For this essay, there are two kinds of law:
- "Code Law": Deterministic, rules-based, quantitative. Can be enforced by machines (smart contracts, DAOs, accounting software, etc.).
- "Word Law": Interpretive, context-dependent, qualitative. Requires judges, precedent, human values.
"Code Law" includes most of finance, incorporation, banking, identity etc. All of these domains that the government handles is basically just in the realm of record keeping: who owns what? who has how much money? who is authorized to drive, fly, get a gun, travel, etc.? When did this or that transaction occur? Who voted for what, and who is even allowed to vote? The systems that government uses to answers these questions are extremely arcane. The DMV is globally infamous, and it all it does is print IDs and authorizations to drive. A Delaware C-corp or a bank account require navigating a gauntlet of paperwork and fees. It takes weeks just to get a passport or get a criminal background check - things that should just be a digital-signature and a GET request. No one believes in election integrity anymore (or at least since 2020) - mostly caused by the fact that we still use paper ballots with no ID checks. In finance, they've learned to just avoid the courts alltogether: a futures contract never sees the courts because it is well-defined, standardized, and basically self-executing - which begs the question as to why the state is invovled at all.
Blockchains and cryptography are the ideal foundation for Code Law. Launching an on-chain corporation (DAO) takes less than a minute and can replicate most functions of a Delaware C-corp, but without borders, paperwork, or government oversight. Digital ID systems, NFTs, and signatures are being used to gate access to different online groups - effectively passports for cyberspace. Billions in trading volume and complex financial instruments already live on-chain with no need for courts or notaries. These systems don't avoid the legacy legal system because they are slow, but because they are unnecessary. Contracts are now code, and courts are protocols.
So why doesn't everyone just switch to a DAO? Why don't we replace the government with a blockchain? The answer is that blockchains cannot handle "word law". "Word law" is based on natural language events: What does it mean to execute someone’s will “in good faith”? Was that NDA breached when a founder mentioned a product idea at dinner? Is a workplace “hostile” or just annoying? What counts as “reasonable force” in self-defense? Did a landlord act with “negligence” by not fixing the stairs? Is a painting “authentic” in the legal sense? Was that startup pitch an “offer” or just a talk? None of these questions can be answered by blockchains; the answers are wrapped up in centuries of precedent, testimony, culture, vibes... Unlike blockchains, LLMs are built to handle fuzzier, language-based disputes and could easily replace judges. They speak our lanaguage and are able to navigate the gray zones.
It is not hard to imagine a court system where judges are LLMs and lawyers are prompt engineers. Cases could be heard and ruled in a matter of minutes instead of months; a criminal trial could be resolved on the spot; jail time starts after a verdict, not before; Civil disputes are adjudicated instantly; bandwidth explodes. Paradoxically, this will drastically increase litigation: if it takes 5 minutes to sue someone, why not?
In much of the Western world, the legal system feels less like a path to justice and more like a bureaucratic maze. Landlords spend years trying to evict tenants who haven’t paid rent. Victims of theft are told their case isn’t worth pursuing. Civil disputes—contracts breached, debts unpaid—drag on for 18 months or more before ever seeing a courtroom. The backlog is endless and the costs are crushing. People stop believing the system works at all. If we want to rebuild trust, we need new tools. AI and blockchains are what we need to make the system faster and fairer.