Blockchain An Ever-Changing Technology. Can It Be Controlled?

The accelerating speed of technological advancements creates massive leaps in terms of knowledge, innovation and possibilities. It also creates new opportunities and most likely, legal problems. It’s the same with blockchain technology, the most buzzy technology tool.

It was introduced in 2008 as the technology behind Bitcoin It is the digital currency digitally created and stored without the need for a central authority. blockchain is a safe digital ledger that can store any type of information. It streamlines the process of keeping records and cuts down on transaction costs.

Its applications in finance, commerce, and possibly even politics continues to expand, which has led to a debate about how best to regulate the instrument.

Goodbye Middleman

Since it doesn’t require an authority centrally controlled to verify transactions and confirm their validity it allows those who might not be able to trust one the other to collaborate and communicate directly.

With blockchain, there’s no intermediary in peer-to-peer transactions and instead, users depend on a decentralized computer network that communicates with each other via a cryptographic secure protocol.

Blockchain can “codify” transactions by deploying small pieces of code directly into the blockchain. The code, often called”smart contract “smart contract”, executes automatically when certain conditions are met.

One of the first examples of smart contracts is business-driven electronic rights management (DRM) technology that restrict access to digital files. The presence of DRM on your ebook might limit the editing, copying, or printing the content.

As blockchain technology advances, smart contracts are becoming more complicated and, in the end, secure. In the theory of things, they will be carried out exactly as intended as no one is able to change the rules that govern a specific transaction.

In reality eliminating trustworthy brokers from transactions could result in some friction.

A high-profile failure of a smart-contract occurred at The DAO the autonomous, decentralised organisation that deals with venture capital investment.

In April 2016 in April 2016, the DAO quickly raised more than US$150 million through crowdfunding. Within three weeks an individual was able to exploit an insecure software, draining approximately US$50 million worth of digital currency from the fund.

The security issues did not start in the blockchain itself, but more from problems in the code that is that is used to manage the DAO.

Concerns were raised about the lawfulness of the action there was some debate that because the hack was permitted through the smart-contract code it was perfectly legal act. In the end, in cyberspace, “code is law”.

The DAO debate brought up the following issue Should the intent of the code be more important than the language used in the code?

A New Legal Framework

Blockchain advocates see a future which all governments and companies operate in a distributed, automated way.

Smart contracts, however, are a source of issues regarding enforceability as outlined in the latest whitepaper from Norton Rose Fulbright, the London legal company Norton Rose Fulbright.

How do we resolve disputes that arise from a smart contract that self-executes? How can we determine which types of contract clauses can be effectively translated in code? And which should be left to the natural language? Do we have a way to both?

It’s not entirely certain that the code will be able to handle the required levels of complexity to replace the legal language. The ambiguity inherent in the legal language is a benefit rather than a flaw and compensates for the unclear cases that have to be evaluated on a case by case basis in the legal court.

Traditional contracts recognize that no law is able to index the entirety of the world as it is and even predict the future course of its development. They also specify the specific terms that can be legally enforced.

Smart contracts, on the other hand they are just fragments of code that are specified and enforced by the blockchain infrastructure’s code. At present, they don’t have any legal status. So, if something goes wrong with an intelligent contract, parties do not have recourse under law.

The DAO’s founders have painfully learned this lesson the previous year.

The Friction Between The Creative And The Law

If blockchain technologies ever to become widespread government agencies will need to create new legal frameworks that can handle these complexities.

The law of positive effect regulates behavior and penalizes any non-compliance. It may be used to define the ideals that the government aims to attain, provide an ethical view of society, or strengthen the structure of power in the current government.

Technological advancements however tend to be focused on the pursuit of profit and change.

There’s an inherent tension in this. The laws can hinder the advancement of technology, and thus impede the competitive edge of an entrepreneur, or the state.

Let’s look at the example of regulation on nanotechnology that is in place within the European Union versus in the United States. European law reduces the risk that it could limit the potential of nanotechnology, and thereby losing its competitive edge to the US.

Another fact about the law: it’s slow as well as reactive. It could be a major nuisance.

Since technological advances have been speeding up with an exponential growth rate in the in the last century, law has played a crucial role in helping societies to maintain the previously agreed upon standards for cohabitation.

The legal system we have may appear outdated in the current world. However, before we change our laws to accommodate the new technology that could (re)define the way we live, it’s crucial to leave some room for discussion and for social conflicts to occur.

The law plays a role in this process of creating friction. It helps restore human autonomy against the rapid technological advancement.

With all the excitement surrounding blockchain technology, it’s likely that the parties interested will soon be seeking legal recognition and government-sanctioned compliance with smart contracts.

These new technologies are far from being thoroughly examination of their social political, and economic consequences. Also, more time is needed to determine how blockchain technology can be used in a positive way.

Blockchain technology could become a crucial part of our society in the near future. The legal system, slow-moving as it is, could be exactly what we require to make sure that this innovative tool is used in a manner that is in line with the established principles and values, keeping the common good at the heart of its.

June 30, 2024