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Blockchain and antitrust laws : an abstruse nexus

June 08, 2021
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Blockchain

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This article is written by Apurv Umredkar, pursuing a Certificate Course in Competition Law, Practice And Enforcement from LawSikho.

Introduction to Blockchain

Blockchain is a technological advancement based on Distributed Ledger Technology (DLT) consisting of a decentralized computer network system for the purpose of P2P (Peer to peer) information or data exchange by its authorized users. With the innovation of this technology, users are able to anonymously and securely make transactions in a very fast manner. The system is based on several blocks attached with each other in an encrypted manner and every time a new transaction happens, it is added to the chain of blocks, hence the term Blockchain. This technology has brought with it some of the really amazing features like absence of centralized or governmental authority, trustworthy system, helps in safeguarding our identity by providing anonymity and systematic record management which ultimately enhances the dependency on the blockchain. As can be seen from recent developments, this technology is mostly being used in the virtual form of currencies (cryptocurrencies) which are now becoming a trendsetter in the financial and banking world.

According to the NASSCOM Avasant India Blockchain Report 2019, blockchain technology is used mostly in Financial Services, Infrastructure, Banking and Media. Given the growth rate, this technology is going to disrupt the major financial systems of the world. But as every coin has two aspects, blockchain technology is not totally flawless. It carries with it some potential risks which are necessary to acknowledge so as to avoid possible future intricacies. The author by way of this article delves into the blockchain system from a competition law perspective. A synopsis of the interlink between the two entirely different yet interlinking concepts is provided. Since the topic ‘blockchain’ is naïve in nature, the information relied upon while writing this manuscript is limited. The author has tried to provide a perspective by critically investigating the rising concerns. So without further ado, let’s begin. 

Enigmatic link between blockchain and antitrust

The possibility of any connection between blockchain & antitrust laws is very hard to comprehend. The reason being, both these subjects are at their nascent stage of development and are yet to be considered as grown-up matured subjects. As far as blockchain is concerned, the majority of the people across the globe don’t even possess a basic understanding of blockchain, let alone investing in it. Because people are so much acclimatized into the traditional financial system of physical notes and government issued coins, that it is hard for them to accept a system which isn’t even being governed by anybody. Also, the person should have more than basic technology knowledge to use blockchain. Apropos the antitrust laws, they are showing signs of future potential with the ever-growing acceptance and new legislation in various jurisdictions especially in the last 2-3 years. Nevertheless, they cannot be construed as flawless or fully developed aspects of the law. As a matter of fact, everyone finds it hard to understand the underlying meaning and hidden connection between the blockchain and antitrust laws. Regardless of the above-mentioned fact, one can find the cardinal links between these two aspects. The author has prepared a list of some problematic antitrust issues which may arise in blockchain in the next paragraph. 

Antitrust intricacies in blockchain systems

Most of the time, the blockchain mechanism is considered to be neutral (neither pro or anti-competitive) or sometimes even pro-competitive. By virtue of its transparent and efficient business model, various tech enthusiasts have claimed that it is going to have a more of a positive effect than any alleged negative consequences.  But this transparency and openness to the users might pose a great risk of various future legal intricacies. Although the data of a transaction is encrypted, it provides an insight into the sensitive commercial information like purchase history, transaction receipt, corporate accounts etc. These are some of the confidential reports which if placed into the wrong hands, might lead to a huge loss or unbearable consequences for the users. Keeping in mind these points there are some specific questions raised on blockchain systems if we observe it though the competition law lens – 

Conclusion 

After the perusal of this article, one will be able to grasp the competition issues in blockchain mechanism. From a legal perspective, blockchain is not tightly regulated by law enforcement authorities. But in future there’s a possibility that laws revolving around will strengthen up to provide an effective management and regulatory enforcement system, specifically laws pertaining to financial matters. the blockchain and antitrust laws, both have limited scope and exposure as compared to the other similar aspects. Due to the absence of concrete information and detailed theory, any of the points made above depicting a nexus between blockchain and antitrust laws must be taken as a possibility. There’s yet to find out more about blockchain as it is considered the most innovative and revolutionary thing after the internet. With a proper assessment, thorough analysis and in-depth research, we can find out more about the blockchain system and the ill effects it has or will have on the socio-legal context across the globe.

Until then, we will have to deal with the problems as per the current regimes and solutions. With the speed with which it is growing and developing, soon we would be aware of the new development of the blockchain ecosystem. Although analyzing through the competition law perspective, there isn’t much to discuss or talk about since both the Competition Law and Blockchain are naïve in nature. Maybe in future the advancements in technology and competition regimes might make another aspect on which the intricacies could be dealt with.


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