When the Internet penetrated the global sphere during the 1990s, there were many questions about its use, its potential or the way in which it would change human routine and activity. Today there is no doubt about it. The technological progress imposed by the Internet has surpassed initial expectations and has modified life on Earth.
Nearly 20 years later, the world is witnessing the emergence of cryptocurrency or digital currency and concerns are once again being raised about its real advantages and its strength as a monetary system, since, being a new proposal, there is still no legal consensus regarding its operation and the equipment it needs to fulfill its purpose.
The technology behind cryptocurrency has offered practical benefits to various companies in different parts of the world. One of these goes by the name of blockchain and refers to a virtual public ledger, which allows the confirmation of encrypted transactions made with the digital currency. When transactions are confirmed they are placed in a block and added to the chain, becoming apparently immutable records.
The operation of this system requires a legal support aware of the advantages and challenges, which represents a novel task for legal professionals around the world.
Why does blockchain continue to grow?
Although it is still being tested in a few industries that have dared to use it, blockchain has brought significant benefits in making transactions an increasingly efficient and secure process.
Among the benefits gained is the fact that blockchain subverts the supply chains by making them faster. to cross-border transactions and improving their transparency. Likewise, it offers identity to those who do not have it to operate, promoting financial inclusion and allowing countries with incipient technologies to take part in global transactions more easily.
With the so-called blockchain it is possible to separate the identity of the person executing the transaction. of the monetary operation, reducing the possibility of hacking. In its procedure, it eliminates many traditional procedures, thus considerably reducing the time spent on operations and avoiding the involvement of third parties in them.
Therefore, the application of blockchain implies the reduction of costs associated with these operations.The cryptocurrency is not regulated by any central authority, such as a bank or government. Like cryptocurrency it is not regulated by any central authority, such as a bank or government.
Its birth responded to the need to provide a guarantee for online cryptocurrency transactions, ensuring a reliable mechanism so that two interested parties could do business without having to know each other.
However, this concept has extended beyond its use with digital currency, offering its benefits to other spaces. From there, different versions of blockchain have emerged, among which stand out the private ones that require approval for its use. This limitation is due to the fear of some companies of being sanctioned in case of hacking, due to the lack of regulation and regulations that control the operation of the system.
It is under these circumstances that we envision legal advice from legal experts as an essential action in the creation of new monetary proposals. Just in December 2015, Nasdaq, considered the second largest electronic stock exchange in the United States, carried out the first transaction using a blockchain. The novelty of these processes requires the study of those who are familiar with the legal environment, in order to define the regulations according to the nature of this system.
The real estate market has been one of the pioneers in putting blockchain to the test. The work in this area appears to be promising in the face of this new system, as it solves frequent problems such as fraud, commission payments and friction with intermediaries.
It also simplifies and speeds up processes while maintaining process transparency. The ability to strengthen the security of property records has been one of the reasons why the system has been highly appreciated in the real estate world.
Challenges to overcome related to the blockchain
The advantages of blockchain seem invaluable. However, the risks and challenges of adopting this system should also be reviewed. Despite the controls in place, security is not foolproof, since when access is given to any individual it is possible that that user may end up gaining access to the entire platform. The nature of the blockchain does not allow for more restrictions to be put in place because it would mean implementing more processes and depriving the system of its efficiency.
The immutability of the saved records cannot be altered. More technically, it has been discovered that they can be "circumvented" and in some way breach security. After evaluating the potentialities and challenges to overcome, the recommendation for its use is to make sure that the company does business with various stakeholders who need trust and access to certain information.
As mentioned above, the legal aspects that frame the use of technology must be developed in order to promote it.. A regulation provides a legal basis and legality to all these innovative processes that seek to facilitate and secure financial transactions.
This is especially true in countries with underdeveloped technology, such as Venezuela, it is imperative to define a consensual legislation that supports the legal security of those who carry out these digital transactions, in order to avoid the violation of human rights, the execution of extortion, fraud or money laundering crimes.
This topic undoubtedly opens up a new possibility for lawyers around the world. to study the legal landscape and innovate a regulatory framework for this nascent technology. Education, experience and a drive for knowledge will be key factors in the development of a strong legal statute.
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