Widespread digitalization of the modern society - the emergence of digital devices, the introduction of Internet of Things, the development of Big Data processing and other technologies result in new challenges. Not only industrial and corporate automation that has already been considerably covered by the legislation initiatives but also the digitalization of everyday life has started to constitute a critical infrastructure in the modern society. This largely happens because digital devices substituting traditional technologies owned by citizens are incorporated into corporate, financial and state business processes. For instance, citizens' devices are becoming the source of primary data for energy and utility companies. More opportunities for the direct interaction of automation solutions between themselves resulting in a controversial synergy effect have been emerging recently. The article addresses specifics of citizens' digital infrastructure in the light of critical infrastructure, in particular the necessity and special aspects of legal and regulatory framework and possible development trends of this functionality.
Digital infrastructure of modern society becomes
critical for its functioning, which is reflected in the
legislation [
Very often personal automation solutions are necessary extensions of corporate systems. For instance, the shutdown of financial, communication or other subsystems servicing citizens’ mobile devices can cause a collapse in the modern society. Traditional, non-digital technological solutions may either not function or solve only a limited number of tasks. However, a massive failure of citizens’ peripheral devices also may cause critical implications. For example, a modern finance system largely operates in digital environment. Transactions, operations, analytical functions are performed in an automated environment. In case of unexpected failure of automated solutions, including citizens' devices, the shift to previous “paper” information processing technologies may not be possible and result in overall collapse of the financial system. In the article, we will address the issues of incorporation of citizens and their devices into the critical infrastructure of the modern society.
Citizens’ devices interact directly with each other on the basis of certain contracts. These contracts are made automatically and require special legal and regulatory infrastructure. Smart contracts are a good example of this.
Every person owns several “smart” devices that can be: • programmed; • used simultaneously in concerted manner; • • updated or reconfigured (e.g. by the update of embedded software); replaced by a new device due to the low cost caused by massive replication.
When building society's digital infrastructure it is important to take into account changes happening at the personal level. Risks should be detected and prevented – unauthorized access to IoT objects, phishing of personal data, location tracking etc. In order to do so it is necessary to have solutions enabling to prevent unauthorized use of IoT infrastructure, and solutions allowing establishing mutual trust between them and other personal digital devices.
Solutions for the diagnostic of unnatural or unexpected behavior of IoT objects and prevention of these states either by the user himself or automatically are highly soughtafter. These solutions should be implemented technically and must be automatically supported by legislative norms and regulations.
It is crucial to reasonably define areas of responsibility for incorrect or fraudulent functioning of personal devices. For instance, it should be clearly defined in the legal framework who is responsible for the incident – the user of the device, the owner of the device or infrastructure interacting with the device, the manufacturer of the device or software installed on the device or external intruder.
In should be clear to everybody which actions must be performed by conscientious users of an IoT device or a system consisting of these devices to provide a sufficient response in order to avoid liability for the damages caused by these devices.
Providing a widespread incorporation of digital devices, including for instance IoT devices, there is a need for the new methods to support social and economic structure of the modern society.
Every person in modern circumstances has to be technologically-savvy, demonstrate a new level of situational awareness and understand the behavioral culture of digital society. This should be ensured by new norms and regulations in the sphere of digital technology.
Devices in the public digital infrastructure are explicitly or implicitly registered; objects are being interconnected and co-used. This connectivity and its usage is often performed automatically. The examples of connectivity between objects are – establishing ownership of an IoT object by a particular person, content and usage rules set by that person, object’s location registration and tracking of its movements etc. Automated systems can provide information about the objects connected with or interesting to a certain person, about his movements or his usage patterns for IoT objects. A new level of information awareness has led to the emergence of new social and economic challenges.
In is not uncommon in digital infrastructure when a person cannot detect risks arising out of the incorporation of IoT devices, new means of communication and processing of information, or assess implications of the use of the new technologies. Besides, possible risks in digital infrastructure tend to increase due to the development of device technical characteristics and introduction of new data processing tools.
Many challenges arise out of the development of the emergent properties in digital systems. These challenges are associated, for example, with the integration of data about the digital devices usage by a certain person and accumulation of data history. For instance, it is possible to collect data and use it implicitly with the Big Data technologies. These methods allow to detect new links between objects, e.g. to personify previously anonymous information. The application of these methods may result in the situation when data harmless for a user today may jeopardize him in future if these data is somehow specified or new data aggregation and processing technologies are applied in unexpected ways.
Thus, there is a need for scientific researches, development and implementation of tools guaranteeing a certain level of situational awareness for persons who are not familiar with the specifics of surrounding digital infrastructure, allowing to be efficient in a rapidly changing digital infrastructure environment.
Tools enabling situational awareness should be implemented predictively, i.e. their emergence should precede the development and implementation of new communication features, IoT devices and systems based on them. The new device development process should be comprehensive, addressing not only technical and technological aspects but also considering psychological, social, economic and legislative factors.
Preventive development of regulatory framework for the application of digital infrastructure is crucial in modern world.
To implement legal restraints corresponding to the requirements of the new digital infrastructure it is necessary to use technologies adapted for the application in digital environment, e.g. technologies that can operate automatically. The use of smart contracts is the example of the application of such technology. With the use of smart contracts, it is possible to implement automated means of communication, for example, for settlements between elements of the IoT infrastructure.
Smart contracts is a new, evolving technology that requires conceptual research, technological improvement of available solutions, and the development and adoption of new norms and regulations. Let us discuss some conceptual issues related to the use of smart contracts in digital environment.
The term smart contract is not standard. It does not fully
reflect the essence of the technology behind it. It actually
means not a smart contract but a form of formal contract
representation with the use of digital infrastructure that is
enough for preparation and execution of a contract in
digital environment. In [
Technological implementation of smart contracts can
be different. The same requirement, for instance to have a
formalized form and automated execution of some
contracts can have different technological implementation
and apply different social and economic technologies.
Under the social and economic technologies, we mean the
combination requirement – technology that is used to fulfill
the requirement [
When talking about smart contract implementation it is
often meant the use of Blockchain technology. Many
authors consider Blockchain as a part of the technology
implementing smart contracts. However, others point out
that smart contract should be technologically- neutral [
The example of implicit smart contract implementation
when traditional documents are not produced at all is
automated taxy ordering system. One of the most
wellknown services of that kind is Uber [
In this example, smart contract is implemented without traditional documents. Correctness of communication between parties is guaranteed by the automated system – if one of the parties does not fulfill its obligations, it is fined and the further use of service can be blocked. Technology supporting data immutability with the use of distributed ledgers is not needed in this case – the contract is short term, mutual assessment and sanctions are done immediately. Automated system enabling the service operation arbitrates the parties.
The issue whether a traditional contract should be
supplemented by a smart contract is being brought up in
literature [
Technologies similar to the described taxi ordering service are becoming more and more popular and are used for the provision of services with the help of digital devices - smartphones and computers. These technologies considerably change social and economic landscape of the modern society. Thus, for example, they have fundamentally transformed the taxi market – prices decreased due to free competition, traditional taxi ordering method with the use of a telephone in many cases became an add-on to the described automated system. However, operating principles require the development of legislative regulation in order to eliminate potential problems.
Summing up, we can state that the technological
implementation of smart contracts should be done
according to the following technological and legal
requirements:
• Impossibility to change a contract content without
consent of all participants, however, if such consent is
granted, the contract can be changed. Immutability of
contract’s content is often guaranteed by the use of
Blockchain technology; still, this is just one of the
possible options enabling smart contract content
immutability and its execution.
• Technological invariance. For example, when
processing technology is updated or changed for a new
one, available smart contracts should remain valid.
• Legally binding. The contract must be duly supported
by the norms and regulations in force guaranteeing its
execution by the parties involved and providing
protection in case of rights violation. However,
excessive regulation that impedes the development,
should be avoided.
• Compliance with regulations concerning data
processing procedures, for instance with the legislation
on personal data processing [
Obviously, available smart contract implementation
solutions do not meet all these requirements. This
technology is still in the process of methodological
interpretation and development. However, it is integrated
by both commercial enterprises and state regulation
authorities of some countries. In the United States, the use
of smart contracts is still regulated on the states level [
In Russia the use of smart contracts and related
technologies is still not enough regulated with regards to
legal framework. However, the adoption of some relevant
norms and regulations is expected in March 2020 [
Legislative framework around smart contracts should be implemented considering the widespread use of automated devices. It should be developed taking into account smart contracts use cases in ordinary routine situation in order to guarantee that the new means of communication are understood by a general user, that they do no cause discomfort and tensions in society.
It may be assumed that the legal system supporting digital environment will function similar to the traditional legal system because despite of new means of life cycle implementation it attends to the same subject domain and supports the same activities but with the help of a new technology. For example, a promising IoT infrastructure will became a formalized and programmed subdomain of the traditional infrastructure. In the context of IoT infrastructure smart contracts may include for instance the following content: • Service Level Agreements (SLA) in a special format allowing to control and assess the fulfillment of mutual obligations by devices and their owners at the technological cooperation. • Settlement and cooperation terms in a broader context not covered by SLA . • Requirements towards service access, formats, volumes of data exchange and other parameters specific to the system consisting of certain devices.
The contents of smart contracts should be available for the wide application by users who do not have professional experience in digital technologies. It is crucial to address the challenges of interface usability and use cases for the implemented technologies.
Figure 1 demonstrates types of smart contract users and the goals they plan to achieve using this contractual instrument. Citizens get a convenient automated tool to process personal information. The state controls and regulates the sphere in order to minimize risks for citizens and social and economic system in general. Besides, the state provides infrastructure services enabling smart contracts implementation. These include up-to-date manuals and classifiers enabling standardization of smart contracts content. Businesses suggest a smart contract business model of a certain type and implement it. Throughout the life cycle of the implemented system businesses strive for profitability of the system, provide its modernization and development.
Design, operation and technological development of this type of smart contract providing sufficient SLA for the chosen business model is supported by technical and technological solutions. The developed software is focused on citizens; they should understand clearly how to work with smart contracts. Special attention is paid to the usability and friendliness of the system interfaces.
Progress in the humanities and natural science is used for the research of smart contracts development tendencies, of best ways to incorporate this technological trend into the social and economic system; it also helps to address the challenges of technology performance. Ensuring immutability of smart contract content providing sufficient operation flexibility is one of these developing trends.
Digital infrastructure object features related to smart
contracts such as those of IoT devices can be considered as
a type of virtual assets in addition to other types described
in [
It should be noted that objects of the legislative framework have its own life cycle – from the adoption to the termination or change for new objects. Life cycle of a norm or a regulation is shortening due to the rapid emergence of the new types of digital infrastructure objects, change in their functionality during operation. The acceleration of changes affects the use of digital technologies in everyday life. Emergence and rapid general adoption of digital technologies by social and economic system created a new situation in the society impending the loss of control and collisions due to the development of unexpected emergent features. Preventive development of legislative framework, regulation of digital technologies usage will allow eliminating possible negative situations.
Digital devices owned by citizens have become a critical element of infrastructure in the modern society. These are personal communication devices, e.g. smartphones, and IoT objects, e.g. home management solutions, utility resources consumption solutions etc. Traditional communication channels and a significant part of object environment are substituted by functionally similar digital devices. New types of violations and technological risks arise along with positive results.
In these conditions, it is essential to preventively implement new legislative framework, new technologies such as smart contracts that meet the requirements of the changed environment and allow to provide effective management mechanisms for the society and eliminate negative situations.
It is also needed to develop and implement norms and regulations that precede the development of new technologies and allow to guarantee efficient operation of social and economic system in new conditions.
This paper was supported by the Russian Foundation for basic Research (RFBR) via projects 18-29-16200.