We explain the mechanics of smart contracts. We then highlight the benefits of smart contracts, such as overcoming commitment problems. We also discuss limitations, such as the difficulty for smart contracts to access information external to the blockchain and the difficulty of integrating smart contract code with traditional legal enforcement. We further highlight how the absence of a trusted intermediary inflates implementation costs for blockchain applications. We conclude with a discussion of the most prominent smart contract applications in decentralized finance: token issuance (e.g., initial coin offerings, nonfungible tokens), decentralized exchanges, and protocols for loanable funds. Our survey covers both institutional details and relevant literature.
Innovations in technology have fast outpaced the rate of change in most legal system, and it is clear that innovation continues to develop at speed. The law is in an interesting phase of development as our courts and legislatures adapt to recognize and apply legal principles in such innovative contexts. B2C2 Ltd v Quoine Pte Ltd [2019] SGHC(I) 3(hereinafter ‘B2C2’) concerned trades relating to the sale by electronic market maker of the cryptocurrency. B2C2 is one of the first cases to consider issues of contract and trust law in the context of the trading of cryptocurrencies and contains interesting observations as to how the doctrine of mistake in common law and equity may apply to such contracts. The relief sought is also of interest, the primary relief sought by plaintiff was specific performance coupled with damages. SICC disagreed. Disputes involving disruptive technologies, such as cryptocurrencies and smart contracts, pose unique legal issues that are difficult to answer. It is important to monitor and influence developments about these issues.
<ns2:p>In modern Russia, thanks to the development of digital technologies, the usual image of economic relations is radically changing. The list of possibilities of their application in the modern world is rapidly expanding. The construction of a digital economy system as the most optimal environment for the application of these technologies is the logical outcome of digital transformation. Against this background, virtual economic relations, electronic payment services, virtual crypto exchanges, crowdfunding are actively developing, which contributes to the development of electronic money and digital currencies. These processes have increased the number of criminal manifestations, crime has been modernized, new types of crime have appeared, as well as new objects, methods and means of committing crimes. The results of the author’s comprehensive crime study indicate an increase in crimes committed using digital currency (cryptocurrency) [1, p. 89; 2, p. 287]. In this connection, consideration of the problems of its conceptual apparatus, legal regulation, study of the issues of legalization of this digital asset, criminal activities with its use may be now necessary to ensure criminological security, since national authorities do not control digital currency (cryptocurrency); it can compete with national fiat currencies and lead to their weakening. At the same time, the development of the digital currency (cryptocurrency) market and the growth of transactions is increasing daily. Sometimes they are used for criminal purposes. However, the insufficiency of its regulation is not conducive to the prevention of crimes in which it is the means of commission and the object of criminal activity. The purpose of the article is to develop scientifically sound proposals for improving criminal legislation and preventing crimes committed both in relation to digital currency (cryptocurrency) and with their use. Methods. In the course of the study, general scientific methods of cognition are used, as well as special scientific methods (system-structural, formal-logical extrapolations, prognostic, documentary analysis, statistical, interviewing, etc.). The results of the study show a high level of acts committed both in relation to the digital currency and with its use. Such crimes are characterized by a high degree of public danger, determined by the damage caused to the individual, society and the state, as well as the commission of acts by representatives of transnational organized crime, characteristics of the object and means of committing such crimes, social consequences, and a high level of latency. The relevance and expediency of criminalization of these crimes is proved, as evidenced by crime statistics, materials of judicial practice, the nature and degree of their public danger, and the possibility of influencing them by legal means. Proposals have been prepared and presented to improve criminal legislation in the field of preventing crimes committed using digital currency (cryptocurrency).</ns2:p>
Purpose-The smart contract and blockchain concepts are being discussed in various disciplines as well as law with a rapid increase. However, in legal sense, the application of such concepts are far more advanced than the legal regulations on those topics not to mention the academic studies. Although there are a few distinguished monographies and a number of papers focusing the legal aspect, the applicability especially in certain circumstance -in which contractual law studies or defines as fundamental elements -are still vague. Therefore, this paper distinguishes itself by focusing on the purpose of studying some of the possible legal effects and results of smart contracts in commercial life as well as in finance.
Мета: визначення сфер застосування, меж можливостей та переваг на шляху до впровадження та вдосконалення використання смарт-контрактів, як альтернативі цивільно-правової угоди. Методи дослідження: діалектичний, дедукції, індукції, порівняльно-правового дослідження, системно-структурний, формально-догматичний, метод аналогії, функціональний, порівняльно-правовий, юридичного моделювання. Результати: визначенні сфери застосування, межі можливостей та переваги на шляху до впровадження та вдосконалення використання смарт-контрактів, як альтернативі цивільно-правової угоди. Обговорення: сучасні цивільно-правові відносини, що перейшли у цифрове середовище, адже розвиток технологій та розроблення відповідного правового забезпечення дозволив договірному праву отримати оновлену форму договору, що мають назву «smart contract». Smart contract є економічно вигідним та простішим у аспекті укладання та виконання зобов’язання. Інновація об’єднує в собі взаємодію передових технологій на базі blockchain та цивільно-правових відносин, які почали видозмінюватися завдяки розвитку цифрового середовища. Порівнюючи розумну угоду із традиційним письмовим договором, вбачається ріст використання та впровадження технологій blockachain та розумних угод, які працюють на вищезазначеній технології замість укладання типового письмового договору. У зв’язку з цим виникла необхідність детального розгляду інновації та встановлення шляхів до впровадження та вдосконалення використання смарт-контрактів, як альтернативі цивільно-правової угоди.
Open access
Digital Transformation in Law
Legal, Health, Environmental and COVID-19 Challenges
The article discusses about the smart contract, its concept and legal nature, as well as the place of smart contracts in the Technology Law, which means a discussion on the important issues covered by this topic. At the same time, smart contracts are com- pared to the usual standard contract, where their pros and cons are discussed. The importance and necessity of both types of contracts in relation to the current reality will also be discussed. At the same time, the article discusses about the revolutions – from where they begin and how long the world has passed before today's reality, why blockchain is considered as the fourth-generation revolution and how important it is to develop and implement it. The article also discusses about the types of contracts, which means how a standard contract can be divided, in the other words, we talk about consensual and real contracts. The definitions of each of them and their need related to the smart contracts are analyzed in the article. Therefore, we use the relevant chapters and articles of civil law to be able to explain what is meant and to what extent it is possible to follow the same norms in the case of the smart contract.
In recent years, the opportunities and challenges brought by distributed ledger technologies (DLTs) have drawn much attention from media, business, and governments. While they represent a relatively recent technology, DLTs could come to considerably redefine socio-economic systems. These disruptive changes raise a number of significant challenges for governments, who strive to find a balance between fostering this innovation while protecting consumers against potential unintended consequences. This case study documents the range of regulatory challenges raised by the development of smart contracts as well as some of the regulatory responses that have been implemented by governments. It highlights, in particular, the need for guidance and appropriate regulatory action to reduce legal uncertainty and limit risks raised by DLT-based smart contracts. It also shows that international co-operation initiatives appears instrumental in addressing territoriality challenges raised by smart contracts.
Digital technologies have been integrated into all aspects of public life, including politics, law, finance, business, education, science, and society. As a result of the use of digital technologies by various subjects, a transformation has occurred of the economic relations existing in society, including corporate relations. This study analyzes the impact of digitalization on individual institutions of corporate law. The authors investigate the following aspects of the digitalization of corporate law: (1) digital legal personality of the corporation (online registration (e-residency) of corporations and the digital footprint that companies leave in public registers); (2) digital corporate governance; and (3) digital (network or decentralized) autonomous organizations. The purpose of this research is to identify trends and directions of transformation of individual institutions of corporate law in a digital society. The authors conclude that the digitalization of institutions of corporate law will result in: (1) the reinterpretation of certain concepts of corporate law, such as corporation and corporate governance; (2) the improvement of the legal mechanisms of corporate governance following the introduction of AI into the collegial executive bodies of corporations; (3) the digitalization of corporate assets; and (4) the emergence of new subjects of corporate and other relevant relations.
Smart contracts offer a unique method of contracting that differs from the methods used for a long time in this regard; Because the agreement between the contracting parties appears in the form of a code that is run and executed by members of the Blockchain network or the nodes, without one of the parties being able to stop it; so that when a certain condition is met and the members of the network verify that, the related or the corresponding condition is executed automatically; therefore it's a contracting method that guarantees the process of contracts performance in the manner agreed upon, without the need to have a confidence in the other party or resort to a trusted body to verify the truth of that party or the object of contract; so we thought about studying the topic of the conclusion of those contracts in order to highlight their features and clarify the extent to which general rules accommodate the specificities of their formation; and we divided our research into an introductory section entitled "the fundamentals of block chain technology", and two main sections; the first entitled "the idea of smart contracts as a blockchain application", and the second entitled" specificity of smart contracts formation. Keywords: smart contracts, blockchain, DApps, Ethereum.
The ambiguity and complexity of the traditional legal contracts have motivated the study and exploration of a better and advanced contract known as blockchain-based smart contracts. A smart contract is a self-executable contract where the terms of the agreement between the involved parties are directly written into the lines of code that resides in the distributed ledger technology known as the blockchain. Obtaining a better understanding of smart contracts to overcome the fundamental issues of traditional legal contracts is vital for the successful and faster dispute settlement process without the intervention of any third-party mediators like courts, banks, lawyers, etc. In this paper, we present a comprehensive overview of the key features of the paradigm shift from traditional paper contracts to smart contracts. In addition, we also discuss why smart contracts are necessary to be legally enforced and the crucial conditions that are required for them to be legally enforceable. Furthermore, we outline recent trends and emerging technologies such as Natural Language Processing, Machine Learning, and the Internet of Things that have been combined together with smart contracts.
The article is devoted to the study of the experience of legal regulation of the legal status of cryptocurrencies and transactions with them in Asian countries (except for the People's Republic of China and Asian countries - members of the Commonwealth of Independent States, as the author examined them in separate publications). In the article the author, based on the study of regulations, administrative and judicial practice of all major countries in this part of the world, emphasizes the divergent trends in cryptocurrency transactions regulation in the region, when some countries move from a liberal approach to the use of cryptocurrencies to their total ban and vice versa. It is noted that almost all countries in the region give a legal assessment of the payment function of cryptocurrencies, using regulatory or prohibitive approaches, depending on the chosen policy, which indirectly confirms their understanding of the legal nature of cryptocurrencies primarily as a means of payment. At the same time, these countries not only categorically distinguish cryptocurrencies from fiat money issued by central banks, but also mostly avoid the official definition of cryptocurrency as private (decentralized) cash, preferring to qualify them as an intangible asset, virtual asset, digital asset, financial value and even a good or service, which is currently a kind of compromise between political expediency and economic realities. The author also notes that the Asian region is characterized by very active attempts to resolve the legal status of cryptocurrencies at the legislative level, and not just administrative or judicial response to the actual legal relationship, although the progress of different countries in this matter is different.
 As a result, the author concludes that in the Asian countries considered in the article, there is no same view on the legal nature of cryptocurrency, its qualification as an object of civil rights, and ways to regulate transactions with it (libertarian approach, positive-cryptocurrency approach but with detailed government regulation and control or a completely restrictive policy in relation to the cryptocurrency market).
The research is carried out on some legal issues of smart contracts and their place in Russian and other countries’ contract law. By means of contract law such issues are analysed: 1) conclusion and performance of smart contracts’ obligations; 2) practical issues arising due to smart contracts’ use; 3) contract law provisions that might be applied to smart contracts; 4) issues that are not covered by the legislation but need to be addressed. A smart contract is considered to be a contract with the specific type of performance of obligations (automated performance). Smart contract is a contract concluded with an exchange of data (type of a written form). Smart contracts are performed with the help of automated performance and previously expressed consent of parties. It is proved that smart contracts could be modified and terminated giving a mechanism for that as well as provides for measures of defence and responsibility that could be applied for obligations out of smart contracts. As the result, provisions of smart contracts that reflect smart contracts’ place and peculiarities in contract law are formulated
The article is devoted to the study of the current state and prospects of further legislative regulation of the legal status of cryptocurrency in the countries of the Commonwealth of Independent States. According to the analysis of the current legal framework in these countries, the author notes that the regulation of legal status and cryptocurrency transactions in the CIS countries is heterogeneous - from the level of adjustment of existing codifications of civil law and the adoption of special legislation on legal regulation of innovative financial instruments to only by-laws or in the absence of special legislation at all, including a deliberate (but for various reasons) refusal to normalize this legal phenomenon. In the latter case, countries apply to cryptocurrency transactions the current tools of civil, tax, administrative and criminal law (depending on public policy in this area), which does not fully correspond to the novelty of this legal phenomenon, and thus leads to legal uncertainty and legal conflicts of private persons with the state. The author states that the countries of the union use different practices to regulate this legal phenomenon: from completely restrictive, to partially restrictive (with the possibility of mining and operations outside national jurisdic-tion) or completely liberal. There are no common approaches of the CIS countries to understanding the legal status of cryptocurrencies as an object of civil rights - depending on the country, they are classified as digital (virtual) assets, other property, property rights. The author emphasizes that almost all the states of the union deny the possi-bility of using cryptocurrencies as means of payment and units of account (except for the payment for the services of cryptocurrency exchanges in the countries where they exist). As a result, the author concludes that attempts to unify the legal regulation of the status and circulation of cryptocurrencies in the CIS countries are currently unsuccessful, which, according to the author, is explained by different levels of democratization of domestic political life and eco-nomic structure of CIS countries as well as by their acceptance of different legal traditions (Western and Chinese).
The emergence of digital technologies contributed to the emergence and rapid development of digital commerce, and at the same time, the number of electronic payments, the use of digital and virtual currencies increased. The article presents an analysis of the legal nature of such a financial instrument as cryptocurrency, characterizes the distinctive features, highlights the advantages and disadvantages. The purpose of the work is to consider the regulatory legal position of cryptocurrency in the modern world, to highlight the legal practice in cases of the circulation of cryptocurrency, to study the role of cryptocurrency in transnational offenses, to explore possible options for combating cybercrime, which is carried out using the use of cryptocurrency. The methodology of the work is represented by a set of methods and techniques, operations that are used to study the topic and achieve the set goal, namely: hermeneutic, historical, extrapolation, comparative-legal, comparison and generalization, analysis, synthesis, deduction. Results of the work: in today's reality there is no unified international legal regulation of cryptocurrency, which complicates the prevention and fight against transnational offenses, the means or subject of which are cryptocurrencies and mining.
The deployment of smart contracts within the European zone could fluidify economic transactions. It also risks fragmenting the Digital Single Market (“DSM”). This conundrum calls for a constructive response to preserve both the benefits brought by smart contracts and a strong DSM.
Against this background, this report adopts a “law + technology” approach. It suggests combining law and technology to develop solutions that encourage the evolution of smart contracts (rather than hindering it) in a direction that preserves and reinforces the DSM.
2021 has witnessed a surge of interest in non-fungible tokens or “NFTs”. However, there is considerable misunderstanding surrounding what an NFTs is, what it may or may not represent, how rights attach, how it may be enforced or used for enforcement of rights, and how it is connected to the asset it purportedly represents. This is self-evident in discussions between the technology community, implementers, and the legal profession. This is compounded by a lack of clarity in how current legal frameworks work with or are applied to such tokens.
Digital Transformation in Law
Blockchain Technology Applications and Security
Neuroethics, Human Enhancement, Biomedical Innovations
Igor Mazurok, Yevhen Leonchyk, Oleksandr S. Antonenko, Kyrylo S. Volkov
Nowadays, Decentralized Networks based on Blockchain technology are actively researched. A special place in these researches is occupied by Smart Contracts that are widely used in many areas, such as Decentralized Finance (DeFi), real estate, gambling, electoral process, etc. Nevertheless, the possibility of their widespread adoption is still not a solved problem. This is caused by the fact of their limited flexibility and scalability. In other words, Smart Contracts cannot process a large number of contract calls per second, lack of direct Internet access, inability to operate with a large amount of data, etc. This article is devoted to the development of the Sharding Concept for Decentralized Applications (DApps) that are expressed in form of Smart Contracts written in WebAssembly. The aim of the research is to offer a new Concept of Smart Contract that will increase the scaling due to applying the idea of Sharding that allows avoiding doing the same work by all nodes on the Network and flexibility due to the possibility of interaction with the Internet without special Oracles. During the research, decentralized 0ata storages with the possibility of collective decision-making were developed. The scheme of forming Drives that assumes that each Contract is executed by a set of randomly selected nodes that allows avoiding cahoots and prevents Sybil Attack is offered. Such an approach allowed using Drives as a base layer for Smart Contracts. Moreover, Drives can be used as a standalone solution for decentralized data storing. The features of coordination of results of Contracts execution that greatly expands the possibilities of the Contracts compared to Ethereum Smart Contracts, and, in particular, allow the Contracts to interact with the Internet are described. The Rewards Concept that incentivizes all nodes that honestly execute the Contracts, unlike other systems where only the block producer is rewarded, is developed. It is based on the specially developed Proof of Executiona special algorithm that allows detecting all the nodes that honestly execute the Contracts. In order to make the Proof of Execution more compact, an extension for the existing discrete logarithm zero-knowledge proofs that makes it possible to consistently prove knowledge of dynamically expanding set of values with minimal computational and memory complexity so-called Cumulative Discrete Logarithm Zero-Knowledge Proof is developed. Thus, in this article, the new concept of Smart Contracts Sharding empowered by economic leverages is researched. The main advantages of the proposed approach are the possibility of interaction with the Internet and big data processing. Moreover, the mechanism of incentivizing nodes to honestly execute the Smart Contracts is developed. In addition, the Cumulative Proof that is necessary for the cryptographic strength of the specified mechanism is offered and its correctness is proven. The obtained results can be used to implement Smart Contracts in decentralized systems, in particular, working on the basis of Blockchain technology, especially in the case of demanding high bandwidth and performance.
В статье рассмотрены отношения, которые складываются в процессе покупки и продажи децентрализованных валют в правовом аспекте. В настоящее время криптовалюта уже набрала большую актуальность, в том числе среди простых граждан, однако в различных странах государственные органы по-разному относятся к новой интернет - валюте. Криптовалюта является ключевой причиной растущего спроса на глобальную социально - политическую революцию. Нельзя не подчеркнуть, что быстрое развитие новых технологий изменяют старые «классические» формы как экономической, так и социальной организации. В последнее время феномен криптовалюты, который действует как денежные средства вызывает противоречивые отклики у специалистов в разных сферах. Актуальным остается вопрос возможности неправомерного использования данных платежных систем и острым встает вопрос о необходимости создания эффективного правового поля регулирования. При рассмотрении данного вопроса в статье были использованы различные частно - научные методы исследования, такие как: сравнительно - правовой, системно - структурный, формально - логический и др. The article considers the relations that develop in the process of buying and selling decentralized currencies in the legal aspect. Currently, the cryptocurrency has already gained great relevance, including among ordinary citizens, but in different countries, government authorities have different attitudes to the new Internet currency. Cryptocurrency is a key reason for the growing demand for a global socio - political revolution. It should be emphasized that the rapid development of new technologies is changing the old "classical" forms of both economic and social organization. Recently, the phenomenon of cryptocurrency, which acts as money, has caused contradictory responses from specialists in different fields. The issue of the possibility of illegal use of these payment systems remains relevant and the question of the need to create an effective legal framework for regulation is acute. When considering this issue, the article used various private scientific research methods, such as: comparative legal, system-structural, formal-logical, etc.
Abstract Blockchain dispute resolution has led the crypto economy to the surge of a new form of dispute resolution: blockchain arbitration. Resolving disputes on-chain is becoming necessary as national and international legal frameworks are not adapted to the characteristics of blockchain transactions. More importantly, the legality of smart contracts is highly debated under various national laws. This new sui generis form of arbitration should not be assimilated with traditional arbitration. Indeed, blockchain arbitration might not fit within the traditional international arbitration framework, and it does not have to. Because blockchain arbitration operates as an oracle, the decision from the jurors automatically triggers or modifies the smart contract. Through the blockchain technology, arbitration has reached the possibility to automatically enforce arbitral awards with no need to rely on state courts’ authority. Observing the legal theories of international arbitration, blockchain arbitration enshrines the representation of delocalized arbitration, but simultaneously leaves room for a new representation of arbitration: decentralized arbitration. In the next decades, we will see the surge of the blockchain arbitral order, an independent legal order anchored in the Lex Cryptographia. This essay advocates for the recognition of the blockchain arbitral legal order and tries to draw its contours.
This article has been prepared for the research purpose of identifying, disclosing, and justifying certain trends in the development of civil law and procedures in the context of the spread of smart contract practices and the expansion of their spheres of application. At the moment, there is no uniform approach to choosing an optimal form for the legal regulation of smart contracts within the system of contract law in modern legal systems or international law; meanwhile, globalization and the digitalization of the economy imply the growth of cross-border transactions. The emergence of smart contracts is due to the development of e-commerce, in which the parties’ interactions are carried out electronically instead of in physical exchanges or direct physical contact. Smart contracts gaining popularity in circulation are based on two interrelated elements: firstly, they eliminate a person’s direct participation in some or all cases of executing the agreement using an automated code designed for execution without reference to the intentions of the contracting parties after publication; secondly, they make use of decentralized blockchain technology, and also provide automatic code execution without any party’s potential intervention, so as to eliminate or reduce the self-control and third-party control of the commitment. This study examines the content, conclusion, validity, protection of rights and legitimate interests of the parties, interpretation, and legal nature of smart contracts. The research materials used foreign experience in resolving disputes from smart contracts on digital platforms (Kleros, JUR, Aragon Network Justice, OpenCourt, OpenBazaar), as well as domestic and foreign literature on smart contracts. This research has been prepared based on general (deduction, dialectical analysis, intersectoral relations of objects) and specialized (comparative-legal, economic-legal) methods of scientific experimentation. The authors conclude that there are no grounds for considering a smart contract as a new classification element of the system of contractual regulation (type or kind of contract). In addition, the analysis shows that the resolution of smart contract disputes through digital platforms remains radically uncertain, and currently is not creating obvious advantages in comparison with traditional judicial proceedings.
The article examines the features of criminal liability for transactions related to the circulation of cryptocurrencies. In order to determine the specifics of criminal violations in the field of cryptocurrency circulation, the legal nature of cryptocurrencies is studied. It is concluded that in order to properly qualify criminal offenses related to the circulation of cryptocurrencies, it is advisable to recognize cryptocurrencies as a type of property or money. The article analyzes the global approaches to the legal regulation of relations related to the circulation of cryptocurrencies. Based on the results of this analysis, it is concluded that relations regarding cryptocurrencies in most countries of the world are insufficiently regulated and are still outside of the legal field. This complicates, inter alia, the establishment of criminal liability for transactions involving the circulation of cryptocurrencies. A significant part of the article is devoted directly to the study of criminal liability for transactions involving the circulation of cryptocurrencies in different countries. The norms of the Criminal Codes, which establish liability for criminal violations in the field of cryptocurrency circulation, are analyzed. The measures that need to be implemented to ensure the control of government agencies over the circulation of cryptocurrencies and the security of all operations related to cryptocurrencies are identified.
The present paper analyses the aspects of investigations of crime involving cryptocurrencies as a payment instrument. Ever since their emergence, cryptocurrencies have come to be actively used by criminals in all types of illegal activities, such as drug trafficking, money laundering, illegal arms trade, payments for criminal services and many other crimes. The paper aims to establish the methods of crime investigation to track data on cryptocurrency transactions and identify and show up the participants of illegal operations. The author shows that the development of computer and digital information technologies and the Internet has brought about the ever-increasing prevalence of cryptocurrencies in all social domains, including the shadow sector, i. e., the criminal world. Figures are provided illustrating the overall circulation of cryptocurrencies in the world and its illegal segment. Explaining the attractiveness of cryptocurrencies for criminal structures, the author points at its anonymity and inadequate regulation of various aspects in laws. An analysis is provided of the practice of countries where cryptocurrency circulation is not only permitted but regulated to a maximum possible extent. The impact of such regulation for the state of the shadow cryptocurrency market is shown. The research further concerns the potential for bringing international expertise to the Socialist Republic of Vietnam. Potential methods of crime investigation concerning shadow cryptocurrency transactions are outlined, helping to identify and show up the participants involved. Forecasts are provided as to the development of modern forensics and the emergence of new forensic methods helping to uncover cryptocurrency-related crime; proposals are drawn for amending criminal and criminal procedure laws to facilitate investigations in the new context.