Legal Contracts

Legal Contracts

Blockchain technology enables to solve numerous practical problems but they do raise many legal issues. New ways of working increase new risks and challenges for all parties.

Irreversibility

No change can be done to the collective ledger without the agreement of all the ledgers keepers. It forbids a lone actor from reversing and correcting a transaction without unanimous agreement. The key feature of blockchain is to enable to solve the issue of deceitful users of a network. It boosts the vulnerable point of the system, get away from remedial enforcement after deceiving or defrauding others.

 

Pseudonymity and Trust

Identity is another trust problem which may weaken blockchain. Pseudonymity signifies that a party’s online identity can be verified whereas its offline identity is not verifiable. It is clear that pseudonymity is a problem for all online networks (commercial in nature or otherwise) and not specially to blockchains. The problem is one of significance for “open” networks (those that do not have a gatekeeper to regulate access and to verify the identities of the parties entering them) and for networks that seek to facilitate valuable transactions.

 

Illegal and Anti-social Activities

Pseudonymity, as well exemplified by the “Silk Road”, facilitates money laundering and trade in illicit articles such as narcotics and offensive weapons. Certainly, bitcoins represent an extremely early and unsophisticated example of a blockchain enabled a network, and one would anticipate better gate-keeping solutions in the future.

 

Smart Contracts

Smart contracts are encoded programs and applications which enable automated performance of contract provisions. It is self-execution and run without any third-party intervention.