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Concepts of Cryptolaw – How Blockchain Based Legal Applications Are Changing The Law?

The advent of bitcoin has introduced the world to a groundbreaking innovation that can change the face of humanity once and for all. The past few years have witnessed governmental interests, across several countries, in many of the aspects and applications of the blockchain technology.

The examples are numerous; The Bank of England will issue its own cryptocurrency. Sweden is moving its real estate recording system to the blockchain. Dubai is working to issue official governmental documents on the blockchain. The US Department of Health and Human Services is currently investigating applications that rely on the blockchain technology for management of medical records. Despite the fact that the rate of rise of such blockchain based legal applications is skyrocketing, legislators , who integrate the blockchain in various legal processes, do not usually consider , in a systemic manner, the overall implications of the introduction of blockchain based legal applications on the law. This will definitely represent a significant problem because the law itself will have to undergo considerable transformations after moving such legal processes to blockchain based systems and other forms of Distributed Ledger Technology (DLT) systems.


Let’s take an example to better understand the problem; If the US transferred the Uniform Commercial Code’s Article filing system to the blockchain. This would omit the need for traditional State filing systems, along with the filing office. Moreover, substantive rules related to failed research, defective filings and lapse filings would also be debatable because the blockchain technology guards against the occurrence of such failings. A blockchain based filing system would enable transaction’s info to travel swiftly across state lines and simplify the process of following debtors while they are on the move. These changes will markedly influence the present secured transactions’ legal milieu via simplification of substantive law, elimination of significant changing of the adjudicatory and enforcement frameworks and transferring the locus of legal culture from attorneys to blockchain technologists who build the system.

Current studies that examine the impact of technological advances on the law mainly focus on big data and predictive technology, as such technology can promote more precise and more efficient approaches to create new legislation and implement it. Present literature considers the influence of such changes on the law, concluding that merits of technology including clarity and precision can come at a price of discriminatory and transparency effects. Nonetheless, there is no examples in literature considering the influence of DLT based legal processes on law’s foundational elements, despite the fact that several of the world’s governments are actively shifting various legal processes to the blockchain.

A recently published article tried to fill this gap in literature via highlighting the powerful ways by which blockchain based legal structures will disrupt the current understanding, experience and adjudication of law. The article moves against the tide of most academics in the field of crypto-legal processes. It cannot be argued that most of the present academic studies involving DLT and blockchains focus on how legislators can regulate the technologies and their various applications. Oppositely, the article discussed how DLT and blockchains will change the way we think about legislation and law from a broader perspective.

Cryptolaw is re-theorized as new jurisprudence when it comes to utilizing smart contracts in the implementation and enforcement of various laws. The code used to create smart contracts, or the code created to implement a given law across a blockchain is referred to as “cryptolegal structure”. When governments create cryptolegal structures, the computer code should be thought of as a foreign legal system. Doing so allows legislators to include elements of regulatory theory within the code, which renders regulatory objectives way more transparent and offers publically visible benchmarks for assessment of which entities represent responsible corporate citizens. When computer code is treated as foreign law, comparative law can be utilized as a methodological paradigm for measuring the overall impact of cryptolegal structures on the law, including the disruption of conventional legal structures, substantive law and legal culture. As cryptolegal structures interact with each other and with citizens governed by the law, cryptolaw will gradually emerge as a novel legal discourse that anticipates the broader consequences, influences and challenges of the blockchain technology’s innate potential to promote more efficient, transparent and self-executing law.


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