BLOCKCHAIN
A blockchain is a decentralised ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and other issues.
Blockchain technology offers a way to people who may not know each other to trust each other through a record that is based upon the approval of everyone involved. This result is achieved by the innovative use of cryptography and distributed ledger technology.
Cryptography is technique of securing information and communications through use of codes so that the information is only understood and processed by those whom it is intended for.
When transferring a tangible asset, from one person to another, physical transfer and possession of the goods takes place. But with digital, intangible goods, usually reproducible at very low costs and which are not tied to one place and found everywhere at the same time, the correct allocation of goods to the respective owner is more difficult.
So allocation requires a more sophisticated system of authentication in order to prevent the double-spending of digital money or double-selling of goods. This can be achieved by blockchain technology, which – through the innovative use of cryptography and distributed ledger technology – makes it impossible to double-spend digital goods that are being stored on the blockchain, such as paying twice with bitcoins.
Blockchain technology is the basis for many current applications, like cryptocurrencies, smart contracts, authentication systems (like Everledger for diamond identification or Bitproof).
Advantages of blockchains:
they are faster, cheaper and more secure than traditional systems which is why banks and governments are turning to them
Legal cheek panel at University of Law= “It hasn’t necessarily changed it — it’s just given us a whole new practice area”, co-CEO at Ashurst, Tara Waters said “We have the recent analysis from the UK Jurisdiction Taskforce’s LawTech Delivery Panel concerning how crypto assets may be viewed as property, and there is an interesting debate around how this new asset class should be treated. In relation to the adoption of ‘smart contracts’ in the legal industry, it doesn’t remove the need for the lawyer or traditional legal contracts. In most cases, it’s simply a new tool to implement certain terms in a traditional contract.”
SMART CONTRACTS
Kushal on the Legalcheek’s technology and business panel at Herbert Smith Freehills mentioned smart contract. This is a “cryptocontract” which is a computer program that controls the transfer of digital currencies or assets between parties under certain conditions.
There are various definitions of smart contracts, which include:
A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code – such code and agreements exist across a distributed blockchain network
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.
A smart contract is computer code that can automatically monitor, execute and enforce a legal agreement. Contractual clauses and functional outcomes are mapped as code on the blockchain
The certainty of a smart contract is therefore seen as a key advantage. If the code works, there should be no misunderstanding as to intention and it can be replicated repeatedly, and cost-effectively, for analogous transactions
An important feature of smart contracts is that blockchain technology prevents retroactive alteration so smart contracts are unmodifiable and final
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