Blockchain is not only applied to Bitcoin and cryptocurrencies. In fact, this technology has the ability to be applied in many different fields such as finance, manufacturing, supply chain, education, healthcare, etc. However, there is still room for new technologies such as blockchain and legal frameworks. The lack of specific legal regulations leads to many difficulties in applying blockchain to life. Continuing the series of articles “What is Blockchain?” ”, Ms. Uptalent will share with readers today the legal issues related to blockchain. Please follow to learn more about the world and Vietnam.
1- History of the development of the blockchain industry
2- Legal issues of blockchain in the world
3- Legal issues around blockchain in Vietnam
First of all, let’s remember what the concept of blockchain is. Blockchain is a database system in the form of blockchain blocks. In this system, data and information will be stored in blocks and linked together.
The information contained in the blocks will be coded in extremely complex ways and may expand over time. Newly generated information and transactions will be stored on a new block and connected to the previous block.
You can simply understand that blockchain is a form of distributed digital ledger. This notebook does not have a single copy and is not stored in a single location. Instead, it is copied in multiple copies and stored on the personal computers of blockchain platform participants, called nodes. When new data is saved, the copies will be simultaneously updated.
The particularity of the blockchain is that once recorded, the data can no longer be modified. Therefore, this technology is used to prevent fraud or intentional changes to data. Furthermore, data transmission will not take place through intermediaries but will be authenticated by independently operating nodes.
2- History of the development of the blockchain industry
Besides the question “what is blockchain”, people also have many other questions such as “when did blockchain appear?” “, “Who invented the blockchain? », “Is blockchain Bitcoin or not? », …
Blockchain first appeared in 2008. At that time, it was announced that this technology was invented and designed by an anonymous moniker named Satoshi Nakamoto. This can be the name of an organization or an individual.
In fact, the idea of blockchain has been discussed since 1991 by Stuart Haber and W. Scott Stornetta. These two researchers introduced a practical computational solution for marking digital documents to prevent them from being pushed back in time, falsified or modified.
According to the original design, the system would use a chain of cryptographically protected blocks to store time-stamped texts. In 1992, Merkle trees were added to the design so that one block could bring together multiple texts. This helped improve the operational efficiency of the system more than before.
However, this technology is not used. At the same time, the patent expired in 2004, before the official birth of Bitcoin and Blockchain.
Towards the end of 2008, a white paper introducing the decentralized peer-to-peer cryptocurrency, known as Bitcoin, was posted to a cryptography mailing list by the anonymous Satoshi Nakamoto.
On January 3, 2009, a year after the blockchain was announced, Bitcoin was officially born when Satoshi Nakamoto mined the first bitcoin block with a reward of 50 bitcoins. Then, on January 12, 2009, the world’s first Bitcoin transaction was made. The person who received Bitcoin in the first transaction was Hal Finney. He received 10 Bitcoins from Satoshi Nakamoto.
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When Bitcoin was born, blockchain technology acted as a ledger recording all transactions. At the same time, the Bitcoin system is managed completely automatically based on the use of a peer-to-peer network and a decentralized data system.
One of the common risks associated with digital currencies is the problem of double spending during transactions. Double spending is referred to as double spending, which means that the same amount of digital money is spent on two different transactions.
However, the invention of Bitcoin based on the blockchain platform helped solve the double spending problem. And Bitcoin also became the first digital currency to solve this problem.
3- Legal issues of blockchain in the world
While experts are studying the benefits of blockchain to apply them in life, another question that arises is that of the legal corridor of blockchain.
Currently, there are a number of legal issues regarding blockchain that still do not have an optimal answer:
First, the immutable and irrevocable characteristic of blockchain
When you learn what blockchain is, you probably know how blockchain works to prevent data tampering and alteration. So, once the data blocks are created and chained together in the chain, the possibility of change is almost zero.
However, the relevant legal provisions will be amended, supplemented and come into force. Immutable and irrevocable functionality will then become a challenge for developers.
Second, the question of protecting important data
No matter how technology evolves, protecting personal data must always be a top priority.
However, the data on the blockchain is stored in a distributed form and everyone participating in the system can view the information. On the other hand, blockchain has many nodes, in many different countries, owned by many people, many of whom are anonymous.
This makes it extremely difficult to determine who is responsible for data storage and protection. Therefore, specific regulations are necessary to determine who is responsible for data protection.
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Third, smart contract issues
A smart contract is only executed when all conditions are met, the transaction steps are visible, tracked, verified and secure. Theoretically, a transaction will not be finalized if all conditions of the contract are not met.
Then the requirement is that the terms of the contract are clear and the parties involved must clearly understand these terms before signing the contract. Therefore, there must be specific instructions on the application of smart contracts in each specific industry and field.
Another problem is that smart contracts are basically legal terms translated into programming language, so there will be many code errors. Additionally, the parties involved in the contract may come from different countries, so it will be difficult to ensure that they clearly understand and have a common view of the terms of the contract.
4- Legal issues around blockchain in Vietnam
Currently, Vietnam does not have a legal framework for digital assets and digital currencies. Therefore, almost 100% of Vietnamese blockchain startups have registered to set up businesses overseas, especially in Singapore. Meanwhile, the human and human resources market in Vietnam is functioning.
Being headquartered overseas makes it much easier for companies to raise capital and move money. Moreover, operating in an environment without a legal framework also carries many risks for businesses, which is why establishing a business in a foreign country becomes the optimal choice for Vietnamese blockchain businesses.
If this situation continues, Vietnam will miss great business opportunities as well as the opportunity to attract huge financial resources through blockchain investments. At the same time, it does not derive much value from investments and tax sources. Meanwhile, the problem of brain drain will persist as Vietnamese people still need to register their businesses abroad.
Therefore, it is urgent in the coming times for Vietnam to build a legal corridor for blockchain. During the construction period of the legal framework, Vietnam can use the sandbox model (an experimental management mechanism) to carry out research, thereby providing official legal regulations and policy mechanisms for the operations of the first blockchain.
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