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BLOCKCHAIN TECHNOLOGY AND THE LEGAL FRATERNITY IN 2022.

Block Chain - The Technology Of Future.


The modern world is evolving quickly, and on a regular basis, new technologies are developed whose application aims to better people's lives. Blockchain technology is one of these technologies it is such a type of technology that redefines the way we interact, and its application is anticipated to significantly advance a number of human endeavors. Due to its use as the technical foundation for cryptocurrencies, this technology has gained widespread recognition. This is by no means a comprehensive list of applications for modern technology, if that seems absurdly unrealistic, it is because it is. It combines the Internet's transparency and cryptography's security, and our daily interactions with one another will change as a result. The technology underpinning Bitcoin, which was initially created as a digital currency, is what caused such a worldwide uproar, the use of the same technology is possible in many different industries which may include supply chain management, banking, insurance, etc. Although this technology is made to store data in a way that makes it nearly impossible for any other Blockchain users to add, modify, or delete it the goal of blockchain is to decentralize all currently centralized processes, when a process is under centralized control, an authority may use its authority to determine whether a transaction is valid therefore when we discuss a scenario in which the processes are decentralized, we are considering a scenario in which all of these strong organizations that had the authority to validate a transaction will be rendered obsolete. This technology offers the potential to improve people's lives and streamline complex processes. Central banks from different nations (like the Fed in the US), stock exchanges, clearing houses, insurance regulators, and many more are a few examples of these organizations, data recording is at the heart of this technology. Financial transactions, ownership information for assets like cars and property, or non-financial information like health and biometric records could all be included in this data.


WORKING OF THE TECHNOLOGY


Now, to comprehend the blockchain concept. let's say a person purchases real estate from another. The Blockchain now records this transaction, a blockchain can be better understood by comparing it to a cloud-based network, every transaction carries a time stamp. That is to say, every transaction is given a special stamp, just like a WhatsApp message, even though two people can respond at once, one person may respond first and all the transactions continue to be recorded up until a block of space is available.


Each block in a blockchain has a fixed capacity, similar to how a specific smartphone has a fixed size, no additional transaction can be added to a block once it is full. Additionally, once the block is full, it receives a special timestamp of its own, and the finished block is now transmitted across the network and joined to the chain, this is where the term "blockchain" came from, even different users may upload their blocks to the network at the same time, each with a distinct timestamp. A hash function is then used to secure the chain and the previous block's hash is added to the one after it, next a trace from the earlier block is added to the next block when it is hashed, it is a never-ending process. There are currently more than three times as many cryptocurrencies-about 1600-with a market cap of about US$197 billion, which is greater than the combined foreign exchange reserves of France, Germany, and Italy. Because of their significant market caps, Bitcoin, Ether, Ripple, and Tether are the most commonly used cryptocurrencies. In some nations, it is illegal to trade in cryptocurrencies. For instance, if someone wanted to purchase Samsung shares, he would do so, and the money would be deducted from his bank account. What if the same person also desired to sell his car and purchase Samsung stock simultaneously?


A SMART CONTRACT would need to be implemented on the blockchain in this situation. A smart contract would automatically buy shares and transfer funds after selling the car, transferring ownership of the car on the blockchain, integrating with the banking blockchain, and transacting on the stock exchange.


With just one line of code written to complete the transaction, all of this can be implemented, to enable the smooth flow of transactions, various government and private organizations will need to integrate with one another, and each blockchain will have to grant the other blockchains it needs to interact with restricted access rights and transactions would be difficult to process without the integration of blockchains.


Integration of multiple blockchains creates a security concern, all blockchains will have to abide by the same security standards. Only the weakest link in the chain can make the blockchain more robust. To address their concerns, cybersecurity experts will need to collaborate closely with all stakeholders, upgrading hardware and software is required for blockchain implementation whereas due to the expense, only very large corporations will initially be able to create their own blockchains, and the price of developing new technology will drop as a result of technological advancements.


The downside of blockchain will be millions of people losing their employment if they do not upgrade their skills, most important thing to notice in this technology is that it is not unhackable'. Till now there have been numerous cases of blockchain thefts where hackers by embezzling cash worth millions of Dollars, evaded in thin air.


LEGAL ASPECTS OF BLOCKCHAIN TECHNOLOGY


Governmental organizations' Blockchain prototypes all share the trait of raising questions from superiors in the administrative hierarchy.'If we want to make this service available to the general public, what laws and regulations must we abide by?" this is the main query upper management will have. Leaders of Blockchain pilots will typically struggle to provide a satisfactory response to this query, this is due to the fact that a sizable portion of the public sector's legal community has not yet addressed legal issues relating to Blockchain. However, if Blockchain is to realize its full potential in the context of public administration and international organizations, a clear understanding of the legal implications involved will be necessary, if we see the law in a decentralized world then we will see that we are used to the idea that the side of the road that we drive to the fundamental rights stemming from the United Nations charter changes as soon as we move across borders. These boundaries between countries are now more hazy thanks to the Internet, which allows people to legally transact within a nation they are not physically present in with the click of a mouse, our legal systems are based on national boundaries, so it is crucial from a legal standpoint to know which nation any legal action has been carried out in, this is important because it determines which laws apply and whose government has the power to enforce them. However, the law's actual applicability is limited. For instance, if I live in India and order a new pair of shoes from Italy online, the only thing that matters is that I pay a reasonable price for a great pair of shoes, the origin of the shoes is not legally significant. The transnational characteristics of the Internet are elevated by blockchain technology to the level of transactions and contracts from information and communication. Blockchain's decentralized nature means that no external legal framework is necessary for the system to function, a blockchain's nodes could theoretically be found anywhere in the world. However, a nation may also declare that any nodes inside its borders are subject to its laws,if the other nodes in the network disagree that these rules apply, the government's action is essentially meaningless. In other words, governments have little control over what occurs in a Blockchain because there isn't a central database or corresponding central party although it's fascinating to observe how society resolves such institutional and legal issues. Because Blockchain technology is decentralized, it is impossible to say which laws generally apply to it because each legal system establishes the requirements for applicability within its own boundaries.


Thus, it is conceivable that a Blockchain transaction will be governed by Dutch civil law, whereas the German government may impose taxes on the same transaction. In fact, depending on the situation, laws from many different legal systems may be applicable to a blockchain, which laws apply are usually quite clear at the transaction level. The civil law of the relevant country will typically apply if two parties in the same country execute a Blockchain transaction. However, in a transaction involving parties from different countries, international private law will have to decide which civil law will be used. For instance, the ASEAN Free Trade Area (AFTA)) The regulation establishes a harmonized set of rules to regulate the choice of law in civil and commercial matters involving non-contractual obligations, subject to specific exclusions, if a transaction occurs between parties from two different Asian countries, as a general rule, parties are free to agree in advance which laws will be applied to their Blockchain transaction. The laws of the nation in which the characteristic performance is carried out will typically apply if they fail to do so.


References


INNOV12-3 Naves-et-al.qxp Cea Rimington (silverchair.com)

Legal Aspects of Blockchain Technology Use (abacademies.org)

An Introduction to Blockchain Technology & Cryptocurrency | Tally Solutions

Legal Aspects of Blockchain | Innovations: Technology. Governance. Globalization | MIT Press

Navin Kumar Jaggi

Varishtha Parasar

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