Blockchain, Bitcoin, ICOs; these are all interrelated terms that have dominated the news and rocked the virtual world as of late –  but what do they actually mean? Blockchain first emerged as the technology that underlies the cryptocurrency Bitcoin. It is a digital, decentralised record of all transactions that have occurred across a network.

But if blockchain is just another technology, why has it generated so much hype? Certain aspects of blockchain raise novel legal questions. For example, data stored on a blockchain is stored in a distributed manner across multiple nodes and is, therefore, accessible to all parties who form part of that ledger. These parties may be difficult to identify as all transactions occur in a pseudonymous nature and, moreover, the parties may be located anywhere in the world.

Legal challenges include basic legal considerations such as jurisdiction and governing law, as well as considering whether or not the parties can establish legal interest in the first place. Additionally, blockchain allows for transactions to be carried out through the use of ‘smart contracts’. These contracts self-execute electronically once certain predetermined terms are fulfilled.

One major issue that arises with these contracts is the fact that the term ‘smart contract’ could relate to either the contract itself, or its underlying source code. Although Maltese law does regulate certain aspects of electronic contracts, it requires updating in order to reflect the novel changes brought about by blockchain.  Conversely, if the term relates to the underlying source code, subsequent intellectual property concerns must be addressed.

This article forms part of a weekly series called ‘Unravelling blockchain’, contributed by Camilleri Preziosi Advocates, which explores blockchain’s unique features and expands upon the technology’s legal implications across various commercial and corporate sectors. For a more detailed commentary, visit http://www.camilleripreziosi.com/ .