It is frequently being said that blockchain technology is the most exciting innovation behind Bitcoins. It is blockchain technology that has the potential to have a major impact on the business world, especially the financial industry and the realms of FinTech.

This briefing will discuss the potential ramifications of blockchain in the legal world.

What is Blockchain technology?

Blockchain can be thought of as a virtual spreadsheet, which is secure, yet open. In the context of Bitcoins, blockchain acts as a public ledger, showing the history of all transactions that have ever occurred on the network by way of a peer-to-peer mechanism. A visualisation of the Bitcoin ledger can be viewed at

Blockchain is a “trustless technology” - no currency encounters a “trusted” third-party intermediary, such as a bank or governmental institution. Transactions rely on being created and maintained by users of the network. Digital asset transfers are facilitated through verifications provided by the system rather than, for example, by a PIN.

Will Blockchain prove to be a disruptive technology?  

The lack of a third-party intermediary could be blockchain’s biggest advantage and disadvantage. Whilst removing the need for a third-party intermediary could cut costs and increase efficiency, removing such an intermediary raises regulatory concerns. For example, pinpointing the locations of any breach of contract or fraud could be difficult.

Blockchain raises legal questions regarding what governing laws will apply to transactions given the cross-border and transnational character of the technology. The likelihood of adherence to a jurisdiction’s anti-money laundering requirements is of concern to governments due to the anonymity associated with any transaction supported by blockchain technology.

Currently, there is little legislation regulating the area. This is because its potential is still not fully understood and governments are wary to legislate to prevent innovation. Furthermore, governments also need time to understand all the concerns the technology may raise.

In what areas could Blockchain have a real impact?

·         Smart Contracts

Smart contracts are permanent contracts that could be formed automatically upon the occurrence of an event by using blockchain technology.  

The introduction of smart contracts together with the increasing legitimisation of electronic signatures (see, for example, the EU Electronic Identification Regulation) could offer businesses a multitude of opportunities. Ethereum is an example of a project promoting the use of smart contracts.

The formation of smart contracts raises potential concerns for lawyers. In Jersey, the Jersey law requirements for the formation of a contract – capacity, consent, objet and cause – may need to be reconsidered. 

·         Intellectual Property

Blockchain technology could assist with creating a public register of intellectual property filings, which could be accessed globally.

·         Financial Services Industry

Not only could banks be removed as third party intermediaries in transactions, but stock exchanges could be blockchain enabled.

·         Land Registry

The technology could be used to create a public land registry. This would help prevent corruption in countries where land registries can be inaccurate and where the identity of people who own areas of land is uncertain. 

·         Aid transfers to LEDCs

By removing the need for a third-party intermediary, blockchain enables the movement of funds directly from one person to another, meaning aid can be directly transferred to the intended recipient. 

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