Distributed Ledger Technology & Law 101 Series | Blockchain’s Origin Story

“The internet is programmable information. The blockchain is programmable scarcity”

 - Balaji Srinivasan

This whole blockchain thing is so compelling to me – I don’t know where it’s going, but its such an interesting ride.”

- Michael Caputo

INTRODUCTION

Blockchain’s namesake came from how Blockchain operated and the manner in which blockchain stores data, specifically, information is packaged into individual blocks which in turn is linked to form a chain with other blocks of similar information.

Whilst blockchain has been made famous by the rise of bitcoin, it is pertinent to note that blockchain is just one of many different forms of distributed ledger technology. The rise of bitcoin however made blockchain the most famous form of distributed ledger technology on the market.

As you plan on starting the next DLT innovation, don’t forget to follow our Distributed Ledger Technology 101 series at the subscribe link provided. Your journey to Blockchain and Law begins here.  

BLOCKCHAIN | WHAT AM I?

“if you wanted to hack the blockchain, it’d be like turning a Chicken McNugget back into a chicken…”

- Don Tapscott

When one hears of the term blockchain, other terms such as immutability will automatically come to mind. This reputation is made possible as it is the act of linking blocks into a chain that makes the information stored on a blockchain immutable.  Once the data is recorded in a block it cannot be altered without having to change every block that came after it, making it impossible to do so without it being seen by the other participants on the network.

By default, blockchain technology does not allow for modification of data once it is on the blockchain. As a result, any data that has been recorded in a block can never be deleted or altered (theoretically very difficult at least due to its distributed nature.

Accordingly, data stored on a blockchain is said to be theoretically there forever. In law, blockchain technology has a number of potential application (aside from just being used to make virtual assets).

HOW DOES BLOCKCHAIN OPERATE?

“We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”

- Tyler Winklevoss

Blockchain stores all of its information/data within a distributed ledger system. More importantly, however is the fact that any kind of data that is exchanged is called “transactions” (though its application is not limited to being for transaction as will be noted hereinbelow).

Within a blockchain ecosystem, every single user on a particular network is usually called “node” and each node will get a copy of an updated ledger (whenever there being an update).

Whenever a ‘transaction’ takes place on a network, a user will request for a transaction in the network that they are in during which they will be provided with a key (either public or private). To find the counterparty, one will need a public key to conduct the transaction.

After the request for a block is made with all the information of the transaction inputted, a new block is born with all the data in the block being encrypted in order to ensure security.

When a block is created, such block is then broadcasted to the rest of the nodes which will confirm witnessing the transaction before it is recorded onto the blockchain, hence the safety. This process is called validation.

POTENTIAL APPLICATION OF BLOCKCHAIN IN JUDICIAL PROCESS

Blockchain is the technology. Bitcoin is merely the first mainstream manifestation of its [blockchain’s] potential

- Marc Kenigsberg

In summary, blockchain is a record-keeping tracking technology. Just as it has potential to track and record performance of a transaction so too does it have the potential to track and record development of law.

Common law is essentially a manual form of consensus protocol. It has therefore been theorized that common law rulings can be recorded as part of a blockchain with each judgment confirming a principal reinforcing the block on a blockchain. It remains to be seen when blockchain will be applied in judicial aspect of our society.

CONCLUSION

We believe that blockchain technology could be an important tool for protecting and preserving humanity and the rights of every human being, a means of communicating the truth, distributing prosperity, and – as the network rejects the fraudulent transactions – of rejecting those early cancerous cell from a society that can grow into the unthinkable

- Don Tapscott

Each year, a large amount of money is spent globally in the litigation and dispute resolution process. It is the pivot of this article that much of humanity’s history of litigation began with the human factor and misconceived expectations. Accordingly, it is also pivoted that a significant portion of litigations within our legal system can actually be prevented from even arising in the first place if our society’s policies, the contracts between the parties and the laws enacted can be fully objectivised.

Blockchain has a potential to achieve such a feat. Presently, the interpretation of law, contracts and policies always lead to significant confusion and ambiguities. I have always said, if a case makes it to trial, a litigator has failed the client for making them undergo legal roulette.

The human factor complicates the judicial process leading to much loss in blood and treasure, with all involved ultimately being victims.

Therefore, if humanity is able to actualize blockchain technology in the practice of law and the legal profession, it will in theory have a cascading effect on society.

We hope you enjoyed the latest of our Distributed Ledger Technology 101 series. To stay tuned for more content hit the subscribe link provided. Until next time.

Solicitor, ONC Lawyers

Joshua Chu is a Litigation Solicitor qualified to practice in Hong Kong. Before becoming a lawyer, Joshua worked in the healthcare industry serving as the IT department head at a private hospital as well as overseeing their procurement operations.

Since embarking upon his legal career, his past legal experience includes representing the successful party in one of Hong Kong’s first cryptocurrency litigation cases as well as appearing before the Review Body on Bid Challenges under the World Trade Organization Government Procurement Agreement concerning a health care industry related tender.

Today, Joshua’s practice is mainly focused in the field of dispute resolution and technology law.

Aside from his legal practice, Joshua is currently also a Senior Consultant with a regulatory consulting firm which had been founded by ex-SFC Regulators as well as being a management consultant for the Korean Blockchain Centre.

Managing Director, Prosynergy Consulting Limited