The Impacts of Blockchain Technology on the Sovereignty of the Modern State

The unique features of the emerging blockchain technology and its new tools such as cryptocurrencies, despite having significant benefits, have posed various difficulties for states. In particular, the centrifugal structure of the blockchain has made it an important challenge to the sovereignty of the modern state. Too much emphasis on the sovereignty of states and ignoring the capabilities of decentralized technologies will result in nothing but an inefficient structure for states. But the assumptions based on the complete domination of blockchain technology over the sovereignty of states, at least based on the available data, do not seem very realistic. The present paper, using a descriptive-analytical method, answers the question of the consequences of blockchain for state governance without falling into the trap of simplistic unilateralism and dualism. The present study finds that the sovereignty of states and the strength of blockchain technology have framed today's complex life in practice on the basis of interaction and will continue to do so in the near future. Although the first party (state) seems to have the upper hand in such a framework, the distant future is unpredictable. To answer the above question, understanding the characteristics of the mentioned technology, recognizing how states react to it and evaluating the perspectives of how the two sides of the relationship interact (sovereignty of the state / blockchain) in order to make the good policy in this regard, it seems necessary.The analysis of what has happened to the states in the last century shows that the application of the sovereignty of the states is gradually eroding. The changes caused by the creation and development of new technologies have forced the governments to take a specific reaction against the mentioned phenomenon. Some of the characteristics of blockchain technology such as its decentralized and trans-spatial structure, in particular, some elements on the governments, such as the authority to enact comprehensive laws in a specific territorial area and the authority to print national currency (fiat) and control it from It has faced a serious challenge through various economic and financial policies.Any simplistic view regarding the complete dominance of the state's sovereignty over blockchain technology, as well as the passing of the aforementioned technology from the state's sovereignty, due to ignoring the other party's capacity to coordinate with the developments of the day and manage it, does not seem justified. This issue has caused the government's response to this phenomenon to fluctuate, from complete prohibition to legal restrictions and recognition and even the production of cryptocurrency. It is noteworthy that so far, some governments have not shown any legal or practical reaction to this phenomenon. Despite the relativity in the above assessment, it should be acknowledged that the technical ability of each government in dealing with new technologies (here, blockchain) is one of the most important factors in determining the type of government's response to this phenomenon.Despite considering blockchain technology as a threat to the sovereignty of states, the opportunities and advantages of the mentioned technology for exercising the sovereignty of states should not be overlooked. In other words, the blockchain technology with its unique features puts innovative methods and mechanisms in line with the government; A tool that, if governments are equipped with the mentioned technology, will deeply affect the scope and effectiveness of the government's actions in the two areas of law making and monitoring its implementation. The aforementioned reality, along with the development of virtual space (and its effects on the diminution of the government's sovereignty in a certain territorial area), doubles the necessity of a justified and calculated response to blockchain technology. However, it should be acknowledged that the technological threats to the government's governance are far greater than its opportunities. The absence of a central control authority in this technology and the equality of all users, as well as the impossibility of refining it by governments or any other person, clearly undermine the government's ability to exercise sovereignty in this field, at least in the current situation is excluded; A thing that also removes other threats to the government's sovereignty (including providing a platform for money laundering and other crimes).Due to the newness of the above technology and the incomplete experience of states in reacting to it, it may not be possible to provide an accurate prediction of the outcome of this relationship (interaction between government governance and blockchain technology) at this stage. Based on this, the range of actions that governments can take in response to the above phenomenon cannot be fully explained and accurately evaluated. Nevertheless, in the current situation, although governments, like other individuals, have the possibility to enter this field and produce cryptocurrencies; Also, they can try to deal with or manage the mentioned phenomenon by prohibiting or imposing some restrictive conditions, it should not be overlooked that the range of the mentioned measures apparently could not and may not be able to create an important practical obstacle for people to enter to this arena. All this shows the necessity of adopting a realistic approach by governments towards this phenomenon, especially considering the consequences of not having a specific reaction against it. The course of the studies conducted in this article apparently indicates that governments are moving towards the option of peaceful coexistence with blockchain technology, of course, with the imposition of certain conditions and specific requirements in order to manage it (to the extent of the technology's capabilities). Governments will move.Considering the concentration of at least part of the capital of some Iranian individuals in crypto-currencies and predicting the possibility of its continuation in the future and even the entry of more capital in this direction, compiling a model of the Iranian government's justified response to the aforementioned phenomenon with a comprehensive review of experience other governments and evaluating the advantages and disadvantages of each of the models and prescribing the most suitable response based on the economic, political and even cultural conditions and requirements of the Iranian society, can be used as a suggestion for future researches on this issue. be taken into consideration and action.