Blockchain and the Law – Legality & Legal Applications

Abstract

Abstract: In our thorough exploration of the intricate relationship between blockchain technology and the legal landscape, we uncover three key intersections: legality, law-like characteristics, and legal applications. Delving into the realm of legality, we analyze the profound impact of jurisdiction-specific regulations governing cryptocurrencies, intellectual property, and taxation. This includes considerations such as identity verification, exchange regulation, securities laws, bankruptcy regulations, and anti-money laundering enforcement, shaping the multifaceted legal terrain. Shifting focus to the law-like characteristics inherent in permissionless blockchains, our examination reveals decentralized governance facilitated through consensus mechanisms. The blockchain protocol operates as a dynamic "constitution," actively shaping the behavior and incentives of network participants, with forking introducing a distinctive form of institutional innovation during disagreements over protocol changes. Expanding our exploration to the transformative legal applications of blockchain, we emphasize smart contracts and decentralized autonomous organizations. Despite remarkable advancements, challenges persist in automating intricate contractual arrangements and organizational functions, particularly within the context of multi-stage interactions embedded in broader legal and social frameworks. In conclusion, our comprehensive findings highlight that blockchain's unique capacity for direct economic value exchange requires innovative legal treatment. It not only influences user incentives through its rule-based structure but also catalyzes transformative changes across legal and contractual domains. However, as the blockchain landscape evolves, persistent limitations become apparent, particularly in addressing relational agreements and ensuring constitutional resilience. The evolving nature of this technology continues to shape and redefine the intersection between blockchain and the law