Showing posts with label Blockchain. Show all posts
Showing posts with label Blockchain. Show all posts

 Introduction

The global cash equity market traded volume is around $ 77.55 trillion. Despite its significant volume and high traction in the cash equity market, the industry agonizes with many anomalies – mainly in the pre/post settlements areas. The Straight-through processing is getting failed due to various reasons which are:
1. Missing settlement instructions
2. Incorrect trade bookings
3. Short of stock or cash positions
4. Counterparty Trade
With a humongous list of intermediaries like a custodian, reconciliation team, pre – post-settlement team, stock lending and borrow team, MIS reporting, and asset servicing, there is a need for a new system. Blockchain has become the tool that is used by the Fintech industry to resolve the complex use cases of the ecosystem and also has been used to challenge the Central Security Depository, Centralized Payment clearing system, and other industries, which are the conventional banking culture about using centralized institutions.

Working of Technology and Flow in Blockchain

Each transaction is transferred from one Node to another, which is represented as a transaction addressed as A to B, B to C, C to D. The technology of Blockchain keeps a record of all the transactions from inceptions to the conclusion.
Blocks: The transactions are recorded in blocks that collect all the transactions which are happening at a point in time and are referred and connected to the preceding blocks. This is how the link of the chain is built.
Nodes: The technology of Blockchain is spread and divided into network computers i.e. the “nodes”, which contains a replica or local copy of the entire blockchain.
Majority Consensus: As it is decentralized, the decisions on the network are made out of the majority consensus. Each node after that makes changes in its local copy of the blockchain to make a mirror status of the majority.
Mining: Nodes have two options:
1. Passively store a copy of the blockchain
2. Actively take part in the maintenance of the blockchain

Wallet: Just like other wallets, it stores credentials ( a complex, unchangeable combination of automatically assigned numbers and letters). This helps blockchain users to transfer and transact the cryptocurrency they possess.

The last part of the transaction or process is that a unique addressee is given their wallet, the recipient’s address has to be mentioned with the amount wished to be paid when a transaction has to be made from one user to another, with that is too his/her credential, after the validations, the process is complete. The flow completes with this.

DLT & Smart Contracts

The conventional technologies are replaced by the new DLT ( Distributed Ledger Technology), Smart Contracts (Ethereum), Private Blockchain, and Federated Blockchain. Especially, DLT and Federated / Private Blockchain Technologies are known to be prime technologies in the IT industry.

Commencing with the details of the prime technology, DLT, which is a distributed database updated by every participant, known as a node, in which the records in the DLT are timestamped, cryptographically secured, and validated with agreed consensus with the nodes participated. After attaining a majority of consensus, with the participants, the record and updates are automatically done. It is highly challenging to penetrate the system by a hacker and to make changes and the hacker cannot make changes to only one node, the hacker would have to make changes into the entire chain, and also, a blockchain is unalterable virtually. It distributes the digital information and does not copy it.

The working of the blockchain is like a shared word document which is a ledger which is a public database. This database records transactions permanently between two or more parties. It eliminates the third party to authorize the transactions as it distributes a copy to all relevant parties, which is why blockchain helps in recording the digital information in the form of a “Decentralized Ledger”. The major reason for its non-penetrative nature with utmost security is this decentralized nature, with military-grade cryptography.

The method to penetrate the blockchain and to alter the same is to crack the cryptographic security, retroactively altering the previous blocks, and contemporaneous tampering of the records held across all computers connected to the distributed ledger. As there is no centralized authority, there is no central point of vulnerability to target.

Ameliorating IPR with blockchain

Blockchain would be an integral part of any technology and in any industry. The entire structure and ecosystem of blockchain are based on the following prime objectives:

1. Accountability
2. Security
3. Transparency
4. Identification
5. Chain linked events

IP rights are authenticated by third parties like the government or administration of the geographical regions, with the inherent physical limitations, it has started to be getting penetrated and cracked. With globalization and the digitalization of the globe, the issues of piracy of copyrighted literary, dramatic, and musical works are fuming up. There is a need for efficient management of the IP assets, with giants creating and having a substantial portion of their industrial framework over the internet, in cases of E-commerce, the geographical limitations are diminishing. Blockchain is expected to become a successor to this “Physical System”, which is inadequate. The stature of possibilities that blockchain offers to the IP ecosystem is humongous.

1. IP Registries

The current registration which is a centralized database can be replaced by a decentralized blockchain, which is the most prominent application of blockchain technology. The use of a centralized, Blockchain technology-based repository to record the life cycle of IP rights can be considered by the IP offices. As blockchain is in a chain form, which the user could trace back to the origin of the data or from the date of its application. Useful when dealing with claims for “Non-use Revocation”, also for audits, assignments, Mergers, and Acquisitions.

2. Smart Contracts and Digital Rights Management (DRM)

Smart Contracts could be used to perform fundamental functions, though they need constant updating and reviewing with time. They have the ability to perform and execute themselves, when specific conditions are met without any manual intervention, with Suo moto authority.

In a case study framework, with the use of Smart Contract, a person could license a copyright-protected work and the relative royalty payment could be transferred to the licensor on a real-time basis after the work is used. With the use of such contracts, licensing of copyrighted work could be done efficiently.

3. Anti- Counterfeiting and Supply Chain Management

Offering many untouched opportunities in the facet of off-line ecosystems in the IP rights. Tags and imprints, which are connected to the blockchain, are again scannable and they provide the ability to trace goods on an immutable Blockchain. The ledger would show the relative ownership or authorized licensees and it would help enable all persons in the supply chain, including the consumers and authorities which will distinguish genuine products from counterfeit goods.

4. Trade Secrets

With upcoming new small and medium businesses, there is a growing concern over the trade secrets of the new inventions made. These trade secrets can be stored in a private blockchain platform system where the entire and detailed information is encrypted and would also be secure from third-party intervention.

Downsides to the Blockchain

While it has humongous possibilities to elevate the IP and other ecosystems, it has its downsides. The fact that it relies on huge processing power and the transactions per hour is limited, due to which there will still be a need for IP experts.

The admissible quality of blockchain evidence is there in some of the jurisdictional courts, but a complete adoption of the technology in law is far. With high power consumption, powering all “Nodes”, with that there would be a need for a cooling system for continuous operations, which is again high-power consuming. This is why Blockchains are one of the most expensive databases in the world.

France became the first country to regulate the recording the securities transactions on a blockchain system in April 2016. The government ordered legislate rules with “Mini Bonds”.[1]

In the courts across the world, in 2018, a court in Hangzhou (China) recognized Blockchain-based evidence[2] for the first time and the court at the apex level affirmed evidence stored and verified in the Blockchain technology. India doesn’t have any specific law regarding the same but, the Indian IT Act, 2000 protects electronic transactions and contains provisions for the prevention of unauthorized and unlawful use of computer systems. Indian Evidence Act, through 65A the legal significance of e-contracts or smart contracts has attained more prominence making it admissible as evidence in the court of law. NITI Aayog has brought some proactive suggestions and innovations including an indigenous blockchain initiative- IndiaChain.[3]
In the coming years, the adoption of blockchain in order to gain the benefits and upsides of the brilliant technology would be considered in order to elevate the IP ecosystem from its core to the peaks.


[1] Statute (no 2016-520, April 28, 2016
[2] China's Supreme Court Recognizes Blockchain Evidence as Legally Binding - CoinDesk
[3] Niti Ayog Block Chain

Introduction

The mind-blowing speed of the growth of technology has been a controvertible debate lately. Blockchain and smart contracts have recently been the most talked about technology advancement yet the impact of them on legal processes continuously remain unknown. This presentation, therefore, serves to analyze the role played by these int Indian Arbitration.
                                           
Blockchain has been defined as an open distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Blockchain’s working principle is based on the concatenation of each transaction or movement as a block to the system so that the platform continuously and frequently grow. The entire system is updated with each new transaction and it becomes visible to the concerned parties all over the world.

In arbitration, specialized decision making is the aim and is used as an alternative to classical dispute resolution. In this regard, banks are considered as intermediary institutions in financial transactions. Blockchain system aims to substitute these banks as intermediaries hence the following advantages.
Transactions carried out by banks and credit institutions are more costly or more expensive at every stage. Furthermore, completing these transactions takes a long period than that taken when using a blockchain system. Therefore, replacing such a system using the blockchain system will help with efficiency, at low costs, and in a short period.

The blockchain system has a decentralized structure. This means that there is no higher authority when it comes to control and implementation. The government’s regulations and authority do not govern the blockchain system. It is governed by encryption methods using algorithms. This also means that there is no need for an intermediary party.Money is transferred from one party to the other without the inclusion of banks as is done in the banking sector.

The blockchain system is an open platform, it can be used by anyone without any permissions or approval. Users are part of the system having their identifier keys. This makes it more convenient and secure as it is based on the will of the users. Whoever is part of the system is in a consensus on the running of the system.

Moreover, information security is very vital in the blockchain system. Every user is identified on the network with either public or private keys. Algorithms and passwords are used to create these keys hence the confidentiality of every transaction made is ensured by these algorithms.

The blockchain system eliminates human error to a greater extent as long as the code and algorithm designs written for implementation are flawless. The algorithm underlying the transaction determines whether the transactions are free from human influence and human error as they are based on algorithms that are mathematical models.

When a dispute arises, the arbitration process takes effect. Automation of procedures and documents is required by the nature of the system. After all this and after the appointment of an arbitrator, the process continues as in normal arbitration proceedings, however, all transactions will be done online. The arbitration award is given outside of the blockchain system as it requires human judgment. This is how blockchain arbitration works.

According to Nick Szabo, smart contracts are a set of promises, specified in digital form including protocols within which the parties perform on these promises. Most of today’s smart contracts are implemented in platforms that rely on distributed ledger technology. Most people assume that since smart contracts perform automatically, the chances of potential disputes are low. This is not true as the intersection of contract law and code creates new areas of potential disputes. Although smart contracts pose a huge potential of benefits such as increased security and low costs, disputes will always be there.

A smart contract may result in several dispute resolution challenges. Since arbitration is one of the alternatives in dispute resolution, it can also be negatively affected by these smart contracts.

In cases where smart contracts are executed pseudonymously, it could be difficult to claim someone. The evidence as to who is responsible for the loss resulting from bugs in the operating system, defective code, or corrupted message may be impossible to find. This makes it impossible to resolve such issues.

Since smart contracts operate through distributed computers, it may be challenging to determine the jurisdiction and governing law that applies to a dispute as these computers may be used anywhere around the world. Moreover, the risk of satellite dispute is increased.

Part of the key characteristics of smart contracts which may be deemed as an advantage is the fact that they cannot be revoked while the transaction remains indelibly recorded on the blockchain. This system disadvantages a party who is entitled to terminate the transaction if needs be.

Evidence about proprietary hardware and software may be involved in some smart contract disputes. This may be risky since proprietary information and source code may become public, which will then lead to material commercial ramifications for either of the parties involved.

Although these systems may be promoting efficiency and low costs, the use of blockchain systems and smart contracts will result in one of the key disadvantages of technology which is commonly known; increased rate of unemployment, as these systems, replace human labor which will, in turn, leave some people unemployed.
Image Source
Author: Moyo Sindisiwe Londiwe, Parul University 









INTRODUCTION

Blockchain Technology and Cryptocurrency are the future of Information and Communications Technology (ICT) and provide a greater security for data protection and financial transfers. This is so, because under Blockchain a ledger is created and data is continuously being added to the ledger which is in the form of blocks and therefore hacking such data is tougher than the systems in place now. 

Cryptocurrency is virtual currency and uses cryptography technology to conduct financial transactions and therefore is supposedly more secure in terms of security and less vulnerable to threats because of their mechanisms and they way they function.

DEMISTIFYING BLOCK CHAIN

Block chain is a basically a decentralized ledger, that is, the digital information is stored in the form of blocks on a public ledger which acts as the chain.A Block is a batch of transactions that happened across a network. The blocks are cryptographically chained together. Every transaction’s data is covered into an unreadable form (data) and this is where it is a safe and secure way of storing data from theft. The ledger can only be accessed by a key which the authorized people have it and use it to login to the ledger.

THE WAY BLOCK CHAIN TECHNOLOGY WORKS:

1. Transaction and Contacts – transactions are the fundamental blocks and contracts are pre-defined business logics on which 2 or more people do business.

2. Accounting Records and Ledger – ledger acts as a record keeping system of transactions which can be created and read but cannot be deleted or updated.

3. Centralized to Decentralized System – Blockchain is a distributed ledger containing multi central nodes. Hackers may not be able to hack into decentralized nodes as easy as centralized nodes. The data may be stored across thousands of networks which are decentralized and are secured using advanced and powerful hashing techniques.

4. Block Chains are in a Distributed Ledger and Cryptographically chained blocks and therefore you cannot manipulated many nodes. Incase, there are only a handful of nodes as in a centralized system it can be capable of being manipulated but not in blockchain technology, but if 51% of the nodes in the network are untrustworthy, then we can say that blockchain is not roboust. Only if it is greater than 51% of trusted networks, we can say blockchain is safe. It can be understood to be an Immutable Data.

5.Smart Contracts – Smart Contracts help to automate the transaction and the terms and conditions are codified. Transactions are then processed automatically.

6. Trust and Transparency – The data in Block Chain is trustable and safe due to the property of immutability. This is needed more so because in business generally we transact with someone we don’t know at all.

APPLICATIONS WHERE BLOCK CHAIN CAN BE USED:

1. Digital Currency – E-commerce, Global Payments,
2. Record Keeping – Healthcare, Title Records, Intellectual Property
3. Securities – Equity, Debt, Crowdfunding, Derivatives
4. Smart Contracts – Digital Rights, Escrow

BLOCK CHAIN CAN HELP PROVIDE VERIFICATION AS A SERVICE – AN EXAMPLE / ILLUSTRATION FOR USE OF BLOCK CHAIN TECHNOLOGY APART FROM FINANCE:
For instance, I would take the Academic Certificates Verification process. Now, currently we need to contact the respective university to get the certificates verified as they are on a centralized node. That is, every university maintains its Data Base Management System (DBMS)and is vulnerable to hacking due to the centralized node as I mentioned earlier. This can be powered by Block Chain Technology when the certificate issuing authority uploads the details on the Block Chain node, we can directly verify it through the data keys, and the uploaded data on the node / network is time stamped and can only be seen and not manipulated. Hence, it is a roboust system to the digital world.
There has always been a problem of fake academic and experience credentials for the Recruitment Team of the Human Resource Management Department of any organization. They spend a lot of money on the certificate verification process which is time consuming as well from the time of submitting an application requesting the university to verify the certificate till they get it verified from the university’s end. With a Block chain, this process can be simplified and save time and costs and is a secure way for every university and organization to store and view data.

COUNTRIES EMBRACING BLOCK CHAIN TECHNOLOGY CURRENTLY:

USA, Canada, Australia, New Zealand, Switzerland and Japan, etc are a part of the 120-odd countries actively using Block Chain Technology for various purposes.

CRYPTOCURRENCY

Block Chain and Cryptocurrency are almost synonyms and when we say cryptocurrency we come across the concept of Bitcoins, the first open-source software from its 2009 existence (though not yet legal in India as on the date of writing this article on, 30th June, 2020). which is one among the 500-odd cryptocurrencies in existence.
Cryptocurrency is a digital currency represented by mathematical algorithms and generated through the process of mining (proof or work) on blocks of nodes. Cryptocurrency is also known as ‘internet of money’. Cryptocurrency can be transacted from p2p (peer-to-peer) all across the world, without any intermediary (decentralized transaction).

CHALLENGES IN CRYPTOCURRENCY

Cryptocurrencies like Bitcoins are subjected to extreme volatility and price fluctuations in the international market and is not a legal tender in India. Due to this decentralized blockchain where cryptocurrencies exist, they have become a hub for funding illicit transactions and terror funding and are therefore illegal in India as per a Reserve Bank of India circular on April 06, 2018 which bans transactions in cryptocurrencies in India which are otherwise called as Virtual Currencies.

LEGAL ISSUES IN CRYPTOCURRENCY

Cryptocurrencies are not regulated yet and do not have a proper policy framework yet in India. There are no laws yet in place to validate Blockchain and Cryptocurrency applications in India

CASE LAW WITH REFERECE TO CRYPTOCURRENCY IN INDIA

Internet and Mobile Association of India v Reserve Bank of India
In the above case, the April 6th, 2018 circular of the Reserve Bank of India regarding prohibition on dealing with Virtual Currencies in India which imposed a blanket ban on cryptocurrency dealings in India was quashed by the Supreme Court of India.
These instructions are issued in exercise of powers conferred by section 35A read with section 36(1)(a) of Banking Regulation Act, 1949, section 35A read with section 36(1)(a) and section 56 of the Banking Regulation Act, 1949, section 45JA and 45L of the Reserve Bank of India Act, 1934 and Section 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007.
On thorough reading of the case judgement we can understand that if precautionary steps like avoiding cash transactions, updating Know Your Customer (KYC Norms) and if these virtual currency transactions are done only within India then they may be allowed as per the Supreme Court’s directives.
Virtual Currency had the characteristics of money as per the economics sense, as in, it acted as a medium of exchange, unit of account, store of value but not as a legal tender.
According to Investopedia, Virtual currency is a type of unregulated digital currency that is only available in electronic form. It is stored and transacted only through designated software, mobile or computer applications, or through dedicated digital wallets, and the transactions occur over the internet through secure, dedicated networks. Virtual currency is considered to be a subset of the digital currency group, which also includes cryptocurrencies, which exist within the blockchain network.

MY ANLYTICAL VIEWS

I strongly feel that digital currency, crypto currency is the future. Even data protection laws may use blockchain to protect the data in the future since the governments and other institutions may see that data is safer when protected using private key and public keys.

PROS OF USING THESE TECHNOLOGIES

1. It is safer to use and more faster to retrive data.
2.It is the future and mostly all data might transfer to blockchain in the next few years like countries who have adopted them.
3. It will be a success if laws are amended to protect the transactions done using cryptocurrency.
4. There must be a proper mechanism for adjudicating disputes arising out of using these technologies then it would be successful.
5. It would work akin to encryption and therefore data theft can be prevented.
6. Using Blockchain, verification can be done easily instead of having to rely on third parties solely for this purpose.
7. Data is the new oil and hence protecting it must be the most important criteria and blockchain technology contributes to such data protection in a systematic manner.
8. When transactions are done online, record keeping is made much more easier and simpler and reference is easy.

CONS OF USING THESE TECHNOLOGIES

1. Data safety might be an issue as if hackers find out ways to by-pass the system and yet penetrate into encrypted data, data loss might be there.
2. We need to develop a strong law first for this before it could be allowed in real-world transactions.
3. Since transactions in crypto currency maybe done world wide, hackers might be in any part of the world using the same crypto currency and involve in illegal transactions.
4. Cross-Border transactions using a currency not of one single country’s but since it is a virtual currency may have to be taken into account.
5. A universal convention may be entered into by countries involving in digital currency transactions like crypto currency to formulate certain set of rules and regulations for its conduct.
6. Putting to use these technologies without having a law in place renders it illegal and therefore any disputes arising out of such an illegal transaction may not be adjudicated. This is a disadvantage now to use cryptocurrency since it is not yet legalised in India. So any claims will not be entertained in relation to crypto assets.
7. The process of blockchain maybe cumbersome as concepts of computer programming like private key, public key have to be created and that maybe a little difficult to understand for people.
8. The technology of blockchain is still not aware by many people and hence is in its nascent stages of development. Implementing it not in a developing country like India may be unviable without proper regulatory mechanisms.

CONCLUSION

Blockchain and Cryptocurrency are thus building blocks in information technology and is the future of data protection and financial transfers but is still in the very nascent stage in India and it may take a few years to materialize and legal policy frameworks be framed for the same. Until such time, only experimental tests may be run to see its viability in India. Blockchain definitely adds as a secure measure of storing data in a cloud like platform though decentralized thus making it difficult to be hacked into as a multiple nodes have to be hacked into before the data could be compromised. Cryptocurrency on the other hand is a digital currency stored in wallets and used like bitcoins but I would not advocate buying or selling bitcoins as it is totally illegal in India at the moment and is unlawful to trade in them or hold them. One must not trade in bitcoins in India. Cryptocurrency is used for terror financing and other illegal activities as it does not come through the legal banking channel and operates parallelly and therefore is difficult for the Reserve Bank of India and the Government to monitor. Hence it is not given a legal sanction yet. Though the day is not far away when we would use these technologies.

REFERENCES:
https://www.investopedia.com/terms/b/blockchain.asp (Accessed on 10th July, 2020)
Blockchain-and-CryptoAssets-25th March-Bhubaneshwar.pptx (Accessed on 10th July, 2020)
Sagona-Stophel, Katherine. “Bitcoin 101 white paper” (PDF). Archived from the original (PDF) on 13 August 2016. Retrieved 11 July 2016. (Accessed on 10th July, 2020)
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11243&Mode=0 (Accessed on 10th July, 2020)
Writ Petition (Civil) No. 373 of 2018
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11243&Mode=0 (Accessed on 11th July, 2020)
https://www.investopedia.com/terms/v/virtual-currency.asp (Accessed on 11th July, 2020)



Blockchain: Move to ban cryptocurrency has Indian blockchain firms ...

INTRODUCTION

“For the rational study of the law the black-letter man may be the man of the present, but the man of the future is the man of statistics”[1]


Time and again there have been advancements in the world so unprecedented, that have improved in togetherness, the smallest functions of human life. One fine example, and perhaps the current technological buzzword, is a blockchain; a new and improved way of connecting masses, that has taken the world by storm and has become, more or less, a show-stealer. The situation, as a matter of fact, has become so astonishing, that upon using the word “blockchain” and nothing to do with its applicability, a beverage company saw an exponential rise in it’s stock price![2] It serves as a testament of the veracity of this technology—which has massive undiscovered potential that has immense applicability in every walk of life. Inter alia, the legal sector, or as in our case, the Indian legal sector could perhaps be remodelled and assisted, by the use of blockchain, if not completely revolutionized and accepted. 

Hence, the following article attempts at portraying the possible usage of blockchain technology apropos to the Indian legal sector and its recent developments, keeping in mind the ramifications of (COVID-19) pandemic, while at the same time also acclimatizing the reader to the basic concepts of blockchain.


WHAT IS BLOCKCHAIN? 

Blockchain is an ever-growing list of records, linked through cryptography, the ledger of which is made publicly available. Now, a ledger in the traditional sense, is often referred to the book of record of a company, which has within it, all the financial transactions of that company. This ledger is maintained and updated by a central authority, say, the accountant of that company—making it a centralized ledger. Blockchain, in contrast, is a distributed ledger; meaning, that there is no ‘central authority’. This ledger, instead of being at one place, resides on every device present within the blockchain called ‘nodes’, and each individual ledger updates automatically as soon as a transaction completes when it is authenticated by every node present in that blockchain. These transactions are continuously maintained at multiple locations (wherever the nodes exist) and are continuously synced. 
Therefore, blockchain, in the simplest sense, is a highly secured account book, present at multiple places, which updates in real time and ensures the transparency and integrity of transactions purely through mathematics, and not trust.[3]

PRESENT LEGAL SCENARIO FOR BLOCKCHAINS IN INDIA

At present, there are no regulatory frameworks addressing blockchains in India. However, RBI has allowed the use of regulatory sandboxes[4] for testing blockchain technology.[5] Additionally, Payment and Settlement Systems Act, 2018 has also allowed control testing and research of blockchains.[6] 

SCOPE OF BLOCKCHAIN IN INDIA LEGAL SECTOR

“Be in the front rank of progress and not to stand still, lest thy be left behind” — The Richest Man of Babylon 
Unlike the highly disputed status and general dislike for cryptocurrency portrayed by the government of India;[7] blockchain, in contrast, is regarded as a potentially transformative force,[8] and that too, for a good reason. It is a transparent, highly secure, distributed, and immutable ledger that has the potential to generate 3 trillion dollars by 2030.[9] These sure do sound like qualities our country could utilize to boost the economy. In fact, positive steps have already been taken in this respect. 
In the public sector, The Monetary Authority of Singapore has signed an MOU with the governments of Maharashtra,[10] Andhra Pradesh,[11] and the Department of Economic Affairs[12] to strengthen cooperation in financial innovation. Whereas in the private sector, banking institutions like ICICI, Kotak Mahindra, and Axis Bank and technology giants like Infosys and TCS have already started using blockchain technology.[13] The confidence, both public and private sector, is strong, but what does it mean for the Indian legal sector? Is there any potential scope of such technology in our legal sector? Down below are discussed three places within the Indian legal sector where this technology could potentially work: 

I. Law Firms 

The imperative use of blockchain technology in law firms operating within India, or at least its acceptance to some degree, is warranted for a plethora of reasons. For instance, the Indian government has aggressively pushed for liberalization[14] in numerous service sectors of the country, one of which, is the legal service sector. The subsisting fear is that of a global competition, which presumably, would have the same effect on the legal service sector, as it did on various Indian accounting firms.[15] Additionally, there is an incessant rise in online legal portals,[16] that can provide legal counsel on go. Furthermore, India has also seen a surge in trend of new-startup law firms which have expertise in specific practice areas[17]and are extremely cost-effective in contrast to some bigger law firms, which are considered lacking “agility.”[18] Owing to these new set of changes, the traditional practice of law, more or less, is being left behind, and in consequence, paving way for these unconventional techniques of practicing law to come forward. Not to mention, many traditional law firms would also encounter cost-conscious clients after the (COVID-19) pandemic—who wouldn't be willing to spend exorbitant sums for legal counsel.

Therefore, these rapid changes have to be taken into consideration. Restructuring the firm, while ensuring the interest of its stakeholders[19], in the absence of huge revenue, while also warranting that no compromises are made in terms of legal support[20]is the need of the hour. The future of the legal industry is said to belong to those who can see and drive disruptive change.[21]This begs us to answer, How can we better leverage technology to improve accessibility, efficiency and transparency?[22] The answer to this question, to some extent, inter alia, seems to be the acknowledgement and use of blockchain.

1. Document management: Lawyers working within law firms, and in general, have to draft, read, analyse, summarize, and deliberate upon innumerable documents, and this process leaves an endless paper trail—making it a living nightmare to deal with. Herein, a blockchain network could assist the lawyer. So, say, upon reading a document, it could be time-stamped and preserved for eternity[23] with no chance of loss, and could be accessed at any given time, improving agility;

a. Chain of Custody: Adding on to the point above, nowadays cases get various aspects of law applied to them and could have multiple stakeholders in them, e.g., a criminal law case. Herein, a piece of document may be necessary in later stages of the case and having a paper-based documentation could have various pitfalls and can lead to redundancy and add friction to the process. Blockchain, in contrast, as mentioned above, would have time-stamped documents, thereby reducing redundancy and lessening the friction.

2. Drafting: Drafting documents like a contract is a manual job which could be excruciatingly long, and very prone to human errors. Use of blockchain would help creating contracts which could automatically execute based on the requirements provided[24], thereby also reducing the cost of friction of generating such documents.

3. Consumer disputes: This is yet another field of expansion for blockchains. In a recent 2018 case in China,[25] the plaintiff used blockchain to prove his claim of being infringed on his copyright. He used a third-party blockchain evidence preservation platform to automatically fetch the web pages accused of copyright infringement, and identified their source codes. The web pages and source codes, together with the packages of call logs, were calculated to get a hash value to upload to the blockchain network to ensure the integrity of the evidence.

II. Courts & Pendency of Cases: A Judicial Pandemic

“There is a window of opportunity for Indian judiciary to adopt technology even before the lawyers”[26]

Indian judicial system is notoriously famed for the burgeoning pendency of cases. In fact, as of 2020, there are over 33.7 million cases pending in the judicial system,[27] at multiple levels, creating a huge logjam in courts. Moreover, given the ramifications caused by the COVID-19 pandemic, the pendency will not cease to exist for a long while, as courts, at all levels, are only taking up extremely urgent matters[28], most of which are through the medium of video calls only.[29] Therefore, it is safe to assume that upon opening of the lockdown would also bring an influx of cases to be decided and deliberate upon—further choking the judicial system. Thus, the present situation demands a critical policy change in the operation, functioning and management of these cases by courts. Herein, blockchain technology could be utilized.
Lack of comprehensive and accurate data relating to cases from courtrooms across the country,

[30] along with management of cash flows in courtrooms[31] are, Inter alia, two most prominent factors leading to said pendency. Fortunately, these can be effectively countered—to a certain extent—with blockchain technology. National Judicial Data Grid (NJDG) does a rather excellent job in updating the pendency of cases in real-time and further giving the opportunity to categorize them under various heads, namely, matter wise pendency, age-wise pendency, stage-wise pendency, delay reason pendency and institutional v disposal.[32] This information can further be used to simplify the process of delivering judgement and in consequences, help with the massive pendency.

The data could be categorized with more granularity and could be classified on the basis of case types;[33] for instance, two-thirds of all civil cases in India pertain to registration of property of land,[34] owing to an archaic piece of legislation, i.e., The Registration Act, 1908. Upon registration within a blockchain, any addition or change in the property would get updated in real-time and the said information would be available with every party present on that blockchain. Backed with the data of NJDG, the data utilized by courts would be highly accurate. Furthermore, the validity of the documents present on the blockchain can be confirmed universally in any court of law at any future date,[35] without having to worry about the accuracy, legitimacy or credibility—which is a rather serious issue[36]— of such data because of its highly secured nature; therefore, assisting with the first problem.


As for the second point, if a dispute arises, there would already exist a digital record, which could be referred to by the judges, before the hearing, to understand the nature of the case, time needed for its hearing, and the requisite documents required thereunder—which could get sourced immediately, as they already exist on the blockchain. This will save the court’s time leading to faster disposal of cases; therefore, also accomplishing the second objective. 

The report has further contended that numbering and coding of cases have evolved from paper-based record keeping and suggests the use of a “tree-like system” for cases to be developed and implemented.[37] Now, it does not specifically point towards the use of blockchain, but the improvement being suggested is akin to technology being discussed. Additionally, it goes without saying that eliminating non-essential human interface from courtrooms would minimize accompanying inefficiencies, corruption, nepotism, etc.[38] Legitimacy in the process of providing justice would get restored to a huge extent in furtherance of the mission of quickier disposal of cases.

It could, however, be argued that digitization of records could be done without having to take blockchain into the loop; as in the case of land record registration, which is in the process of being digitized under India Land Records Modernization Programme. But it is important to note that this process could be plagued with bribery, corruption, cyber-attacks, and data theft. However, blockchains are not hackable and very, very, very—cannot emphasize this enough—secure.[39] Perhaps that is why Amitabh Kant, Niti Ayog CEO, has also emphasized use of blockchains in the field of land registry.[40] Lastly, the application is not limited to just land registration. It could very well be expanded to include other types of cases.

III. Law Schools

With this fastening pace of technology and constant changes in the legal sector, a client would also want their lawyer to be extremely proficient and equally tech-savvy. Erwin Chemerinsky, Dean, University of California-Irvine School of Law contends, “Computers are going to take over certain legal tasks—the practice of law will focus more on advice.”[41] This isn’t far from the truth. Not wanting to acknowledge this advancement could be extremely troublesome; as having the skill to work with this technology, in all likelihood, would give an upper hand to those who know it, than those who don’t.

Law schools already promote the use of various online legal search tools like Manupatra,[42] LexisNexisIndia,[43] and SCCOnline[44] for conducting better research and improving the efficiency and effectiveness of a law student in the long run, while also conducting seminars for its “know-how”. It wouldn't be unfair to say, and rather close to believe, that the same could also be done for blockchains for getting more experienced lawyers.

 CONCLUSION 

“There is a need for embracing automation wherever possible.”[45]
While deliberating upon the positive aspects of blockchain, other sides of this coin also require our apparent attention; thus, this note of caution should be given at this point. The suggestions contented in this article are not absolute or definitive in any sense, and while the application of this technology is immense—which has the potential to change the legal industry as we know it, the author agrees that its usage would have it’s own risks and costs that would need to be recognized, but perhaps that is a discussion for another article. 

Having said that, the idea of using this technology seems plausible and definitive in near future. Furthermore, it would not be the first time the Indian legal sector would accept something new. For instance, digitization of court records has been welcomed by many judges and they have usually seen potential in this idea to challenge pendency.[46] Blockchain would up the ante for this objective.

Lawyers in the past would have never imagined getting relevant case laws, legal articles, and other surfeit of legal knowledge through a click of the button. Courts in the past had only imagined using video-conference technology to impart justice, but it appears to be a reality in the present world. There happens to be a nexus here. Law and its application has always changed given the requisite circumstances. In fact, one of the premises that the field of law works upon is that of change. Ever since rules & regulations were put in place for men, change has anchored itself alongside, as the greatest virtue of law is its adaptability and flexibility.[47] All things considered, there seems immense scope in this idea, and therefore, should be pursued, as benefits would more likely outweigh the cost, or as Clinical Psychologist Jordan Peterson notes, “Change might be an opportunity instead of a disaster.” 

This blog is written by Sanchit Sharma of HPNLU.


References:-


[1] Richard A. Posner, ‘The Path Away from the Law’ (1996) 110(5) Harvard Law Review <http://www.jstor.org.elibraryhpnlu.remotexs.in/stable/1342115> accessed 21 August 2020
[2] Arie Shapira, Kailey Leinz, ‘Long Island Iced Tea Soars After Changing Its Name to Long Blockchain’ Bloomberg (New York, 21 December, 2017) https://www.bloomberg.com/news/articles/2017-12-21/crypto-craze-sees-long-island-iced-tea-rename-as-long-blockchain accessed 19 August 2020
[3] Nitish Desai Associates, ‘The Blockchain Industry Applications and Legal Perspective’ (2018) 3 <http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/The_Blockchain.pdf> accessed 19 August 2020
[4] It is essentially a controlled testing ground for new business models and technology that are not protected by any regulations.
[5] Reserve Bank of India, ‘Report of the Working Group on FinTech and Digital Banking’(RBI, Mumbai, November 2017)https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/WGFR68AA1890D7334D8F8F72CC2399A27F4A.PDF at pg. 27. Accessed 19 August 2020
[6] Section 22
[7] Andy Mukherjee, ‘View: India must not drop out of crypto arms race’ Economic Times of India (23 June, 2020) https://economictimes.indiatimes.com/markets/stocks/news/view-india-must-not-drop-out-of-crypto-arms-race/articleshow/76522357.cms accessed 21 August 2020
[8] NITI Aayog, ‘Blockchain The India Strategy Part I’ (NITI Aayog, New Delhi, January 2020) https://niti.gov.in/sites/default/files/2020-01/Blockchain_The_India_Strategy_Part_I.pdf accessed 21 August 20202
[9] Id., at 12.
[10] Monetary Authority of Singapore, ‘Closer FinTech cooperation between Maharashtra State and Singapore’ (MAS, Singapore, 26 February 2018) https://www.mas.gov.sg/news/media-releases/2018/CloserFinTechcooperationbetweenMaharashtraandSingapore accessed 21 August 2020
[11] Monetary Authority of Singapore, ‘Singapore and the Government of Andhra Pradesh ink FinTech cooperation agreement’ (MAS, Singapore, 22 October 2016) https://www.mas.gov.sg/news/media-releases/2016/singapore-and-the-government-of-andhra-pradesh-ink-fintech-cooperation-agreement accessed 21 August 2020
[12] Monetary Authority of Singapore, ‘Singapore and India advance in FinTech cooperation’ (MAS, Singapore, 2 June 2018) https://www.mas.gov.sg/news/media-releases/2018/singapore-and-india-advance-in-fintech-cooperation accessed 21 August 2020
[13] Desai Associates, Supra note 3, at 1.
[14] Rajesh Begur, ‘Issues and challenges for the legal profession’ Indian Business Law Journal (Mumbai, 11 December 2017) <https://www.vantageasia.com/issues-challenges-legal-profession/> accessed 18 August 2020
[15] Id.
[16] Id.
[17] Monica Behura, ‘A host of startup law firms show the way’ The Economic Times (11 September 2009) <https://economictimes.indiatimes.com/india-emerging/a-host-of-startup-law-firms-show-the-way/articleshow/4996959.cms#:~:text=Some%20of%20the%20recent%20ones,focus%20on%20specific%20practice%20areas.> accessed 19 August 2020
[18] Id.
[19] BW Online Bureau, ‘Post COVID-19 Legal Sector Challenges And Remedies’ Business World (April 2020) <http://www.businessworld.in/article/Post-COVID-19-Legal-Sector-Challenges-And-Remedies/08-04-2020-188635>accessed 17 August 2020
[20] Id.
[21] Supriya Sankaran, ‘Why The Indian Legal Industry Must Get Out Of Its Rut’ Huffington Post (6 May 2016) <https://www.huffingtonpost.in/supriya-sankaran/why-has-the-indian-legal-_b_9812808.html> accessed 18 Augsut 2020
[22] Id.
[23] Kartik Hegadikatti, ‘Legal Systems and Blockchain Interactions’ (2017) Munich Personal RePEc Archive MPRA Paper No. 82867, 4 <https://mpra.ub.uni-muenchen.de/82867/1/MPRA_paper_82867.pdf> accessed 16 August 2020
[24] Akash Takyar, ‘BLOCKCHAIN IN LEGAL INDUSTRY – TRANSFORMING LEGAL ISSUES’ LeeWay Hertz (California) <https://www.leewayhertz.com/blockchain-in-legal-industry/> accessed 19 Augsut 2020
[25] Giesela Ruehl, ‘China’s innovative Internet Courts and their use of blockchain backed evidence’ Conflict of Laws (28 May 2019) <https://conflictoflaws.net/2019/chinas-innovative-internet-courts-and-their-use-of-blockchain-backed-evidence/> accessed 21 August 2020
[26] Dushyant Mahadik, ‘Analysis of Causes for Pendency in High Courts and Subordinate Courts in Maharashtra’ (Department of Justice, Government of India, New Delhi, January 2018) <https://doj.gov.in/sites/default/files/ASCI%20Final%20Report%20Page%20641%20to%20822.pdf> accessed 18 August 2020 [The Report hereinafter]
[27]NJDG, ‘Pending Dashboard’ (National Judicial Data Grid, 18 August 2020) <https://njdg.ecourts.gov.in/njdgnew/?p=main/pend_dashboard> accessed 18 August 2020
[28] Murali Krishnan, ‘How the Covid-19 crisis may be delaying 5 key cases in Supreme Court’ Hindustan Times (New Delhi, April 17 2020) <https://www.hindustantimes.com/india-news/how-the-covid-19-crisis-may-be-delaying-5-key-cases-in-supreme-court/story-qF2gsyFsyPNZ3NCK1NGcXP.html> accessed 18 August 2020
[29] Id.   [30] Report, Supra at 26, at 101   [31] Id., at 98   [32]Supra note 27   
[33] Report, Supra note 26, at 102-103
[34] IANS, ‘Blockchain can help solve logjam in courts: Niti Aayog CEO’ Business Standard (Hyderabad, August 3 2018)<https://www.business-standard.com/article/news-ians/blockchain-can-help-solve-logjam-in-courts-niti-aayog-ceo-118080301307_1.html> accessed 16 Augsut 2020
[35] Kartik, Supra note 23, at 4
[36] Aditi Singh, ‘Delhi HC calls for affidavit disclosing identity after realising that petitioner had appeared with a different name in another PIL’ Bar & Bench (New Delhi, 19 August 2020) <https://www.barandbench.com/news/litigation/delhi-hc-affidavit-identity-petitioner-appeared-different-name-another-pil> accessed 21 August 2020
[37] Report, Supra note 26, at 105 [38] Id, at 109. [39] Kartik, Supra note 23, at 10
[40] Supra note 33.
[41] David Horrigan,’ The Best of Legaltech 2017: Our Favorite Quotes from the Speakers’ Relativity (February 7 2017) <https://www.relativity.com/blog/the-best-of-legaltech-2017-our-favorite-quotes-from-the-speakers/> accessed 21 Augsut 2020
[42] https://www.manupatrafast.com/
[43] http://www.lexisnexis.co.in/en-in/Home.page
[44] https://www.scconline.com/
[45] Report, Supra note 26, at 109
[46] Id., at 101.
[47] Balbir Kaur & Anr v. Steel Authority of India Ltd & Ors. AIR (2006) 6 SCC 493

Image Credits: The Economic Times.