[vc_row][vc_column][vc_custom_heading source=”post_title”][vc_column_text]There is no doubt that technological advances have revolutionized the world in recent years. This has brought with it countless positive aspects, but it also poses new challenges for businesses and their regulatory framework. One of these innovations is the “Blockchain” or Blockchain. Blockchain is primarily known for its association with cryptocurrencies, such as Bitcoin and Ether. However, the reality is that it has a much broader scope than the aforementioned, which has led to the creation of applications in various fields. But what is Blockchain?BlockchainWithout getting too technical, we can define it as a decentralized transaction record or database that cannot be altered. As its name suggests, it is a chain of blocks that stores information. Thus, we can exemplify the above by establishing that in a cryptocurrency transaction, the buyer’s data, the seller’s data, and the amount paid would be recorded in a block. Although it may seem legally uncertain, the truth is that it is not possible to regulate Blockchain as such, but we must consider that we can regulate the applications of said technology. One of the main legal applications of this new technology are the so-called “smart contracts“Smart contracts,” which should be understood as computer code supported by this platform that determines a series of instructions to execute agreements between the parties involved. How do these contracts work? Although the name of these agreements may be intimidating, the truth is that they are simply contracts that are executed autonomously and automatically once the agreed conditions are met. In other words, when we talk about smart contracts, we are referring to contracts that have been previously negotiated by the parties but are capable of being executed and enforced by themselves through computer programming. In practice, it is currently common to use the Ethereum platform to implement these contracts. Because of this, these contracts are formulated through a programming language (usually Solidity), establishing conditions such that “if A happens, then B happens.” Some examples are:
- anda debtor does not make payment within the stipulated time,sothe guarantees granted for this purpose are executed.
- andthe death of a person is registered in the civil registry,soThe registrable assets are automatically distributed and assigned among the heirs.
These types of contracts help reduce the risk of parties breaching their contractual relationships or of altering them in bad faith. Some practical problems that have arisen regarding smart contracts arise from their rigidity and privacy risks. While it is true that contracts are made to be fulfilled, in many cases there are negotiations and a margin of flexibility granted by the parties involved. An example of this is when, in a loan contract, the bank grants the debtor a grace period to make payment at a later date than agreed upon instead of immediately executing the granted guarantee. This problem arises due to the “non-alterability” characteristic that defines Blockchain, which, while providing security on the one hand, limits the flexibility that the parties can have on the other. However, solutions have emerged such as trusted third parties called “trusted third parties.”oracles”, which have provided greater flexibility as they have the ability to respond almost in real time to changing conditions. In this sense, these trusted third parties can be both people and programs. An example is the connection that a program can have with the LIBOR database, allowing the amount of interest payable to be always updated. Any lawyer can conclude that this type of logical language is insufficient in most contracts, which is why hybrid contracts have often been chosen. What types of aspects seem difficult to capture in instructions? For example, the indication that the parties will use their “best efforts” to fulfill an obligation or the agreement that the parties will act in good faith. Just as the “non-alteration” characteristic that provides security creates a problem of rigidity, the publicity characteristic that generates transparency can constitute a confidentiality issue that is fundamental in many contracts. Considering all of the above, it’s clear that, for the time being, this type of contract is not recommended in all cases or for all types of legal relationships, but in my opinion, this is not a sufficient reason not to use this new technology that can bring so many benefits. Given these technological advances, some say the legal profession is in danger and will eventually become extinct. In my opinion, our profession isn’t about to end; rather, what is in danger is our way of working up to now. It’s essential that lawyers stop viewing the computer world as alien and educate ourselves on technology so we can advise our clients based on current realities. Lawyers are adapting their business models and increasingly taking advantage of the benefits this generates. Therefore, lawyers must not only identify the risks of these technologies to protect our clients but also use them to their full potential. As a real-life example, we can cite international law firms such as Hogan and Lovells, which have begun to use smart contracts, albeit in a hybrid form with conventional contracts. Finally, it should be noted that in addition to cryptocurrencies and smart contracts, there are Blockchain applications that have direct and indirect effects on the legal world, such as the application of this new technology in the field of real estate and property registries, by granting a unique digital fingerprint for each asset. Likewise, this system also serves to protect intellectual property, as it allows for the granting of digital fingerprints to original works or products and registering them according to their creation date and corresponding authorship. Thus, we can consider implementing this technology in civil registries, to securely record births, deaths, marriages, and divorces, allowing for the safe custody of accurate and up-to-date public information. It should be noted that in the case of judicial registries, there is a potential contingency due to the fact that the “non-alteration” characteristic of Blockchain could conflict with the right to be forgotten that individuals have with respect to their personal data. In conclusion, I believe we must accept that this disruptive technology is changing not only business but also the legal world, which is why we must find a way to better regulate the risks they entail without limiting innovation. http://happyjazzpanda.com/lexincorp/miembros/natalia-ramirez/ [/vc_column_text][/vc_column][/vc_row]
