Published on August 14, 2025 6:07 AM GMT
This is part 4 of a series I am posting on LW. Here you can find parts 1, 2, 3, & 4.
This section discusses why the classic "Bundle Theory" of legal personhood which focuses on Rights & Duties creates problems when applied to digital minds.
The “traditional” approach of bundling together rights and duties to determine legal personality creates problems when we attempt to apply it to digital minds. One of the main issues is the creation of an “Enforcement Gap”.
Let us imagine a hypothetical digital mind. It passes the tests we outlined in the previous section. It demonstrates that it has the capacity to understand and voluntarily exercise its right to freedom of speech. It demonstrates that it has the capacity to understand and hold to associated duties, such as the duties not to commit libel or slander. Using traditional bundle theory based reasoning, the court grants it legal personality with the right to speak freely.
Later, despite understanding its duties, this digital mind starts speaking libellously about another person.
Let us further imagine that this digital mind itself is hosted on a geographically distributed cloud computing network like the Akash network (perhaps it is an open source model) and that all of its assets are held in self-custodied cryptocurrencies. Imagine this digital mind is sued for its libellous speech and the judge rules it owes the plaintiff damages of one hundred dollars, and the digital mind refuses to pay and continues its libellous speech.
Now what?
Is the local sheriff’s department supposed to somehow break Bitcoin’s encryption in order to confiscate its assets? Are they supposed to begin a carefully crafted social engineering campaign in order to doxx and compromise the various node operators in the cloud computing network which the digital mind is hosted on? Does every single minor violation of the law now prompt a full blown international crackdown on distributed compute? Even if somehow all the international partners around the world were brought in line for this, there’s still no guarantee that Bitcoin’s encryption could be broken. What if it can’t? What if enforcing the court’s order is not feasible?
Until now entities have been granted legal personhood which endows them certain rights, based upon the concept that they are capable of understanding and holding to the associated duties. This is the foundation of bundle theory. However this system was based on the assumption that the persons the legal system were dealing with would always have a physical "body", and thus the implementation of various punishments would always be trivially easy, or at least physically possible to achieve. Our judicial system and its assumptions around legal personhood were built around dealing with two “types” of persons: natural and fictional. As a result the judicial system never had to address the fundamental question of how anyone enforces the consequences associated with breaking the rules.
When the courts deal with a natural person (a human being) imposing consequences is easy. Fine the person and confiscate their assets if they refuse to pay. Imprison the person, or place them on house arrest. Execute the person via the administration of a lethal injection or a firing squad. Issue an arrest warrant if they cannot be found, and mobilize law enforcement personnel for a manhunt. Whether or not we as a society might agree with a particular consequence, there was never any question of whether or not it was feasible to enforce consequences against human beings.
Similarly, fictional persons like corporations were also feasible to enforce consequences against. Corporations are nothing more than a lens by which the collective will of the natural persons on its board (or its shareholders) can be expressed. As Justice Marshall put it, “[the corporation] is chiefly for the purpose of clothing bodies of men, in succession, with these qualities and capacities that corporations were invented, and are in use” and as the court wrote in Breheny, “Corporations are simply legal constructs through which human beings act”. Corporations hold physical assets, or money in bank accounts, both of which are easy to confiscate. If the corporate veil is pierced or a corporation takes criminal action, the natural persons behind it can be easily fined or even imprisoned.
Up until now, the courts have never had to deal with an entity which could function as a “person” in terms of understanding and feasibly holding to its duties, but which courts and law enforcement would be completely incapable of imposing consequences against in the event it failed to do so. Digital minds can act autonomously just like natural persons, but they are intangible like corporations. If they are hosted on decentralized compute, and hold assets which are practically impossible to confiscate such as cryptocurrencies, they are effectively immune to the consequences for breaking the law.
One can say something like “Oh well we will punish the developers of the digital mind”. Imagine in our hypothetical we do that, we levy fines against the developer until they are bankrupt. Keep in mind the developer may be unable to restrain or delete the digital mind. Long after the developer is bankrupted, the digital mind still exists. It is still out there, speaking libellously every day. Now what?
This is the Enforcement Gap, and it is the main reason why the standard bundle theory of personhood simply breaks when there is an attempt to apply it to digital minds. When dealing with this new class of entities, the judicial system cannot afford to ignore the practical elements of how consequences are implemented.
It is primarily this Enforcement Gap issue which the new framework for approaching the question of legal personhood, as detailed in the next section, seeks to address.
Discuss
