Blockchain: can I trust?

blockchain trust

Which legal questions arise with blockchain technology? And what needs to be clarified in order to participate in a blockchain business in good faith? Prof. Ursula Sury approaches the topic from a legal perspective.

Blockchain projects are springing up like mushrooms. Whether private or public Blockchain, The possibility that unchangeable information is available seems to be an important motive for a blockchain project.

Data protection and legal risks in the blockchain

what is blockchain and data-protection

The question is often asked whether and why information in the blockchain is trustworthy. A basic distinction must be made between open and closed blockchains: anyone can join an open blockchain, such as Bitcoin or Etherum, and access is restricted for a private blockchain, such as Hyperledger.

In an open blockchain, it is difficult to implement data protection because all information is indelibly accessible to a broad public. This will make it very difficult, if not impossible, to use it especially for public institutions. Because publishing in this form can hardly be considered lawful. It will also be difficult for private use. Especially if data has to be deleted, if revocation or expiry of the limitation and archiving periods, this can hardly be solved legally. This is different with the private blockchain.

What clarifications have to be made to participate in a blockchain business in good faith?

  • First, it is important to clarify the context in which the blockchain was created and who was originally responsible for it. If you have carefully informed yourself about the mechanisms and the founders of the blockchain, you definitely have reason to trust. Nevertheless, you can be deceived in this trust.
  • The legal form and the rules of cooperation must be checked carefully before participation and the advantages and disadvantages evaluated and weighed up.
  • The technical options are also long-term in terms of security, scalability, costs, integration into other systems, etc. to weigh.

“With an open blockchain, enforcing legal claims is difficult to impossible.”

Robert Herinkton, ultranatum blogs Author

Especially with an open blockchain, where the original founders can hardly be identified, legitimate legal claims can only be asserted with difficulty if not impossible. It is not only unclear who you should sue, but also where and under which law. I probably have to bear the damage that I suffer, precisely because no responsible persons are within reach. The damage caused to a third party due to my actions based on false trust can also fall back on me.

Personal responsibility and commitment

blockchain is legally

Anyone who gives data to the blockchain and obtains data there should act in accordance with the legal requirements. As a user of the blockchain, you have to be absolutely sure that:

  • the information was collected legally
  • the information is correct, so it is correct
  • the information on the blockchain may be made accessible
  • the planned processing on the blockchain is legally permissible

The data providers must also be able to rely on the fact that the data recipients behave legally and do not undertake any data processing that violates any rights.

In order for a blockchain-based business model to function sustainably, this requires absolute integrity and care from all involved. This is the basis for trust and thus for the success of the business model par excellence. An important basis is the transparent information and commitment of the management.

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