The Legal Problems Surrounding Blockchains
Eliza Mik · SSRN Electronic Journal · 2018
In the overheated atmosphere surrounding blockchain technologies, predictions of what “might be” are difficult to distinguish from actual commercial applications. It is also difficult to discern the relevant characteristics of blockchains, those that require legal or regulatory attention. This paper sketches a number of important blockchain-related concepts that will facilitate the identification of legal issues that could arise in this area. It emphasises that it is impossible to generalise and provide advice without a thorough understanding of the underlying technologies and the blockchain in question. The paper commences with some definitional problems and introduces the crucial distinction between permissioned and permissionless blockchains. Next, it demystifies three terms that underlie the common belief that blockchains will revolutionise commerce: “validation”, “immutability” and “smart contracts”. The paper assumes that understanding the legal implications of a technology is predicated on an understanding of its characteristics. Compared to the sensationalistic descriptions of blockchains encountered in the press, its contents will appear somewhat dry.