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Blockchain And Smart Contracts

Everything will be tokenized and connected by a blockchain one day.-Fred Ehrsam

We are living in the 21st century, a century in which technology is advancing/evolving with the speed of light. This is a progressing virtual world of global computers having networks of interdependent information technology infrastructures, telecommunications networks and computer processing systems, in which online interaction takes place. present day world we all are vulnerable to Cyber crimes, so in article we will discuss about how can we and our legal industry will be safe if we use recently developed Blockchain technology

What is blockchain technology?

Starting with an example:
Have you ever thought you do a transaction of 10 Rs from your UPI and automatically it reflects in your bank statement , how this works ?

Though they don't use this technology but to understand better we used this example

Blockchain is basically a distributed public ledger which is used to maintain a database and can also be called as a network of servers which maintained and joined to each other by Nodes .
Earlier we used to have a single server which used to control the entire system but in blockchain it is distributed in different nodes which eventually eliminates the middleman and passes on the control to its users ,comparing these two blockchain is much more secure and free from hacks and cybercrimes.

How blockchain works?

Blockchain was solely introduced for cryptocurrency such as Bitcoin and ethereum. Crypto currency is a digital form of money which does not have a physical existence like the hard or soft money that is circulating throughout the public in today’s economy. Blockchain technology is used in Bitcoin to get rid off the third parties in their transactions. Blockchain is used as an inventory which stores transactions and prepare different blocks with information pertaining to senders and recipients, digital token or digital coin, amount of digital token spend, date and time of transaction.

Considering the security aspects of blockchain, it has been used extensively in cryptography, it was successfully solved the problem of double spending and forging of bitcoins and other digital currency.

Is blockchain free from cyber crimes and hackings?

Considering the security standards of blockchain, it comes second to none and is the superlative without an equal in the technology industry today.

Hacking blockchain is like herding cats for the reason that it already has a database which is accessible by all of its users where all the transactions can be reviewed by any user which makes it more secure as a counter party agreement is required before making any change to it. It is counter-intuitive but the lack of privacy is benefit of using a blockchain technology.

In every 10 mins a new block is added to the blockchain and it carries information of a set of transactions , each block contains its own unique code also known as “Hash Code” and if a valid hash code is not predicted by a hacker hash code of every succeeding block changes.

Till now we have discussed about what is a blockchain, how it works and is it safe or not? In the following section I will walk you through on its usefulness in legal industry.

Smart contracts
Smart contracts are basically self executing contracts between two parties buyer and seller along with terms of agreement .The agreements exists in a decentralised network of blockchain. Code controls the executions and transactions which are irreversible and traceable. Smart contracts can be considered much more secure than the traditional contracts because of blockchain. One of the most prominent feature is that it removes the middlemen and it eliminates unnecessary contracts costs which ultimately results in improved efficiency.

There have been a lot of discussions on smart contracts, some made it more easy and clear and some made it more difficult for us to adopt this technology. One of the basic provisions for foundation of a contract is Section 10 of Indian contract Act 1872 discuss about the legality of object and consideration without a central regulatory institute because of its decentralised structure. Hence contracts with illegal objects can also exist as legality of object and consideration is not judged by the government agencies. Therefore, illegal contracts can also be formed . There can also be formation of smart contracts without meeting of minds because of electronic agents .Hence, the self-executory nature of smart contracts may go on defying some of the basic rules of contract formation.

In India the existence of smart contracts and cryptocurrency is a tough statement as it was banned by the Reserve Bank of India in 2018. But in one of the recent judgements of Supreme court of India it has been stated that transactions in digital currency and cryptocurrency is valid. Seeing to this decision NASSCOM and payment council of India asked RBI to include Smart contracts and crypto-technology in the regulatory sandbox under the guidance of RBI the Insurance Regulatory and Development Authority of India (IRDAI) and the Securities and Exchange Board of India (SEBI) for comprehensive assistance and evaluation This initiative would provide benefit to the developers and help in devising regulatory framework and methods to cover issues which are evident in smart contracts

Conclusion
Basic aim of Smart contract with the concept of blockchain technology is to reduce frauds as wells as extra transaction costs which are caused in traditional contract formation , this also ends third party interference and involves directly buyer and seller , considering the drawbacks and loopholes of this concepts is there is no organization to monitor the legality of these contracts, contracts can be formed by unlawful object and consideration, considering secure nature of this technology it would provide us with greater help in future. and at last I would like to mention that we are never perfect with technology we just improve therefore we can adopt this technology to make our environment much more faster and secure.

Award Winning Article Is Written By: Samarth Nair (BBA LLB) 2nd year - Presidency University, Bengaluru

Awarded certificate of Excellence
Authentication No: NV31667201315-11-1120

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