................. 49 3. Political Privacy .......................................................................... 50 C. Creating Legitimacy ............................................................................. 54 1. Procedural Justice ....................................................................... 54 2. Trust ............................................................................................ 57 3. Transparency .............................................................................. 60 4. Sovereignty ................................................................................. 62 Conclusion ....................................................................................................... 64 INTRODUCTION Since its inception, democracy has been organized through centralized entities, such as the nation state or corporations. As Winston Churchill famously stated, “democracy is the worst form of government except for all 2 LIMITS OF BLOCKCHAIN DEMOCRACY [2020] those other forms that have been tried from time to time.”1 One of the core challenges in organizing democratic procedures is to determine mechanisms that enable a sound aggregation of political preferences without falling prey to the temptation of overriding the citizens will through the use of money and the abuse of power. Each citizen should have the right to resist corruption and the abuse of power, a republican idea that features prominently in James Madison’s writings.2 Sound voting procedures and competitive elections are fundamental predicates of democracy, providing bulwarks against authoritarian lapses and subtler forms of institutional erosion.3 An obvious reason for citizens’ discontent with democracy is that the costs of voting usually exceed the expected benefits. Given that the probability of being pivotal is close to zero and that voting can be cumbersome, self-interested or rational voters should be expected to refrain from casting a ballot - a theory that explains what is usually referred to as the paradox of voting.4 These weaknesses are exacerbated by the fact that paper-based elections, especially the ballot counting procedures, are laborious and vulnerable to human errors. Moreover, both traditional voting procedures and electronic voting systems are sometimes considered as being intransparent and not sufficiently exposed to public scrutiny. Voters may therefore feel that electoral processes are rigged and distrust the voting procedures used to produce political outcomes. A particularly worrisome problem is that less affluent voters and minorities are increasingly disconnected from electoral processes, which eventually results in what has been coined as vote dissociation.5 These weaknesses might explain why many citizens lapse into voter apathy or, worse, turn their back on the idea of democracy and the procedures used to elicit the people’s political will.6 Blockchain evangelists claim that blockchain technology is likely to cure these maladies.7 Blockchain technology, they argue, makes it closely 1 Winston
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