Blockchain technology, as a whole, has made it possible to create solutions for a substantial number of industries that has never been possible before now. Some of the industries that have integrated the technological advance include cryptocurrency/finance, pharmaceuticals, fashion, and food safety.
The neatness of maintaining all the transactions on a ledger makes it easier to organize important details. However, there are currently some blocks in the path of those industries, if blockchain continues to be bypassed by current legislature.
The Role Of Smart Contracts
A smart contract is fairly similar to a physical contract, in that it includes a protocol that each of the participating parties must follow. However, the digital format makes it easy to send and apply with little risk for fraud.
Smart contract technology was first established with the Ethereum network only three years ago, and it because crucial to the application of blockchain. With these tools, any individual could create a smart contract, and would be able to self-enforce the agreement. Through the last two years, cryptocurrency has been using these agreements as well, with projects like NEO, EOS, and Cardano.
Some of the reasons that consumers prefer the use of smart contracts is because they come with fewer costs, better transparency, fewer conflicts, and less time to manage.
However, despite these advantages, without legislature to verify their validity, it is questionable whether they are valid or null. Even though a person creates the original contract, the technology allows the contract to run independently, which is where the law becomes a little fuzzy.
To offer further clarification, a law firm called Norton Rose Fulbright weighs in:
“In many common law jurisdictions, a contract can only be valid if it is entered into by a person (i.e. a human or legal person, such as a corporation) with legal capacity to do so. There is also common law authority (for example, in English law) that a contract cannot arise unless there is sufficient certainty over who the contracting parties are. Some civil law jurisdictions lay down other legal requirements for the formation of a legally binding contract.”
There is some debate on whether the current laws need to be modified to include smart contracts, or if the verbiage of the law already covers it. Both Tennessee and Arizona specifically recognize smart contracts, though some experts say that legislation may worsen the current issues.
Andrew Hinkes, who teaches at NYU’s Stern School of Business, expanded on that concern:
“Laws should not attempt to define technologies that do not have a widely held definition in their relevant technical communities.” Additionally, the relative youth of the space means that legislators are likely to get some terms wrong and use outdated terms that may further compound the issue.”
With the major concerns across multiple industries about the concept of identity theft, blockchain projects typically provide a chance for users to develop a digital identity. Ideally, this would mean that the customer has full control over where their personal information goes, which is basically a “self-sovereign” identity. This technology should let consumers apply identity protection through personal and business efforts, storing their identification papers in a way that will not put them at risk for loss or destruction.
This effort is so necessary for consumers that platforms like Sphere Identity and Uport have systems that specifically work with government-issued identification. However, they will still need support from those entities to verify the validity of any identifying information. Alastria, a blockchain network in Spain, is recognized by its local government for identification, which helps citizens to maintain their records easily.
A land registry is simply a way for the government to keep track of who owns the wide range of properties across the nation. However, these registries are often so disorganized that there is plenty of debate available regarding who owns different pieces of land. These efforts are made even more useless when consumers consider how many physical records have been destroyed over time.
There are several blockchain startups that are trying to use blockchain technology to help with this area of disarray. Both Ghana and India are working towards this type of registry in their own countries, but the only way to truly keep these records is with verification of government-issues deeds and titles. However, without being legally recognized on the blockchain, there is no way to establish this registry anyway.
Legislation Is Necessary
There are so many ways that blockchain technology has the potential to benefit the American government and its citizen. The only one holding up the process is the legislative branch of the government. Otherwise, all this amazing technology cannot be used for its intended purpose.
Realistically, both the government and projects with blockchain technology stand to benefit, but the critics surrounding blockchain are keeping the world from making impressive progress. Various levels of legislation are required for each function, so it would be best for governments around the world to reconsider their current restrictions for a more seamless economy.