By Han Soo-kyung
The boom in virtual currency investments has highlighted increased interest in cryptocurrencies in general, and in blockchain, their underlying technology.
Blockchain is the open ledger that records transaction history using a P2P (peer-to-peer) computer network. Because all transactions are cumulatively recorded and everyone shares their records, manipulation or falsification is technically very difficult.
Blockchain appeared in 2008 as the basic technology of bitcoin, the world’s first virtual currency. Therefore, it naturally first attracted attention in the field of finance.
However, because it can record transactions, contracts or possession of assets accurately in a structure that effectively prevents tampering, it is also expected to be utilized in non-financial fields.
Other than those features, blockchain has also received high praise in that it does not require a central administrator. However, this absence raises a new legal question.
Namely, this is: If a financial loss is caused by, for example, a hacking incident, who should be legally responsible for this? Under existing financial systems, responsibility can be pinned on the central administrator. However, in the decentralized case of blockchain, it is difficult to find an answer to this question in the conventional way of thinking.
But this is only one possible legal problem that can arise in connection with blockchain. As the technology improves and is used more broadly and in more ways, more problems will surely occur.
To deal with these problems, existing legislation is not enough. Therefore, new laws should be created to coincide with this progress in technology.
Han Soo-kyung works for HMP Law as a lawyer. As well as being a member of the Tech & Comms team, she is also on the Japan Team, where she provides advice to Japanese businesses in connection with any legal issues, including labor, IP disputes, compliance, and so on.