Blockchain, what is it good for?

Presented by Kasia Jaruzelska

It's one thing to understand Blockchain. It's another to figure out where it will hit first. In this week's You Legal TV, we look at what areas are most likely to be impacted by this new technology.

See below for the complete transcript of this episode -

Hello and welcome to You Legal TV.

Last fortnight we looked at blockchain technology, what it is and how it works. In some ways, blockchain is like the internet in its early days. It's rapidly evolving, possibly highly pervasive, and almost totally unchartered territory. Who at the start of the internet could have predicted Facebook or SmartPhones? As promised, this week, we'll look at some uses and some areas that may be impacted. Firstly, smart contracts. Blockchain can be used to replace anything that needs authentication or a signature.

Smart contracts are more agreements that automatically execute themselves once certain conditions are met. Wikipedia actually provides the following useful definition, smart contracts are computer protocols that facilitate, verify or enforce the negotiation or performance of a contract or that obviate the need for a contractual clause. Don't believe it. As an example, in early 2016, a new company was formed called The DAO. This is short for Decentralized Autonomous Organization. There are no managers, no directors, no CEOs, not even a secretary. It runs on a series of smart contracts on the Theorem blockchain.

This is truly revolutionary but also provides valuable lessons. Earlier this year, the DAO raised funds on the blockchain. However, early this month, a third was siphoned away by an unknown attacker. Coding errors in DAO's smart contracts proved to be the culprit, and this also reminds us that existing corporations’ law is not equipped to deal with these kinds of entities. Number two, notary and registry services. Services such as Block Notary are becoming available. A document is given a unique digital identifier. This allows subsequent versions of the document to be verified as being the same.

At number three, property. If you lease assets, blockchain can provide a way of tracking goods as they move from party to party. It has the potential to replace domestic title registries for real property, and even intellectual property may be impacted with an ability to track licensing and ownership. Next, banking and finance. Blockchain's first and foremost claim to fame is to relegate banks to the dark ages, but if this happens, what sort of regulation will be needed to deal with an entirely new system? Privacy also needs to be considered. What are the risks for privacy in an open ledger that everybody can see?

Of course, this technology is in its infancy. Other uses that may emerge include peer-to-peer email that encrypts the messages and hides the parties, fully anonymous online voting or a decentralized domain system. However, whatever the use, as you know, blockchain is known for being decentralized. There is no one in charge, and there is no one in control, but what happens when something goes wrong? Who fixes it, who's to blame, where do you go for recourse? This is just one of the things that we will need to consider as system technology emerges and grows.

What Should I Do Next?

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* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.