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ARTICLE

IN PRESS

JID: CLSR

[m7;July 3, 2018;21:58]

computer law & security review 000 (2018) 1–8

Available online at www.sciencedirect.com

journal homepage: www.elsevier.com/locate/CLSR

From Rai

stones

to Blockchains: The

transformation of payments

Edward A. Morse ∗

Creighton University School of Law, Omaha, NE, USA

a r t i c l e i n f o

a b s t r a c t

Computer technology has dramatically changed the marketplace, including the way we make payments. Electronic access to funds expands liquidity and the relationships within payment networks allow strangers to build bridges of trust, increasing trade and human in- teraction. But electronic payment channels have also presented new challenges in security and privacy, including new forms of criminal behavior and tax avoidance for governments to address. This essay outlines some of the legal, social, and technological implications from this transformation of payments and assesses future challenges in the electronic payments frontier. © 2018 Edward A. Morse. Published by Elsevier Ltd. All rights reserved.

Article history: Available online xxx

Keywords: Payments Networks Regulation Cryptocurrency

networks link merchants, consumers, and their banks to pro- vide a secure and reliable basis for transmitting money. Con- sumers prefer the convenience and benefits that accrue to them from these networks and merchants have been will- ing to bear most of the network costs (at least nominally)

1.

Introduction

Electronic payments have transformed the marketplace. While coins and paper bills have not yet become a curios- ity of history in the manner of the Rai stone, 1 they are be- ing used less frequently than ever before. 2 Electronic payment

∗ Corresponding author: Edward A. Morse, Creighton University School of Law, 2133 California Street, Omaha, NE 68178, USA. E-mail address: morse@creighton.edu 1 Rai stones are large circular disks quarried on Palau and Guam and used as a form of currency on Yap. See George M. Williams jr, Structure and Purpose of Payment Systems 300 n. 4, in Electronic Payment Systems: Law and Emerging Technologies (Edward A. Morse, ed. 2018). Ownership of these stones was transferred virtually, based on common knowledge among the tribe, which some view as a precursor to the modern Bitcoin system. See Aleksander Berentsen & Fabian Schar, A Short Introduction to the World of Cryptocurren- cies, 100(1) Federal Reserve Bank of St. Louis Review 1, 3-4 (2018), https://files.stlouisfed.org/files/htdocs/publications/review/2018/01/10/ a-short-introduction-to-the-world-of-cryptocurrencies.pdf . 2 See, e.g., Art Swift and Steve Ander, Americans Using Cash Less Compared with Five Years Ago (July 12, 2016), http://news. gallup.com/poll/193649/americans-using-cash-less-compared-five-years-ago.aspx ; Federal Reserve Payments Study (2016), https:// www.federalreserve.gov/newsevents/press/other/2016-payments-study-20161222.pdf (showing noncash payments increasing dramat- ically over three-year period from 2012-2015).

https://doi.org/10.1016/j.clsr.2018.05.035 0267-3649/© 2018 Edward A. Morse. Published by Elsevier Ltd. All rights reserved.

Please cite this article as: E.A. Morse, From Rai stones to Blockchains:The transformation of payments, Computer Law & Security Review: The International Journal of Technology Law and Practice (2018), https://doi.org/10.1016/j.clsr.2018.05.035