Maryam Pazhoomand; Jafar Nory Yoshanloey
Abstract
Competition law, which governs the economic activities of entities operating in commercial and economic markets, is now facing a new challenge with the emergence of cryptocurrencies. While adhering to the philosophy of competition rules and the economic nature of these markets, it becomes necessary to ...
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Competition law, which governs the economic activities of entities operating in commercial and economic markets, is now facing a new challenge with the emergence of cryptocurrencies. While adhering to the philosophy of competition rules and the economic nature of these markets, it becomes necessary to conduct a legal analysis of the Bitcoin market from a competition perspective in order to identify various forms of anti-competitive behavior. In such cases, the application of competition rules and corresponding penalties needs to be tailored to the market structure. The occurrence of anti-competitive behaviors is possible in new formats, which should be taken into consideration when assessing market structure.One of the most significant forms of anti-competitive behavior is the abuse of dominance, which includes selfish strategies and the 51% attack. By manipulating the original blockchain and compromising the decentralized nature of Bitcoin, this behavior not only violates the principle of fair competition but also leads to market failure. A dominant position can also arise through mergers and monopolies involving dominant equipment. Additionally, algorithmic collusion, which involves altering the algorithm and creating a fork, represents a distinct form of cartel practice that enables the 51% attack. Attacks themselves constitute another form of collusion in this market, further complicating the competition landscape.Considering the self-regulatory nature and global structure of the Bitcoin market, competition rules and entities involved face the challenge of defining governance authority while accounting for the difficulties of imposing penalties due to anonymity criteria. Establishing an effective and productive relationship with developers is crucial for the safe application of competition rules in the market. Furthermore, it is possible to enforce competition law on registered agencies that operate as legal entities in compliance with local legal frameworks.
