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To combat fraud in Web3, we need a decentralised justice and reputation system

By Andrei Panferov
June 8, 2022 0

Imagine endlessly walking down the corridors of a dusty old courthouse in New York, London, or Melbourne to meet a judge who will be considering your NFT scam suit as soon as he figures out what a non-fungible token is… in half a year or so. While Web2 squeaks like an old cart and ambles along at the speed of the new century, Web3 needs to be much faster, more accurate, and transparent in all spheres, including justice. 

In the offline world, there is a more than one trillion legacy market full of dissatisfaction, a lack of transparency, offences, and astounding sums needed to deliver justice. Court costs in Canada, for instance, can range from $10,000-$25,000. The cost of contesting a will in Australia in pre-trial proceedings reaches $10,000, and if it goes to court, the numbers could be in the six figures. Attorney’s fees range from $300 to $500 per hour, and higher. Do we really have to pay that kind of money for justice to be served?

In the blockchain universe fraud and scams are growing faster than the crypto field itself. Losses exceed 15 billion a year, growing 79 per cent since 2020, according to a Chainalysis report. There’s no reputation or trust system in crypto to stop it. From our point of view, the current law system requires a transition to a Web3 transparent infrastructure. That’s how we came up with YourJustice.

Andrei Panferov.Tech entrepreneur specialising in decentralised laws and justice. Calls himself a “freedompreneur”. Nomad who feels like a “person from the planet Earth”. Co-founder of YourJustice.

We decided to build an easy-to-learn blockchain-based reputation platform where everyone сan create various types of social structures and play roles for their own benefit. It’s possible to experiment with the platform, make money as an arbiter, legislator, or validator etc, while improving relationships with others or just to make the world a better place. 

We intend to build a plural reputation layer, where communities have their own laws and judges. They can impact people’s reputations by filing positive and negative cases. People may respond and appeal, compensate, or just ignore, but the reputation stays on chain. 

Why do we need decentralised justice?

Crypto has always strived to get rid of state regulation, but this is where it has also led to the great wave of fraud that has swallowed up millions. To be blunt, it does not make any sense to go to a traditional court because our current legal systems do not know enough about DeFi and scams. In the crypto world, fraud is often committed by anonyms or pseudonyms. To sue them in an offline court, you need to somehow de-anonymize it, which often proves unrealistic. It seems reasonable to take legal action online with competent judges, including filing a case against a person or company without their prior agreement.

What else? Distrust. In the newest Netflix series, “The Lincoln Lawyer”, judges are bribed and juries are selected by special software or even with the help of a shrewd poker player. Not fiction, but also not news. There are few countries where the judicial institution is not discredited by corruption. 

Through a multi-stage control system, a decentralised court would be 99 per cent unbiased.

Now let’s see what this looks like in practice. Let’s suppose we have a person cheated out of money. Instead of going through the dusty endless offline corridors, he or she joins the platform, attaches evidence, and creates a report against the offender, company X. Judges are randomly selected and also blindly checked by pre-selected validators — honorary community citizens who have agreed to participate in the checking process to earn some money. The judge is aware of secondary control and is motivated to give the right verdict. Judges can be graded and hold responsibility for their mistakes, including financial responsibility. That’s how it should work in normal countries: citizens checking officials.

A dramatic difference from traditional court is that all data is stored decentralised, meaning that case histories, evidence, and even profiles cannot be deleted. This should evolve into a closed-party trial with secret rituals as a clear procedure illuminated by all the lights of Web3.

Why reputation and how will it change the world?

So, the verdict is in and the fraud company X is exposed. What’s next? The primary means of enforcement in Web3 court would be reputation. The world is full of score systems: credit scores, knowledge scores in schools, achievements in video games, number of followers and likes, amount of money in bank accounts, scores on Google Maps, cab driver reviews, etc. Scores in themselves are not a horror because in every value system, there are more and less important things. But it’s  essential that such rating systems do not end up in the hands of a certain group. It is high time we decentralised scores and offered people a tool to establish their reputation.

Back to the example of the company X that was convicted in a digital court, and then downgraded, this can be crucial for the future of business. 

From our point of view, acting in the Web3 world and by complying with the laws of various jurisdictions, the vast majority of players will build their reputations in a positive way. They will compensate for it in the event of mistakes. It will become, among other things, a commercial motivation.

Any history of reputation is bound to be part of the assessment of a potential startup or project that attracts investment or business. If that’s not your story, there’s something wrong. From my point of view, reputation is the missing puzzle piece not only for anti-fraud companies but for all decentralised institutions. 

The common goal of visionaries

It took us eight months to build the game theory and ontology that can help us put laws and justice into the blockchain, ensuring it will work. It’s clear that launching such a system means starting an industry with lots of different roles while balancing their interests so that everyone is motivated, but no one is overpowered. 

Crypto is inevitably taking over states’ powers one by one, but we are still at the beginning of the journey. It all started with DeFi, and now it’s about justice, governance, and social relations. Vitalik Buterin is looking for the “soul of Web3”, Balaji Srinivasan is ready to create a network state, and we are willing to open the gates to the decentralised future by motivating communities through reputation, reducing scam and irresponsible behaviour, and other black holes in our society. 

We have different means but a common goal. There are more of us, and that’s a great thing.


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