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If there's one thing that the government does not enjoy doing, it's having to change laws that have faithfully served the public for decades—or even centuries. Lawmakers are also fairly slow to write new laws unless they benefit the lawmaker.
Sluggish as the legal system may be, blockchain might end up kicking legislation into high gear. Or, rather, it's basically a given that there will need to be change in order to keep society functioning now that blockchain technology is here.
Some of the laws blockchain will force to change will be obvious. Others? Not so much. Here are some of the most striking predictions legal analysts are seeing with the advent of cryptocurrency and other blockchain tech.
Cryptocurrencies may become legal tender.
One of the most obvious laws blockchain will force to change is the definition of legal tender. Bitcoin and other forms of cryptocurrency currently have value as tender, but it's not officially touted as legal tender.
In order for cryptocurrency to be traded and used as tender, there will need to be laws that will stabilize it and regard it as the asset it can be. Chances are, laws will turn this digital currency into a part of our world as a whole.
The other option would be for Bitcoin and other currencies to be traded as a commodity. In this case, it would need to be taxed and treated like stocks. Either way, new laws will have to be created to help figure out this technology as a whole.
Tax laws will have to be tweaked, too.
Trust us when we say there will be a lot of tax laws blockchain will force to change in upcoming years. The IRS has already made a statement saying that it wants a share from any profits made in Bitcoin investments, so it's already underway.
Depending on how cryptocurrency will be treated, tax laws may treat it like a stock, a currency, or something else entirely. Either way, tax systems around the world will want to adapt sooner rather than later.
Anti-money laundering laws will have to be created as well.
It's no secret that a lot of people have used Bitcoin and other currencies as a money laundering device. World governments have had a very hard time tracking money that's laundered through the use of cryptocurrencies, which is precisely why many there will be tons of money laundering laws blockchain will force to change.
There will be a number of laws that will clearly define money laundering and how law enforcement will be able to track, trace, and indict groups using cryptocurrency for money laundering. Considering that Bitcoin is seen as the new criminal currency, it's going to be a major change for many groups out there.
Some of the laws blockchain will force to change may touch upon subpoenas for criminal activities.
It's no secret that a lot of criminal activity happens on the Dark Web, even though Silk Road is no longer up and running. Bitcoin and other cryptocurrencies are the standard form of payment on these sites.
Secure as they may be, they are still based on a decentralized and heavily distributed ledger...which means that law enforcement can trace payments pretty well. Lawmakers have already used subpoenas in order to shutter Silk Road.
We're willing to bet that there will need to be international agreements over what can and cannot be legally traced, not to mention laws that mandate who to turn to when a subpoena is made.
Privacy laws may need to be changed, too.
The thing about blockchain technology is that it's an open ledger—to a point. When you're using cryptocurrency to pay for things, you will have some details published about your transaction in the blockchain. With blockchain, the data is private but still there.
One of the many groups of laws blockchain will force to change are privacy laws. Financial institutions tend to have laws mandating that they ensure that they get proper identification in order to keep things compliant with current laws.
Moreover, financial groups are also required to remove certain bits of information during a transaction. That can't be done with blockchain, since blockchain data is indelible. Since we can't change the chain, we'll have to change the laws.
What can be institutionally tracked with blockchain is also up to debate.
A lot of the laws blockchain will force to change will involve what it can and cannot legally track. Blockchain isn't just a currency, after all. It's a form of technology that's ideal for tracking things in an open and transparent manner.
Many people already are debating using blockchain smart contracts to make a better energy grid. Some are considering using blockchain to track gun sales in a transparent manner.
What government groups will trace with blockchain is still up to debate, but it's safe to say that it'll be a technology that will be rapidly adapted.
We're also going to need to have laws that show the legal ramifications of blockchain records.
If there was a blockchain transaction that happened on Silk Road or a money laundering bit, does that mean that everyone in the chain will have evidence of guilt? Of course not—but the question remains where the line can be drawn.
A lot of the laws blockchain will force to change will involve how people trace money, what it'll mean for the criminal justice system, and how lawyers will cope with the advent of a decentralized ledger system.
Financial institution compliance laws will have to change, too.
If there's one industry that's famous for having lots of (justified) red tape, it's the finance industry. It's not surprising that a decent number of financial tracking and compliance laws are going to be bigger laws blockchain will force to change.
It's really hard to fit all the different ways blockchain can impact the finance sector into one article. Everything from how blockchain smart contracts can be used to get transactions underway, to the way that central bank functions will handle Bitcoin needs to be overhauled in order for it to be workable in a legal manner.
There's also the fact that some regulators might want to start stabilizing the cryptocurrency market.
The biggest issue that people have with cryptocurrency is the fact that it has no guarantees, backing, or government safety net. It's totally decentralized and while that means that there can be great reward, it's also exceptionally risky.
Due to the risky nature of the crypto market, many of the laws blockchain will force to change may involve regulating exchanges that buy, sell, and trade cryptocurrencies.
It wouldn't be shocking to see governments demand that cryptocurrency companies buy insurance with a central bank before they allow their coins to be sold and traded.
Though these laws seem pretty involved already, chances are that there will be even more unforseen laws blockchain will force to change.
Blockchain is such a revolutionary technology, it's very hard to see where the future will take it. It would be foolish to think that we already know all the ways that blockchain will alter our economy, life, and everything else that the legal system can involve.
The only way to really see all the ways blockchain can change our legal system is to wait and see.