Cryptocurrency and blockchain: thoughts for the future
What does the future hold for cryptocurrencies and blockchain? A world with possibilities.
Blockchain, for a relatively new technology, has certainly sparked many conversations. The concept was developed by Satoshi Nakamoto, an anonymous person or group of people, to create a digital cash — Bitcoin — that could be transferred peer-to-peer without the need for an intermediary. It is a clever interweaving of software engineering, cryptography science and game theory which led to the concept of distributed ledger technology.
Research by the International Data Corporation reported that US$1.5 billion expected spending on blockchain adoption in 2018, with total spend projections of $11.7 billion in 2022. It is therefore unsurprising that tokenisation of assets and cryptocurrency regulation is being explored deeply by both the public and private sector. Contractual obligations and payments in cryptocurrency are becoming increasingly common with value transfer and due diligence work becoming seamless through the use of blockchain, creating more transparency and certainty for business. However, the rise of blockchain may spell bad news for the “middlemen” of the financial world due to the seamlessness of the transacting process.
Blockchain also creates some legal uncertainty and will change some of the roles that lawyers play. However, the transformative benefits it offers are compelling and cannot be dismissed. Blockchain is not simply a technology limited to cryptocurrencies, it is a foundational technology that will impact every industry and profession and will force changes in the law. A key difference between the internet and blockchain is that the internet developed relatively slowly, the blockchain’s pace of change and adoption is exponentially faster.
Another feature of blockchain is that, as some people have rightly observed, some solutions can be achieved through other technology, thus using blockchain may not always be necessary. However, while this is sometimes true, the new solution was only thought about because of blockchain’s presence. Blockchain allows for a new way of thinking which is uncomfortable for many but exhilarating for those who understand blockchain’s profound implications for society.
People forget how quickly technology is viewed with suspicion and then adopted and seen as nothing remarkable. In 1996, when Richard Susskind predicted that lawyers would primarily communicate with their clients via email he was soundly reprimanded by the Law Society of England and Wales in 1996 and was told that he did not understand confidentiality and should not be promoting his alarming views in public. Similarly, cloud computing was viewed with suspicion and fear, but now cloud computing is a normal part of business activity. If a nation accepts blockchain and utilises it to its capacity that nation will receive large amounts of capital and expertise and the ability to innovate. But if nations do not embrace blockchain they risk losing out in the next industrial revolution.
This is an excerpt from an article by Jason Lee BLOCKCHAIN CENTRE, James Waugh BLUEBLOCK and Alex Sims, UNIVERSITY OF AUCKLAND. The full article explores thoughts on the future of cryptocurrency, tokenisation of assets, contractual obligations, value transfer and blockchain from the perspective of legal practitioners and an academic.