Is Blockchain Legal? — The Confusion
Sudden spike in rates of Bitcoin and numerous frauds across ICOs have confused the masses and created questions towards the legality of Blockchain. While the formers are cryptocurrencies, the latter is a technology that has cryptocurrencies as one of its numerous use cases.
People often consider Bitcoins & Blockchain as synonyms and question the grounds of Blockchain’s legality in the nation. Firstly, we need to understand that Blockchain and Bitcoins are 2 different entities.
What is Blockchain?
The Blockchain is a decentralized ledger onto which the transactions are recorded in an immutable manner. The transactions are always performed on the basis of community consensus, assuring the authenticity. In every 10 minutes, a new block is mined (formed) carrying records of transactions, where the information is encrypted through hashes (A hash is a function that converts an input of letters and numbers into an encrypted output of a fixed length). Each hash is pointing to previous and next hash, creating an immutable chain, as tampering with data or any hash would disturb the entire sequence.
The Blockchain is of 3 types, permission-based, private and public. In the former two types, only the participants have a complete access to the information stored on the chain, and in the latter, the information is transparent to public.
What is Bitcoin?
Satoshi Nakamoto, in January 2009 released a whitepaper on ‘Peer to Peer Electronic Cash System’, in that the term ‘Bitcoin’ is defined as cryptocurrency. Bitcoin is a currency powered by the Blockchain Technology, making it secure and immutable in nature. Transfers in cryptocurrency do not require an intermediary to perform verification, but this transaction takes place on peer-to-peer network triggering complete transparency. Therefore, making the transaction secure and tamper-proof.
Legal Aspect of Blockchain in various countries
“UN Agencies Turn to Blockchain In Fight Against Child Trafficking” (Source CoinDesk)
Certain governments have put the utility and trading through cryptocurrency on hold because they want to come up with regulations to curb the illegitimate activities they fear that can be done using crypto. Few countries have not reached the economic threshold required to execute the extensive practice of cryptocurrency in the market and without due diligence, simply banned their use in their respective country.
However, those who realised around 2014 that Blockchain has more implications than cryptocurrency alone, started to invest in and explore including Dubai, Singapore, Switzerland to name a few. All these countries realised the importance to deploy this technology in various domains.
Gradually, world is opening and willing to inherit the utility of Blockchain, which is not just logical, but most transparent version of doing things right. Embracing this technology can help the governments establish groundwork for their citizens that “all processes can be transparent, corruption free, safe and immutable.” It can make various structures more trusted amongst the people. Hence, this technology ‘Blockchain’ that coined the phrase ‘decentralised ecosystem’ is neither banned in any country and neither is it illegal to implement its use cases in any part of the world. But, legality comes in question only for the cryptocurrency.
Many potential leaders across world believe that technology holds the same significance.
“Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchain automates away the centre. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.” — Vitalik Buterin, co-founder Ethereum and Bitcoin Magazine.
“Blockchain is a technology tour de force”- Bill Gates.
“I have been at this 35 year, writing about the digital age. I have never seen a technology that I thought had a greater potential for humanity” — Don Tapscott Writer.