Blockchain continues to make remarkable developments in the digital landscape since its inception. In 2022, the worldwide market size for blockchain technology reached $11.14 billion and may have a compound annual growth rate (CAGR) of 59.9% until 2030.
Part of this progression is the integration of blockchain within the established legal structure, which signifies the technology’s growth while introducing a new era of compliance and cooperation.
Discover the multifaceted advantages of adopting a blockchain framework into the existing legal system in this infographic. It explores how this move ensures regulatory compliance, fosters trust and facilitates effective decision-making within blockchain networks.
5 ways blockchain can help the existing legal framework
Harnessing the power of blockchain opens up innovative possibilities. Below are areas in which blockchain technology can improve the present legal framework.
1. Provides more robust measures for digital identity verification
By providing a decentralised method for verifying individuals’ identities, blockchain enhances security and reduces the risk of identity fraud. Blockchain-based identity solutions can be particularly valuable in legal contexts where robust identity verification is essential. As for financial transactions, blockchain’s decentralised identity verification can reduce the likelihood of unauthorised access or fraudulent activities.
Legal contracts that rely on the accurate identification of parties involved can benefit from blockchain’s identity solutions, as it ensures the authenticity of signatories. Likewise, blockchain can offer a reliable and transparent method for meeting these requirements in regulatory compliance, where adherence to strict identity verification standards is crucial.
2. Safeguard intellectual property rights
Blockchain has timestamping and verification capabilities to check the ownership of intellectual assets, such as patents, copyrights and trademarks. It can also create a tamper-resistant record of relevant activities from creation to ownership.
This feature becomes instrumental in legal disputes involving intellectual property rights. It offers a transparent and indisputable trail of ownership, strengthening intellectual property protection’s legal foundations.
3. Decrease instances of contractual problems with self-executing contracts
Smart contracts introduce a new dimension to legal agreements. These self-executing projects automate and enforce the terms of transactions through code. Besides expedited processes, there is a reduced risk of disputes arising from contract misinterpretations.
Plus, smart contracts bring efficiency and precision to how parties in legal agreements manage and execute contractual relationships.
4. Streamline ownership transfer with asset tokenisation
Blockchain facilitates the tokenisation of real-world assets, ranging from real estate, art and equity. This innovation streamlines the transfer of ownership and enhances asset liquidity.
It also reduces bureaucratic hurdles, eliminating the need for complex paperwork and improving overall efficiency in asset transactions. As legal frameworks recognise and regulate tokenised assets, your business or investment can be more efficient when acquiring assets.
5. Ensure data integrity with auditing and records-keeping features
Immutable ledgers ensure the integrity and permanence of records, making blockchain a game-changer for auditing and records-keeping. Auditors can rely on the accuracy and completeness of data stored on the blockchain, simplifying checks and balances.
Since a blockchain framework is invaluable in regulatory audits, you won’t have trouble gaining the trust of regulators and stakeholders. Ultimately, data transparency and immutability can contribute to a robust legal system that promotes accountability and compliance.
5 potential challenges of incorporating blockchain into the existing legal framework
Although the blockchain governance framework presents a promising frontier for innovation, it still comes with limitations. These would-be issues require thoughtful navigation to strike the right balance between technological progress and legal compliance.
Here are possible setbacks your organisation may encounter when adopting blockchain.
1. Questions about legal recognition
The evolution of blockchain is outpacing how legal systems adapt to the technology. As a result, there is a lack of clarity regarding the application of existing laws to blockchain-related activities. Uncertainties about the legality of blockchain records and transactions present a significant challenge in establishing their enforceability.
Without clear guidelines or legal recognition, businesses and stakeholders may hesitate to embrace blockchain solutions fully. This scenario might hinder blockchain’s widespread adoption and integration into conventional legal processes.
Hopefully, governments start acknowledging blockchain activities to foster public confidence, enable enforceability and support the smooth integration of this technology into various sectors.
2. Concerns with matters regarding data protection and privacy
Sometimes, blockchain’s transparency can present issues and even conflict with data privacy regulations such as GDPR, specifically their “right to be forgotten” and data deletion provisions. The concern lies in the immutable nature of blockchain, making it seemingly impossible to remove or alter personal data.
However, it is a misconception that blockchain inherently compromises data privacy.
Various privacy-preserving techniques protect sensitive information while still harnessing the benefits of blockchain’s transparency and security. For instance, leveraging a public blockchain as an external timestamp server enhances the security and integrity of internally managed databases.
Another tactic is masking, which permits data entry alteration before publishing it to the blockchain. The mutation scheme secures details within the enterprise, with the data remaining easily and fully restorable to its original form during an audit.
3. Lack of option to correct mistakes due to immutability
Unchangeability is a key feature of blockchain, yet it can be a double-edged sword. On the one hand, this trait guarantees data integrity and trust. Conversely, it can complicate rectifying errors or addressing fraudulent activities due to the irreversible nature of recorded information. Fortunately, the BSV blockchain provides redactable contracts.
These acknowledge the need for flexibility, allowing certain parts of the contract to be editable without compromising the entire document. The contract type can be beneficial when parties need to update terms, correct errors or accommodate changing circumstances without requiring a completely new agreement.
4. Limited knowledge when it comes to interoperability
The challenge of interoperability stems from the lack of seamless compatibility between blockchain platforms and networks. Consequently, it creates difficulties when networks within multiple blockchain ecosystems must interact with one another since establishing standards and protocols for cross-chain transactions and communication can be a complex task.
The BSV Blockchain prioritises standardisation via the Technical Standards Committee to promote interoperability among projects, companies and industries.
5. Global regulatory uncertainty
Globally, there are different rules regarding blockchain technology regulation. Blockchain networks must follow all relevant laws and regulations from country to country. This potential hurdle highlights the importance of a proactive and flexible approach to meet the legal requirements in various regions.
Fortunately, one of the BSV Blockchain’s advocacies involves blockchain regulation, emphasising legal compliance across industries. The BSV blockchain’s proponents also collaborate with policymakers and regulatory agencies to foster clarity on obligations, encourage compliance, strengthen governance and build trust while attracting investments.
Unveiling the power of the BSV blockchain
Blockchain in governance can enhance transparency, security and efficiency within legal processes. However, challenges such as legal recognition, data privacy concerns and regulatory uncertainties demand thoughtful solutions. As the legal landscape evolves, harnessing the power of blockchain within established frameworks offers a transformative path forward.
BSV is the sole public blockchain offering scalable, stable, secure and instant transactions for enterprises and governments. BSV paves the way for a transformative era in enterprise blockchain technology by powering the core elements crucial for successful blockchain integration.
You can delve deeper into BSV’s capabilities and applications in this comprehensive eBook, BSV blockchain – Restoring the promise of enterprise blockchain.
