On 8th of January digital currencies had a major fall. Ripple traded 10% lower at approximately $2.46. Bitcoin fell by 7.6% and so was Litecoin by 6.4%.
Ripple in the last year soared to 35000% in comparison to Bitcoins 1500%. Ripple’s distributed ledger moves payment between banks. A concept not so much in synchrony with the basic technology behind cryptocurrency: Blockchain Technology.
Blockchain Technology as explained by the authors of Blockchain Revolution (2016) Don and Alex Tapscott, is an “incorruptible digital ledger of an economic transaction which can be programmed for many things and not just financial transactions.”
How does it work
Blockchain is essentially a network of nodes. These nodes are computers connected to the blockchain networks. Through these computers, users may validate their transactions using a private key encryption mechanism. The blockchain technology is a decentralized technology, which cuts the middlemen out. The network operates peer to peer. Therefore ever node would act as an administrator.
This technology is technically incorruptible. Its durability stems from the storing of ‘blocks’ of identical information across the network. It, therefore, isn’t controlled at a single point by a single entity. On the contrary, it gives the ability to create and authenticate digital information.
Its transparency and incorruptibility are embedded within the network. The modification of any information on the network would require a great computing power to override the entire network.
Use of Blockchain in the Legal Arena
After last year media attention to cryptocurrencies like Bitcoins have gained momentum, there has been much talk about the actual technology behind it. The cryptocurrencies according to technology experts is just the tip of the iceberg called Blockchain Technology. There could be many such applications of this technology. A few of its possible legal applications are as follows.
- Smart Contracts: Possibly the most important application of them all is the smart contracts. Distributed ledgers system enables coding of specific contracts which could be executed to the satisfaction of a particular condition. These contracts are not contracts in the conventional sense; however, their implementations may be enabled. Smart contracts are “computer protocols that felicitate, verify, execute and enforce the terms of commercial agreements”. Decentralized Autonomous Organizations( DAO) operate through the implementations of precoded rules where once after creations human input should be zero. Startups like ‘Agrello’ developed Artificial Intelligence for smart contract creation. And ‘Ascribe’ is an Intellectual property startup which provides permanent digital deeds
- Recordkeeping and registration: Constant updating and verification of the ledger mechanism provide real-time auditing of documentation. Therefore experts predict a possible application in the government registrations. Blockchains would technically provide documents with
- Proof of existence
- Verification that the documents are unaltered.
Proving useful in land title registration, articles of association, Business agreements, insurance documentation and know-your-customer verification procedures, etc. Honduras and Republic of Georgia have initiated blockchain technology into their land registration procedure. A startup called ‘Bitland’ is a real estate startup which provides such technological solution for land ownership registration.
- Evidentiary Value: It provides legal evidence for defense litigation Law firms, because of its time-stamped and unalterable tendency.
- Intellectual Property Regulation: Smart contract specifically coded for copyright protection and automated sale of digital creative works online eliminate the risk of infringement. Trademark registration would be as it would help create a time-stamped record which would be legally defensible to prove the first use of such TM. Digital Right Management technology was similar to smart contracts which controlled the accessibility of any digital file. Blockchain enables such smart contracts to be decentralized and removed any third party involvement. ‘Bittunes’ is a platform for artists’ digital rights.
Limited information about this technology provides extrapolated possibility of a number of applications. However, proper understating and research on the technology is the need of the hour. The initiation of this technology would create many challenges.
- Jurisdiction: since the technology is decentralized, and a network all around the world might complicate ascertainment of breach or failure of contracts especially in cross-border transactions disputes.
- Legal Status: legal status of such smart contracts as well as such DAOs and their liabilities in case of a legal dispute. It is also extremely important for the legal framework to provide and define the legal status and evidentiary importance of documentation provide by such technology.
- Legal enforceability of smart contracts.
- Modification of Laws: Smart contracts would invite the traditional concept of contracts. This, in turn, would include the traditional concept of acceptance, offer, promise, consideration, etc. There would certainly be a requirement of either encoding these legal nuances or, find a way around it for proper enforceability. At the same time for proper enforcement, the law would require modification to be in synchrony with such technology adoption.
- Software compatibility, privacy, and data security: Much importance must be given to the proper technology development, taking care of privacy and compatibility.
The attempt here is made to provide readers and thinkers the information to initiate a dialogue between policymakers, technology innovators, and us consumers. Clean and well-researched technology is the need of the hour, but proper implementations and adoption are of as much importance.
- Cryptocurrencies are falling, led by ripple, bitcoin, by Fred Imbert, CNBC https://www.cnbc.com/2018/01/08/cryptocurrency-ripple-crashes-30-percent-in-24-hours-bitcoin-also-dropping.html
- Blockchain and the law An uncharted landscape, Clyde & Co.
- Beyond Bitcoin: Issues in Regulating Blockchain Transactions by Trevor I. Kiviat Duke Law Journal
- What is Blockchain Technology? A Step-by-Step Guide For Beginners https://blockgeeks.com/guides/what-is-blockchain-technology/
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