Mass consumer adoption of new technologies often runs ahead of legal frameworks. In fact, many Silicon Valley visionaries are self-professed believers in as little regulation as possible, as they believe it stymies innovation, an ideal that’s also encapsulated by Facebook’s maxim “Move fast and break things”.
Yet, not everyone shares this mindset, and for mass professional adoption of new tech, companies and institutions tend to be more careful lest they face potentially damaging legal issues. So, what is the current legal status of Blockchain?
The good news is that Blockchain, as a technology, is not illegal anywhere in the world, not even in traditionally more restrictive societies such as Singapore or Russia. This means both individuals and organizations are free to experiment with the technology as they see fit.
However, cryptocurrencies – still the best-known Blockchain application – are illegal in a number of countries including Egypt, Bolivia and the United Arab Emirates, and “implicitly” illegal in a host of other countries such as Indonesia, China and Lithuania. Most of these bans flow from regulatory concerns, but whatever the motivations are, this makes it harder for Blockchain tech to break through in these places.
Public Blockchain experiments, e.g. with transaction data from government agencies or healthcare records, need to take into account privacy legislation. “Implementing Blockchain does not fit neatly within most legal and regulatory compliance requirements that exist, and those working to meet compliance are likely new to Blockchain and may not realize all the associated compliance issues […] Validating the security and privacy of blockchain is not a simple goal to accomplish,” says Rebecca Herold, CEO of The Privacy Professor.
This is less of an issue with private Blockchain setups controlled within one company or organization, although there is simultaneously less of an incentive to adopt Blockchain within just one organization. After all, Blockchain’s allure is mainly that it creates a distributed ledger between a vast network of ‘nodes’ (people or organizations), as we have previously talked about with the mining industry, justice and healthcare.
The trust factor
Successful implementations of Blockchain tech, whether for smart contracts, quality control or financial exchanges can enhance trust between parties because of Blockchain’s verification, encryption and security protocols that are built in. But Blockchain is not the general cure if basic trust is lacking to begin with, as demonstrated by the “51% principle”, where if 50%+1 data sources begin feeding false or corrupted data into a Blockchain, the falsehoods become accepted as truths.
That is why Blockchain implementation should always come with a general view on legal, ethical and cultural issues within the sector it’s being implemented in. Blockchain alone can’t change these things. In fact, it may sometimes even make change harder, as it’s impossible to sue a “middle man” that consists only of code and has no legal personality, e.g. in the case of cryptocurrency fraud.
Asking the right questions
Of course, as Blockchain supporters ourselves, we are in favor of implementing this technology in a myriad of ways, from diamond provenance to sales records and from smart archiving to government. But a successful implementation always begins with asking the right questions.
Some of these questions may not have answers at the moment. What happens if you abandon a Blockchain platform? Who owns a distributed ledger? What type of jurisdiction applies to Blockchain tech that is shared globally? The sooner international organizations can work out an answer to this, the better. And they will have to anyway, as this technology isn’t going away anytime soon.
You don’t need to make the leap by yourself
And none of that should stop companies and institutions from trying out Blockchain. The benefits are too vast to ignore. Cutting costs by removing traditional intermediaries such as banks and notaries. Making data available and usable for Big Data analytics and AI. Removing expensive background checks in education, politics and HR. Not looking into Blockchain would be like ignoring the Internet in the ‘90s because some bad actors used it, too, and Internet regulations were still in their infancy.
Luckily, you’re not alone. In fact, at Investereum we specialize in answering all these pesky questions and navigating uncertainties regarding Blockchain. After all, our mission is to enlighten and educate others and provide a practical ‘how to’-plan to successfully implement Blockchain and let you make the most of this technology. It would be a shame if an organization would miss out on Blockchain’s opportunities because it can’t get past some of its hurdles.