A more sustainable approach to the use of blockchain technology is that as organisations take into account the potential advantages of blockchain, they also do well to take into account any potential dangers and how to manage them.
On innovations in the property technology space, today we will consider two major legal implications of the use of blockchain technology in the proptech space.
1) Jurisdiction – The use of blockchain technology involves nodes, which in the context of blockchain means computers that run the blockchain’s software to verify and store the whole history of transactions on the network.
Nodes of a decentralised ledger will usually span numerous jurisdictions around the world. With this reality, it will be problematic to ascertain which law and regulation will apply to a transaction.
The possibility exists that transactions carried out by an organisation could be subject to regulation in each country where a node in the blockchain network is located, leading to an unmanageable number of rules and legislation that could apply to transactions in a system built on a blockchain.
This challenge will be of more concern in a public blockchain system, which is unlike a private or permissioned system.
2) Data privacy and protection – The blockchain technology is unique in itself as a result of its decentralised nature, where peer to peer transactions can be facilitated without the need for an intermediary organisation.
With such a reality, every user of the platform may have access to all the data on the network. This in itself is in opposition to the mischief that data privacy laws are enacted to remedy.
With the use of blockchain technology, where the systems are operated by every user in a peer to peer setting and there is no clear cut distinction as to who a controller or processor of data is, the way forward with regards to data protection may be to take into account how much each blockchain network participant is a controller depending on their own actions or individual activities in the network.
References;
Benedict George, What is a node?,https://www.coindesk.com/learn/what-is-a-node/#:~:text=In%20computer%20science%2C%20the%20term,of%20transactions%20on%20the%20network.
John Salmon and Gordon Myers,Blockchain and Associated Legal Issues for Emerging Markets,https://www.ifc.org/wps/wcm/connect/da7da0dd-2068-4728-b846-7cffcd1fd24a/EMCompass-Note-63-Blockchain-and-Legal-Issues-in-Emerging-Markets.pdf?MOD=AJPERES&CVID=mxocw9F
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