Lawyers interested in blockchain and cryptocurrency regulations need to understand the basics of this technology. Financial institutions are looking at how they can utilize blockchain technology to revolutionize everything from settlement and clearing to insurance. However, these same institutions have been terrified of the very idea of a decentralized ledger, which can make a lot of people nervous. Thankfully, however, the technology has a lot to offer the financial sector. These articles will explain why these changes are happening and what you need to do about them now.
The problem that financial companies face is a lack of trust in the system. When you give a financial institution complete control over a ledger (which is just a database where all transactions are recorded), you are asking for trouble. When a ledger is controlled by a single entity, there is no way for that entity to be taken advantage of. If a ledger was managed by many different parties, however, it is easy for corruption to happen. This is one of the primary arguments in favour of the technology known as the blockchain.
The technology behind the blockchain is quite complex. However, a basic explanation of how it works should be easy to understand. Basically, it is a way for all of the assets of a certain company to be held in a virtual location. All of the information that is recorded in this location is completely secure, because it is stored in a decentralized fashion. Because the ledger system is completely safe from corruption, you can be sure that this type of technology is something that is safe and will continue to improve in the future.
One of the most exciting things about the future of the Blockchain is all of the applications that will be possible with it. Right now, companies can use the technology to hold digital assets like customer records and sales documents. They can also use the ledger to handle the money that they are owed by their customers. Because the transactions are all done digitally, you won’t have to worry about the security of these assets. Instead, you can be confident that all of the data and assets will be safe and secured on the decentralized Asset Ledger.
While it may still be some time before you see the benefits of the Blockchain, there are many people who have already taken full advantage of its power. Just recently, one of the most powerful companies in the world was able to process a record-breaking $3.9B USD in a single day. Even though this may seem impossible, it is very possible with the help of the Blockchain technology. The future of financial institutions is about to get even more interesting thanks to the incredible work that has been done with the help of the blockchain technology.
If you have been looking for an alternative to the traditional online transaction methods, then the best solution available right now is the use of the blockchain. However, there are still a lot of people who are unfamiliar with how blockchains work. In order to make yourself more familiar with the technology, you should definitely look into the popular and highly regarded ChainPoint. This service allows you to transfer funds between two different companies using the power of the Blockchain. No matter what your knowledge of the technology is, it is easy to understand the potential of the Blockchains and why they are quickly gaining in popularity.
In simple terms, blockchain represents a different type of database that is unique as compared to traditional database used to store data. Blockchain includes a connected and growing list of records, which are called blocks. These blocks are connected with each other using a technique called cryptography. To provide a secure mechanism, each block contains cryptographic algorithm, also known as a hash, corresponding to previous block. This algorithm represents timestamp and transaction data of each block. Application wise, blockchain is used as a distributed ledger for a variety of solutions like financial fraud detection, medical records management, etc.
A P2P network refers to a network developed using peer to peer architecture that is built across a connected network of devices instead of a single central server. These connected devices are also known as nodes. In such networks, peer to peer communication is done without any central admin, thereby providing equal power to all devices across all the nodes. This acts as a backbone of the blockchain technology to provide a decentralised network for a vast variety of applications. Therefore, the responsibility to run and manage the blockchain network lies equally with all the users having access to all the nodes present in a blockchain network.
The primary difference between blockchain and cryptocurrency is that blockchain is a technology framework over which cryptocurrency is implemented. In simple terms, a cryptocurrency is a currency to be used as a mode of exchange for transactions involving goods or services. The cryptocurrency works on the same fundamentals as conventional currencies, with only difference being that the cryptocurrency is a virtual currency instead of a physical one. Blockchain provides the technology infrastructure for facilitating exchange of cryptocurrency. Specifically, blockchain provides a decentralized platform that acts as a distributed ledger for cryptocurrency. A distributed ledger means that the records of cryptocurrency issuance and exchange are not maintained at a single location or a central server. Bitcoin is the best example of a cryptocurrency that has been in the public domain since long.
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Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.
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Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.