In this article, Himanshi Srivastava of Amity Law School, Lucknow discusses kinds of laws that the state of Andhra Pradesh should make to become a Blockchain capital of the World.
What is Blockchain Technology?
Blockchain Technology is a System Ledger which provides a security to transactions, agreements, and contracts etc. which need to be verified and stored. However, uniquely, instead of being kept in one place just like the a lot of ancient ledger book, the info is shared across a network of computers. This network will comprehend simply a few of users, or lots of and thousands of individuals. The ledger becomes an extended list of transactions that have taken place since the start of the network, obtaining larger over time.
How is it Used?
Blockchain runs on specialised computer software that operates behind the scenes, mechanically distributing data to the information as new transactions are created. Most individual users will not see a blockchain performing and this fast nature suggests that there’s very little to no window of your time for somebody to change a transaction before it’s recorded on to the ledger.
Why it is Secure?
A blockchain information consists of blocks and transactions. Blocks contain batches of transactions that are “hashed” and encoded. every block contains the hash of the block before it, that links the two and forms the chain. This method validates every block, all the approach back to the first, and is integral to the database’s security.
When a transaction takes place, its details are encrypted and a singular multiple-character dealing number is generated. Rather than alternative users within the blockchain having the ability to check the precise details of the transaction, this number is recorded within the ledger as a placeholder. All the users of the network are ready to see that the transaction has taken place however solely the parties concerned within the dealing will access and look at its details.
Why it is meant for development?
As an emerging technology, blockchain enthusiasts are hopeful it may be successive huge development disruptor. In providing a clear, instant and indisputable record of transactions, its potential to get rid of corruption and supply transparency and responsibility is one space of intrigue. However, there are still several queries around a way to apply the technology.
In What Sector will it be useful?
Blockchain might even be used for land tenure and property rights. Traditionally, governments keep records of who owns an exact piece of land or property, and therefore the owner might or might not have a bit of paper to prove it. However, government records may be lost or manipulated, or the govt might have issued a deed to some other person for a similar piece of land therefore two individuals might claim possession for the same plot. The blockchain, however, might operate as a neutral broker to work out who owns what; the chain might prove that parties are concerned and what they agreed to as the original contract would have been verified by a blockchain info, and hold on firmly on the ledger.
Blockchain as an idea of Decentralisation?
By design, the blockchain may be a decentralized technology. Anything that happens on it could be a function of the network as a whole. Some vital implications stem from this. By making a replacement way to verify transactions aspects of ancient commerce might become extra. Securities market trades become virtually coinciding on the blockchain, for example: or it might create kinds of record keeping, sort of a land register, totally public. And decentralization is already a reality.
A global network of computers uses blockchain technology to collectively manage the information that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means that the network operates on a user-to-user (or peer-to-peer) basis. The types of mass collaboration this makes attainable are simply beginning to be investigated.
Who can use Blockchain Technology?
The blockchain probably cuts out the middleman for these kinds of transactions. Personal computing became accessible to the overall public with the invention of the Graphical User Interface (GUI), which took the shape of a “desktop”. Similarly, the foremost common graphical user interface devised for the blockchain are the supposed “wallet” applications, which individuals use to shop for things with Bitcoin, and store it together with different cryptocurrencies.
Transactions online are closely connected to the processes of identity verification. it is simple to imagine that wallet apps can rework within the returning years to incorporate different kinds of identity management.
Andhra Pradesh: Among few states to implement the Blockchain Technology in India.
Hyderabad, the capital of Telangana and de jure capital of Andhra Pradesh, are integrating blockchain technology into its government affairs. The 2 Indian states are following help from blockchain startups as they assess the technology for information security. Many alternative state governments among the country, like Karnataka, Gujarat, and Maharashtra, have additionally started exploring the appliance of blockchain technology for governance. State IT minister of Karnataka, Priyank Kharge, says Indian officers are presently evaluating international markets to visualize however the technology are often used in the general public and personal sectors:
“We have asked these startups to return back to United States with how blockchain is getting used outside the country and what policies are in place there.”
What legal Issues the State can Face?
With huge restrictive implications, blockchain applications have already raised several legal queries as they provide new capabilities to engage activities in ways that don’t match showing neatness into existing legal frameworks.
Here are simply a number of ways in which blockchain and its numerous apps are changing the legal landscape:
Cryptocurrencies as legal tender
Bitcoin, the world’s most recognizable digital currency, uses encryption techniques as to manage the generation of units of currency and verify the transfer of funds, operational severally of a financial organisation. It implies that this money has not passed through a bank or alternative financial institution, nor has it been screened by any bureau.
If you’ve got a significant transaction that’s normally needed to be reportable, it simply isn’t. This ends up in important challenges, principally regarding government regulators and current laws.
Money laundering and other illegal monetary transactions
Bitcoin’s blockchain has remained resilient to attack, and it supports a sturdy payment system. however, this doesn’t mean the people using this technology are always noble citizens.
Blockchain actions are automatic and fall outside of human legal proceeding, which means bonus funds might be anonymously spread mechanically into various accounts.
In 2013, regulative bodies answerable for preventing money crimes have introduced new rules to bring Bitcoin within the scope of its enforcement. Later that year, some twenty two Bitcoin firms and investors were unceremoniously subpoenaing by the New York Department of financial Services (NYDFS) culminating in federal agents move down the trade route (a dark market for the most part powered by Bitcoin).
Recently, lawmakers in West Virginia deemed it a law-breaking to use Bitcoin or other cryptocurrencies for concealment, with an update to the state’s anti-money laundering (AML) statutes. The law specifically created a definition for cryptocurrency that is recognized as a ‘monetary instrument’ in the state.
Regulating decentralized applications
In some cases, block chains are used to produce tokens that aren’t designed to be cash at all. for instance, programmable block chains like Ethereum let users create decentralized applications that have their own tokens.
“Distributed” and “decentralized” refer to the peer-to-peer aspect of the blockchain network; there’s not one central information of the blocks. every node on the network will have a duplicate of the total ledger.
Privacy laws
Blockchain, like every kind of ledger book, becomes the official record for trailing the history and validity of transactions and other data. That record is visible to all, even though individual components of the transactions are encrypted and not publicly visible. Here, the division of public and personal on a blockchain are particularly interesting.
For example, your passport or different identity data might be securely encrypted, but the proof of the validation could be used publicly on a blockchain to prove that you simply are you for functions of that dealings, without revealing the underlying private data.
But blockchains could raise challenges where financial establishments are forced to comply with bound privacy laws.
Legal ramifications of Blockchain records
In part, to its stringent encryption techniques, blockchains will have more legal bearing in court. A bill in Vermont passed that would make records verified through blockchain technology admissible as evidence in court.
Laws like this produce a sort of legal backing for blockchain-based information.
In Nevada, a bill has deemed smart contracts and blockchain signatures acceptable records beneath state law.
As blockchain ledgers and systems become a lot of common, their attainable use in cases as proof and discovery becomes more possible.This means lawyers will need to know such records exist as well how to handle that evidence as well as what specific information to request.
Smart contracts
Because blockchains will process transactions, not merely store information regarding transactions, they will functiona platform on that code will be executed and apps are often run. this can be mentioned as “smart contracts.” they need a logic designed into them that triggers an action if a predecessor event happens, while not requiring an extra intervention.
As such, simple contracts – and their reduction in transactional friction – are showing nice potential within the short term.
Property ownership
In several developing countries, wealth is made through ownership. sadly, one in every of the foremost difficult aspects is determining who owns an explicit piece of land. And disputes typically occur once corrupt governments or people take advantage of the under-educated.
Having a public blockchain ledger would allow for everyone to bear in mind of who owns that parcel of land, and it might build the exchange of ownership a lot of easier and a lot of equitable . This efficient proof of ownership would create a higher base for authentication and governments may fairly tax people and businesses.
Multi-signature transactions
Blockchain technology can accomplish official document by exploiting multi-signature transactions, that involve depositing funds to a virtual currency address to initiate a gaggle action between 3 parties, where 2 getting parties and a third-party ‘escrow’. Finishing or refunding the group action desires two of the three parties to sign the group action.
Laws control written agreement agents who assume physical management over assets don’t seem to be designed to accommodate this sort of group action. for example, Calif. defines written agreement using language like ‘delivers’ and ‘to be held’. Such laws could also be discrepant with transactions wherever nothing is physically delivered to or heldin written agreement.
Storage and data transfer
Other data could also be transferred or hold on via blockchain. for example, a blockchains redistributed verification may give for secure digital signatures. Identity data might be stored and verified via a blockchain ledger, and ensuing verified identities (remaining pseudonymous) may scale back fraud on peer-rating sites or give trust ratings for peer-to-peer marketplaces or disposal services.
Yet, such identity verifications raise privacy issues, together with whether or not a right to privacy would exist in such applications. Further, making huge data repositories raises knowledge breach issues. though cryptologic ledgers are wide seen as secure, if in person recognizable knowledge from elsewhere were exposed and related to blockchain knowledge, or if blockchain knowledge were aggregative and analysed, transactions might be tracked and compared even with a onymous ledger.
Conclusion
As this technology continues generating new possibilities for the approach we interact and exchange info, it brings forth difficult and complicated legal issues and pushes the boundaries of existing laws.
Blockchain technology is a subject of law – one thing that our laws will need to adapt to, even as they adapted to the web, new medical technology, or social media. Do these legal and regulatory challenges mean we shouldn’t be exploring the potential of Blockchain? not at all. The technology is already showing tremendous potential to require our business into the longer term. These are simply a number of the initial problems we must always be exploring in parallel to our exploration of the technology. Once, Blockchain becomes totally developed, we tend to won’t be able to merely plug into it and begin giving product. we are going to initial ought to explore all of the legal and regulatory implications of doing, This, as always, to make sure that we tend to shield our customers and ourselves against any potential mishaps.
So, it’s not a matter of not evolving with the days. It’s solely a matter of making certain that our evolution is completed with foresight, insight and a transparent plan of protection. regardless of the future of Blockchain holds for the State, we should conjointly make sure that we tend to shield our most worthy asset: our citizens.
References:
- https://www.ethnews.com/india-looks-to-blockchain-for-e-governance
- https://blockgeeks.com/guides/what-is-blockchain-technology/
- https://www.theguardian.com/global-development-professionals-network/2017/jan/17/blockchain-digital-technology-development-money
