EXAMINING THE LEGAL LANDSCAPE OF BLOCKCHAIN TECHNOLOGY.
Krutika Patil (6th Sem BBA.LL.B)
R21LB022
ABSTARCT
In this research paper, we will be discussing the concept of Blockchain in relation to the
existing laws. The undeniable adaptation of the technological innovations and digital
advancement permeated in the legal domain cannot be overlooked. The adoption of
blockchain and its application knocks the doors of the law to regulate and govern it. The
interface between the Information technology and law is witnessed her. The paper dives into
the basics of blockchain – to better aid the laws, the background and the legal ramifications
have been examined. By examining the evolving landscape of blockchain ,this study aims to
provide insights for individuals navigating the transformative technology.
Keywords: Blockchain, transnational, cryptographical, Bitcoin.
INTRODUCTON
The concept of blockchain technology is a sought-after term in the current status. The concept
gained its attraction due to its ease of transaction and the developments that came along with
it in the socio-economic and legal field. Blockchain challenges the governance and the law. It
is unique and unexplored. Blockchain has one feature than any other disruptive technology
that makes it distinctive. It is by nature a global and transnational technology1.
It was developed exclusively to understand the national borders and establishes institution.
Blockchain promote the transmission of data and economic value independent of the
geographical location of the participants in the blockchain network2. According to de Filippi
and Wright, blockchains accelerate the shift of power from legal rules and regulations
1
Primavera De Filippi & Samer Hassan, Blockchain Technology as a Regulatory Technology: From Code is
Law to Law is Code, MICHÊLE FINCK, BLOCKCHAIN REGULATION AND GOVERNANCE IN EUROPE
58 (2018).
Accessed 03 April 2024.
2
Georgios Dimitropoulos, The Law of Blockchain, 95 Wash. L. Rev. 1117 (2020). Available at:
https://digitalcommons.law.uw.edu/wlr/vol95/iss3/3, Accessed 03 April 2024.
administered by government authorities to code-based rules and protocols governed by
decentralized blockchain-based networks.3
WHAT IS BLOCKCHAIN?
Blockchain is a technology allows for secure sharing of information. Data, obviously, is
stored in a database4. Transactions are recorded in an account book called a ledger. A
blockchain is a type of distributed database or ledger—one of today’s top tech trends—which
means the power to update a blockchain is distributed between the nodes, or participants, of a
public or private computer network. This is known as distributed ledger technology, or DLT.
Nodes are incentivized with digital tokens or currency to make updates to blockchains.
Blockchain allows for the permanent, immutable, and transparent recording of data and
transactions. This makes it possible to exchange anything that has value, be it physical item
or something less tangible.
A blockchain has three central attributes5.
• First, a blockchain database must be cryptographically secure. That means in order to
access or add data on the database, you need two cryptographic keys: a public key,
which is basically the address in the database, and the private key, which is a
personal key that must be authenticated by the network.
• Next, a blockchain is a digital log or database of transactions, meaning it happens
fully online.
• And finally, a blockchain is a database that is shared across a public or private
network. One of the most well-known public blockchain networks is the Bitcoin
blockchain.
HOW DOES IT WORK?
When data on a blockchain is accessed or altered, the record is stored in a “block”
alongside the records of other transactions. These blocks of encrypted data are
permanently “chained” to one another, and transactions are recorded sequentially and
indefinitely, creating a perfect audit history that allows visibility into past versions of the
3
DE FILIPPI & WRIGHT, supra note 13, at 7
4
What is Blockchain? <https://www.ibm.com/topics/blockchain> accessed 03 April 2024.
5
Dong, Shi & Abbas, Khushnood & Li, Meixi & Kamruzzaman, Joarder. (2023). ‘Blockchain technology and
application: an overview’. PeerJ Computer Science. 9. e1705. 10.7717/peerj-cs.1705. Accessed 03 April 2024
blockchain. When new data is added to the network, the majority of nodes must verify
and confirm the legitimacy of the new data based on permissions or economic incentives,
also known as consensus mechanisms6.
HOW ARE BLOCKCHAIN BENEFICIAL?
Blockchain usually associated with bitcoin finds itself in various disciplines capable of
doing so much more. The term blockchain is the nomenclature which suggest whole suits
of blocks. It can track financial records, medical data and land tiles
To better understand, say ‘A’ and ‘B’ are having issues about ownership over a piece of
land that has been in dispute over the years. Because it uses the ledger method, there is
an entry in the ledger showing that ‘C’ first owned the property in 1900. When he sold it
to ‘D’ in 1930, a new entry was made in the ledger. Every change of ownership in the
property is represented by a new entry in the ledger. Right up until ‘A’ brought it from
‘E’ in the 2000. ‘A’ is the current owner which can be seen in the ledger. This lives on
perpetually.
Blockchain technology stands to revolutionize the way we interact with each other. It
also sets itself apart in the following ways7.
• Cost-efficient transactions: Digitizing records and issuing them on a universal
ledger can help save significant time and costs. In a letter-of credit deal, for
example, two companies opted for a paperless solution and used blockchain to
trade nearly $100,000 worth of butter and cheese. By doing so, a process that
previously took up to ten days was reduced to less than four hours—from issuing
to approving the letter of credit.
• Automated and secure contract fulfilment: Smart contracts are sets of instructions
coded into tokens issued on a blockchain that can self-execute under specific
conditions. For example, one retailer wanted to streamline its supply-chain-
management efforts, so it began recording all processes and actions, from vendor
to customer, and coding them into smart contracts on a blockchain.
6
Kibet, Amos & Bayyou, Demeke Gebresenbet & Esquivel, Rosanna. (2019).’ BLOCKCHAIN: IT'S
STRUCTURE, PRINCIPLES, APPLICATIONS AND FORESEEN ISSUES’.
7
The McKinsey and Co.,’ What is blockchain?’ <https://www.mckinsey.com> accessed 03 April 2024
• Blockchain allows companies to track a transaction down to its current status.
This enables companies to determine exactly where the data originated and where
it was delivered, which helps to prevent data breaches.
• Blockchain supports smart contracts, which are programs that trigger transactions
automatically upon fulfilment of contract criteria.
THE EVOLUTION OF BLOCKCHAIN
Blockchain technology could be witnessed as a computerized channel maintaining security and
transparency through Distributed Ledger Technology (DLT) as explained by David Chahum in his
paper titled ‘Computer Systems Established, Maintained and Trusted by Suspicious Groups8‘.
Untampered records of information in the form of blocks which cannot be altered in the backdates
were introduced then by Stuart Haber and W. Scott Stornetta in 1991 materializing the idea of
distributed ledger fetched cryptographically. Merkel Trees, 1992 also known as hash trees gave a new
enhanced efficiency to the security of the cryptography structure. The efficiency in recording and
verification of input data was introduced through this model by Haber and Dave which came to public
scrutiny post-2004. The digital Cash prototype introduced by Finney by the name ―Reusable Proof
of Work significantly contributed to blockchain introduction in 2004 popularizing the Distributed
Ledger Technology (DLT). In 2008, the first large-scale successful implementation of Blockchain-
based Distributed Ledger Technology was reported in 2008 by Satoshi Nakamoto9
In India, National Informatics Centre10 is the sole agency which is responsible for
implementing and coordinating the blockchain ecosystem in India. The Ministry of Electronic
and Information Technology proposed to use blockchain for governance and state
governments and other government organizations are also required to use blockchain
technology for security and other enhancement purposes.
Since the majority of usage of blockchain is used for cryptocurrency trading, the regulations seem to
cover only this particular risk at large. Negotiable Instrument Act11, the Securities Contracts
(Regulation) Act,12, and the RBI Act13, were prominent laws governing the technology. Later on, in
8
David Chahum, ‘Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups’ ,
Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups | Satoshi Nakamoto
Institute(April 3, 2024)
9
Kukrety, Neha & Kaushik, Pitresh & Pandey, Shashank. (2023). ‘Blockchain Technology and Legal
Framework in India: A Systematic Review’. 10.5281/zenodo.8360087.
10
Ms. Jayanthi S, ‘Journey with Blockchain’ (January 29th, 2021)< https://www.nic.in/blogs/journey-with-
blockchain-technology/> accessed 03 April 2024
11
Negotiable Instrument Act,1881
12
The Securities Contracts (Regulation) Act, 1955
13
RBI Act,1934
addition to the mentioned regulations, the Indian Copyright Act14, and IT Act,15 were added to the
basket to regulate this new technological upgradation as well.
14
The Indian Copyright Act, 1957
15
IT Act, 2000
