Dr. Jeppe R. Stokholm

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  1. What is the legal impact of the Blockchain (R)evolution?

    In five years from now, no one can tell what will have the biggest impact on the global economy. What we know today, might be changed tomorrow, at least when we talk tech developments. Maybe the biggest future impact will be developed by robots using #bigdata combined with #ai, #machinelearning and #deeplearning or maybe it will be developed by ordinary humans using just plain and simple #research?

    However, one thing is for sure: Not even the most ultra-conservative and regulated market, the financial sector, is safe from new tech developments and legal challenges.

    When we talk #FinTech, a bunch of new players are in town. And they do not spend time on legal analyses or wait for permission to launch their new ideas on how to transfer values directly from wallet to wallet without the use of financial intermediaries.

    Instead, they protect their anonymity using a clever combination of peer production, cryptographic algorithms, distributed databases and decentralized consensus mechanisms in their online communities.

    For about a hundred years ago, Joseph Schumpeter called the phenomena on changing business cycles and the rise and fall of economic players for creative destruction. Schumpeters point was, that entrepreneurial innovation and new developments are aimed to destruct the weakest link in the market. “Creative destruction” is necessary to build up new economic players to make the free market stronger and less fragile.

    Today #disruption is a global buzzword, that is used in all kinds of different contexts, but the point is still the same: Technology evolves, no technology remains fixed, and new players will pop-up with smart ways to do things better than before. A disruptive approach will aim to tear down existing structures, so that a new foundation can be built. Even in ultra-conservative and regulated markets with big financial muscles, disruption is a fact of life.

    FinTech developments challenge the way, we use the traditional financial legislation. From the use of early currencies such as physical commodities (grain, salt, copper, silver, gold, oil etc.) to currencies established by governmental decree (also known as FIAT currencies: USD, EUR, CHF, GBP, DKK etc.), it has been necessary to change the rule of law related to these innovations. Maybe not rapidly, but step-by-step to maintain the common belief in trust, fairness and justice in the financial eco-system.

    But now a new player has entered the scene: The Distributed Ledger or #Blockchain technology. Today, the Blockchain technology is still very young, but it has already a world-wide multi-billion-dollar impact driven by venture capitalists, entrepreneurs and enthusiasts. Even traditional centralized powerful organizations such as governments, regulators and financial institutions are spending billions figuring out how to develop, use and control the distributed ledger.

    Fact is, that even though the blockchain technology do not by-pass existing laws and regulations, the blockchain (r)evolution is still in its Wild West phase.

    The multi-billion-dollar question seems to be: If no international standards exists, how can we then define and solve the legal impact of the Blockchain technology related to crypto currencies, crypto securities and smart contracts, assets and things?