A recent report released by the European parliament entitled “How blockchain technology could change our lives” outlines the capabilities of blockchain technology. The report was presented by European Parliamentary Research Service and notes the following as being of considerable significance:
Digital Property Rights
Blockchain technology has great potential for application in intellectual property rights in digital materials. It could be applied in multi-territorial licensing policies with the effect of improving legal certainty for creators and purchasers of digital content. Moreover, it has the potential to provide a sure way of protecting the patent rights of innovators from infringement by competitors. “Hashing” and “proof of existence” could help improve the patent system and deal with the current state of affairs where there is no unified patent system in EU.
In public administration, the onset of eGovernment services creates a huge potential for application of Blockchain technology. The technology could be applied in land registry management, identity management, distribution of benefits, tax collection among other government records. If applied, blockchain technology could enable faster creation and verification of records.
Supply Chain Management
The report points out that Blockchain technology has the potential to transform supply chain management through the provision of infrastructure for certification, registration, and tracking of goods and services along the supply chain. Tokens can identify goods on the blockchain in a unique way with the transparent stamping of each transaction time.
The report notes that with regard to electronic voting, blockchain technology can provide a participatory social structure that is both secure and cost effective.
According to the report, one of the most promising benefits of Blockchain technology is the application in smart contracts which could be more efficient to enforce. However, the existing law may not properly address issues arising from smart contracts. This includes the laws of evidence and record keeping requirements. It may, therefore, be necessary to find new ways of asserting the primacy of the existing law in case the automation that characterizes smart contracts render the existing law difficult to apply. Further, such laws may need to be modified in order to adequately address the challenges of enforcing smart contracts.
Decentralised Autonomous Organisations
The report observes that bundled smart contracts capable of automatic enforcement and execution via blockchains (decentralized autonomous organisations) have the potential of providing a more autonomous organization. At the moment, it is not possible to predict the level of autonomy that decentralized autonomous organisations will reach. Currently, decentralized autonomous organisations exist in regulatory gray areas where protection, liability and accountability guarantees are sometimes not provided.
Although blockchain applications have a self-regulatory nature and operate in parallel with traditional law, there is often a mix of traditional and novel legal issues that should be considered. The effect of the decentralized nature of blockchain gives rise to jurisdictional issues because it erodes legal responsibility and institutional accountability in an unprecedented manner. Additionally, Blockchain-based systems which assume a decentralized nature may be open to co-option by external powers. Therefore, in absence of sufficient institutional protection, these could evolve into oligarchies.