Blockchain technology is undeniably one of the most fundamental technological breakthroughs of our modern times. The financial and societal implications of blockchain constitute a milestone to the future of our digital world.
Blockchain is the technology behind Bitcoin and it is this technology that has led to the next generation Internet. It provides an architecture for so-called trustless trust. It allows us to trust the outputs of the system without trusting any actor within it. Blockchain is a shared, trusted, public ledger of transactions, that everyone can inspect but which no single user controls. It is a distributed database that maintains a continuously growing list of transaction data records, cryptographically secured from tampering and revision.
It is worth mentioning, that the University of Nicosia in Cyprus, not only offers a Masters Degree (MSc) in digital currency but were also awarded for their blockchain achievement as the biggest contributor to the rise of blockchain in 2018, by the Blocks Awards.
In 2018, more than 90% of companies across different industries in the world were investing in blockchain technological projects. Currently in 2019, the pilot techs that were geared by those investments are finally reaching the end users. In fact, major projects of blockchain tech have been released in healthcare, cyber security and agriculture. But what exactly is Blockchain technology and why did the Cyprus Government decided to update legislation in favor of blockchain technology?
Blockchain technology was first introduced in October 2008 as part of a proposal for Bitcoin, with the aim to create P2P money without banks (i.e. person-2-person payments using your smart phone, tablet or computer). All network transactions get stored in the blockchain. The file is not centrally stored, but each node of the network keeps a copy of the blockchain – the distributed ledger recording all transaction history.
Instead of a single third party validating transactions through their servers with authority a peer to peer network of computers running the blockchain protocol validates transactions by consensus.The blockchain protocol, therefore, formalizes pre-defined consensus rules for approving transactions on the P2P network.
Blockchain was initially designed for P2P money only. But the major organizations soon realized that it is trusted to be used for any kind of P2P value transaction on top of the Internet. The Ethereum project thus introduced the idea of decoupling the contract layer from the blockchain layer, where the ledger itself is used by smart contracts that trigger transactions automatically when certain pre-defined conditions are met.
By decoupling the smart contract layer from the blockchain layer, blockchains like Ethereum aim to provide a more flexible development environment than the Bitcoin blockchain. These smart contracts are a piece of code running on top of a blockchain network, where digital assets are controlled by that piece of code implementing arbitrary rules. They have properties of contractual agreements but should not be confused with legal contracts.
If and when all parties to the smart contract fulfill the pre-defined arbitrary rules, the smart contract will auto execute the transaction. These smart contracts aim to provide transaction security superior to traditional contract law and reduce transaction costs of coordination and enforcement. Smart contracts can be used for simple economic transactions like sending money from A to B. They can also be used for registering any kind of ownership and property rights like land registries and intellectual property, or managing smart access control for the sharing economy, just to name a few.
Cyprus Government by recognizing that the digital world is the future and that the major companies, firms and entrepreneurs worldwide set blockchain technology a critical priority for their organizations in 2019, aims to be among the first countries to regulate blockchain technology.
On 18 June 2019, the Council of Ministers of Cyprus, during its session approved a National Strategy on Decentralized Technologies and Blockchain, encouraging the use of these technologies in both the public and private sectors.
According to the President of Cyprus, the Digital Strategy has been introduced in Cyprus since 2012, and during its years of action, more than 19 strategic projects and 28 e-governance projects were approved and implemented with the purpose of reforming and modernizing public service.
Some of the projects for digitization are: Health Information System, e-Justice, the new information system of the Tax Department and the Department of the Registrar of Companies.
In A. Dimitriou & Associates LLC we are adherent to the application of the blockchain in the legal sector. With the increase of technology in the redefined legal market we are turning into tech legal professionals and consultants to help you as our customer lead your business.