blockchain - legal aspects of new technologies

The rapid growth of decentralised exchanges poses new challenges for market regulators and raises new legal questions.

One of the key attributes of blockchains is the ability to achieving a consensus in distributed networks. This allows the Bitcoin network transaction record to be maintained by thousands of servers across the world, without any centralised coordination. It also makes it possible for complex smart contract transactions (such as ones on the Ethereum platform) to be entered into and executed directly by network users.

In the beginning, blockchain technology’s sole use was for Bitcoin. This first truly decentralised digital currency launched an accelerating stream of innovations. For several years now, it has been leading the way for alternative means of payment (the summary of our 2014 crypto-currencies report is available here), through to smart contracts and DAO (decentralised autonomous organisation – our report on this is available here), up to, perhaps, a revolution in how the internet operates.

The world of blockchain technology does not cease to surprise and fascinate. Over the last year, one of the most frequently discussed blockchain-associated concepts has been tokens.

I wrote about tokens for the first time in “Legal Aspects of Initial Coin Offerings and Token Crowdsales” in the report on blockchain, smart contracts and DAO of 2016.

Let’s take a closer look at tokens. We can consider them from three perspectives: technological, economic and legal.

Twenty-four million seven hundred and fifty thousand American dollars. This much was raised in less than 15 minutes by the developers of the Aragon Project. What is it about the Aragon project that has interested so many blockchain users and made them willing to support it?

Bitcoin opened up a spectrum of possibilities and a legal Pandora’s Box. But block chain—the technology on which Bitcoin is based—generates even greater potential and further legal challenges.