This article has been written by Samarth Suri from Symbiosis School of Law, NOIDA and is edited by Gitika Jain. The article briefly talks about what blockchain is, and how it has evolved over the years to become one of the most sought after financial assets in the world. The article also enlists the ways in which the Blockchain technology works and the technology required for it.
Table of Contents
Blockchain is the technology that allows for the existence of cryptocurrency. Since the advent of humanity, we have always sought for some form or medium of exchange, and for a long time, this was the barter system. However, the inadequacies of the barter system lead to the emergence of currencies and a standard medium of exchange. The most followed model for determination of the value of a currency is its demand and supply, hence meaning that as heavily a currency is traded, depending on that the value of the currency will be determined.
Similarly, a cryptocurrency is a digital asset that is designed to work as a medium of exchange, in contrast to normal currency, cryptocurrency doesn’t have any physical state. Hence cryptocurrency may also be defined as a digital currency.
Bitcoin was the first open-source software that was introduced in the year 2009 and acted as a cryptocurrency. Since then 6000 such cryptocurrencies have been introduced.
What is Blockchain and how does it work?
Blockchain in the simplest sense can be explained by extrapolation of the word itself, “Block” and “Chain”. Herein, Block would save the information regarding the transaction and chain would be the glue that connects all such blocks of information.
Blockchain has been regarded as a trailblazer in terms of international trading and transaction, this is because at the base of this technology is the premise of it being decentralised, meaning that it is not regulated by any central authority. Hence all such transactions are done and regulated at the behest of the people themselves.
For example- if a person X goes to a grocery store and he wants to pay via Bitcoin, under this computers on the Bitcoin network will rush to verify the transaction. To do so the users will rush to the programme and try to solve a complex mathematical equation called a “hash”. Upon solving this problem, its algorithm will work and verify the transaction.
In case of Bitcoin and several other cryptocurrencies, the computers that successfully verify such transactions will be rewarded with Bitcoins for their and this paradigm essentially is called mining of Bitcoins.
Blockchain technology created the backbone of a replacement sort of internet by allowing digital information to be distributed but not copied. Bitcoin blockchain, originally devised for the digital currency, the tech community has now found other potential uses for the technology.
Facts of the case (Gallagher v. Bitcointalk.org)
Ryan Gallagher, a Bitcoin enthusiast in his twenties, on September 24, 2018, filed a claim to the U.S District Court for the Northern District of California claiming that the Defendants Bitcointalk.org and the Bitcoin foundation were operating as an illegal Monopoly.
In his plea, he explained that he had been a member of the website since 2012, when he had started trading in Bitcoins. He further stated that the Defendants completely banned him and slandered his name, even though he had no negative points in their reputation system.
This, he held, was monopolising the cryptocurrency technology, and was more specifically in violation of Section 1 of the Sherman Act.
The court in process of the proceedings stated that his application to proceed in Forma Pauperis, was incomplete as he hasn’t filed a copy of his incomes and expenses. The Plaintiff never paid the court fee of $400, and the Judge dismissed the action without prejudice.
On May 14, 2019 Gallagher revealed the facts of the case before a Texas northern district court. In this, he explained that all cryptocurrency and Bitcoin talk and development are centered at Bitcointalk. If any person creates a cryptocurrency even from scratch today, it would have to have a presence on Bitcointalk.
He did not have access to the marketplace or resources like crypto developers and everybody is forced to congregate at Bitcointalk.org because in 2013 he was banned from Bitcoin talk for being too involved, but not being a developer or a nerd.
He asked the court to stop Bitcointalk to decide who wins and loses in the Bitcoin crypto field and asked for damages to the count of $250,000.
On Commonwealth Day 2019, a US Magistrate Judge underlined that “Gallagher is not any stranger to federal courts. A review of Public Access to courts electronic records would clearly show that he is a serial litigator, having filed 30 cases since 2016 at district courts across the country.
In pursuance of this the District Court if colorado had already imposed pre-filing restrictions i.e. prohibiting Gallagher from filing any more suits without hiring a licensed Attorney.
The Judge held even determining the case upon its merits, the complaint is baseless and frivolous. The contention of the plaintiff has no legal basis whatsoever, and his arguments are based on conjecture, which rather seems to be tinted with a malafide intent. For these reasons the court felt that it would be highly unlikely that Plaintiff could come up with some cogent argument with viable legal claims. The court thus concluded that granting leave to amend under these circumstances would be futile and needless delay.
For these reasons, the judge made a recommendation to the court that his case may be dismissed with prejudice as frivolous and malicious. Gallagher should also be restrained from filing these representations in Forma Pauperis and warned him that persistent and unwarranted filing of such cases may result in loss of electronic filing privileges. The case was accordingly dismissed, three days after which he appealed.
Analysis of the case
Unfortunately, one finds too few discussions regarding the antitrust aspects, in this case, which is the same with all cases of Blockchain dealing with Antitrust issues. They do not concern the functioning of Blockchain itself, but ask critical questions related to Antitrust law.
In this particular scenario, does restrict the access to any cryptocurrency, in the incumbent case the intermediary Bitcointalk.org constitutes an infringement of Antitrust law. Section 1 of the Sherman Act states that every form of trust or combination that is in restraint of trade or commerce with other states, or with other nations is declared to be illegal.
Invest in cryptocurrency with open eyes
Holland saw the worth of tulip bulbs skyrocket, in the 1600s, ultimately crash, leaving investors with great financial losses. Other market boom and bust cycles have followed including the dot-com crash and therefore the newer subprime mortgage market collapse within the wake of the good Recession. But there are significant differences between previous booms and busts and therefore the current cryptocurrency craze. Actual assets were focused on all the prior enthusiasm for tulips, tech and subprime mortgages. Cryptocurrency can’t be touched or seen and is just an entry in a web log. Those that invest must remain cautious, understanding that they’re buying into an asset class without a tangible product or history.
Know these facts before investing in cryptocurrency.
- The government wants to regulate cryptocurrency.
- Buying cryptocurrencies may be a bad investment.
- Some say you’ll invest alittle portion of your portfolio.
- Risk-averse investors should steer clear.
- Cryptocurrency may aid business transactions.
- Cryptocurrency can vanish.
- The cryptocurrency market is unpredictable.
- Invest in cryptocurrency with open eyes.
The simplest candidates for the cryptocurrency market are Gamblers and speculators are. But some investing experts alongside famous investors like Warren Buffett, Charlie Munger and T. Boone Pickens express distaste for cryptocurrency. Virtually there are no investment strategies that are worse ideas than buying cryptocurrencies. Robert JohnsonIt says that it is pure, unadulterated speculation in an unproven commodity, who is a finance professor at Creighton University in Nebraska. There is not any intrinsic value and speculators buy in bitcoin, with the hope that somebody will come along and pay more. “There’s no thanks to value cryptocurrencies aside from the greater fool theory, unlike traditional businesses” he says.
Mike Alfred, co-founder and CEO of Digital Assets Data in Denver, believes that bitcoin is the most vital and misunderstood asset of our lifetime. He says that every investor should own up to 5% of this asset class. He is joined by David Tawil, president of Magellan Capital, who recommends investors allocate between 2% and 3% in crypto assets. Technology has disrupted every business and cryptocurrency is not any different. People who believe that digital currency will transform financial services are a growing class of investors, advisors and regular folks., but Unsure which currency will prevail, Tawil is certain of the crypto influence. There’s no guarantee which digital asset will ultimately take hold, while bitcoin is that clear leader.
Any investor who is uncomfortable with great investment volatility and risk should stand back from digital coin investing. The same goes for those that can’t afford to lose all their investment. Choosing the wrong cryptocurrency asset one could watch their investment disappear. But Russell Korus, co-founder and CEO of EZ Exchange in Toronto, says that investors who have an interest in dipping their toes into the crypto pool should specialise in the blue-chip cryptocurrency: bitcoin. Resilience to the threats of technology, community infighting and attempted government intervention has been demonstrated by the oldest and largest cryptocurrency. For crypto investors, research into the precise coins is important. “Mass adoption is inevitable,” Korus says.
Whether it is a bank, credit card, PayPal or another intermediary, money transfer currently needs a third-party portal. Crypto proponents expect the industry will facilitate direct transfer between two parties, ablation the trusted third party. Through public or private keys, the transaction would be facilitated. A user’s wallet or account address controls the general public key and therefore the private keys wont to sign the transactions. Processing fees charged by banks and financial institutions for wire and other fund transfers are reduced by crypto benefit. The widely adopted blockchain technology stores the web transaction ledger and reduces the threat from hackers, as every new block created must be verified by the ledgers of every user on the market.
Blockchain is fashionable among monetary institutions and other users. Since cryptocurrencies are virtual and lack a central storehouse, it’s possible for an account balance to be exhausted. Without backup, a computer crash could destroy a stash of cryptocurrency. The cryptocurrency is unrecoverable if a user loses the private keys. Scammers also can hijack someone’s mobile account by impersonating an account holder. The thieves contact the carrier and request for the user’s phone to be transferred to a new device. This gives the scammer access to crypto accounts.
At a couple of hundred dollars, from being valued, to quite $17,000 in December 2017 Bitcoin has been extremely volatile in its pricing. Bitcoin is worth nearly $5,900 and there’s no thanks to determine whether it’ll be worth more or less within the future, at this writing. Cryptocurrency coin prices are unpredictable – especially among smaller coins, there are more than 2,000 types of coins. The cryptocurrency market cap shows the market price of all the coins. HarmonyCoin is the smallest coin with a positive market cap and its market is worth $32. The No. 2 player is Ethereum, worth $18 billion in market cap while the bitcoin market cap is valued at quite $104 billion.
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