Legal Implications in Blockchain

The decentralized ledger technology with the aid of well-structured cryptography makes provision for power, speed, accuracy and security at reduced costs unlike the traditional financial systems. Generally, in every setup and organization, there is always provision for legal standards and requirements, however, these laws are seen as restrictions to the free operations of some activities like business, social, political, economic etc.

So, like any other technological innovation, the blockchain technology poses some legal risks, challenges and implications


An implication of blockchain due to its inability to control and stop operations has made the attribution of risks and liability to a manufacturing service as to a private blockchain. Blockchain services haven’t been identified as liability or risk management company


Blockchain activities are basically carried out automatically I.e there is no regulating body or rule yet enforcing service performance to customers. The service available is still limited and therefore no provision for performance warranty hence leaving customers with no assurance that the technology will function as expected

DAO’s (Decentralized Autonomous Organisations)

Traditional elements allow for legal activities in case of breaches of contracts like legal power to sue and be sued, but, blockchain operates on Decentralized Autonomous Organisations which the management is automatically conducted, and this makes legal system challenged with identifying responsible individual in case of contracts breach. Also, the legal implications of ownership and control.


Blockchain uniqueness is seen in its ability to cross territory boundaries and this has made the technology automatically jurisdiction boundaries crossing since it can be operated anywhere in the world. Contracts, agreement differs from jurisdictions hence possess the task of identifying appropriate governing law which has to be in compliance with every jurisdiction laws.


Some software or solutions are developed to meet a customer’s requirements on the network. The legal implication here is in the software and business process patent right (IP). The customer may insist on ownership of the solutions or license them to the service on a term of agreement thereby restricting usage.


Every activity on a blockchain network is global, in case of dispute among participants, the vendors are left with the responsibility of determining the laws that could be useful in solving the disputes and the ones to employ thereby satisfying the parties involved.


legally, there are laws in every country protecting the data of its citizens, which is the Data Protection Act. A customer on a blockchain network definitely releases personal data, the network keeps and protects these data, however, in the case of data compilations/reveal for a new purpose, the company will have to go by the Data Protection Act.

But, the data is still seen as a property of the blockchain network which they are responsible for ensuring secrecy of such data and at the same time maintaining enough transparency needed for blockchain smooth operations.

The decentralized nature of the technology is a factor making it vulnerable and open to lots of legal monitoring and unfortunately, some school of thoughts has argued that the legal structures available for blockchain services aren’t enough yet.


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