In an article published in the September 2018 issue of the ACC Docket, Bass, Berry & Sims attorney Curtis Capeling and co-author Les Wilkinson, GC and chief development officer at Hashed Health, provided insight on the global impact of blockchain technology. The prediction that blockchain will disrupt traditional systems and transactions leads companies, governments and others to ask where this technology is taking society – and how to properly implement it.
Blockchain can create a “trustless network,” and eliminate the need for a central intermediary, such as a bank, to validate and store transactions. Their decentralized nature and transaction verification mechanisms also make blockchain systems more or less “fault tolerant,” because their network nodes are generally widely dispersed and must reach a consensus to validate transactions.
Blockchain technology is used for cybercurrencies such as Bitcoin, but many industries and business functions may benefit from (or be disrupted by) blockchain. Implementing blockchain systems comes with challenges. Where a blockchain system falls on the continuum of permissioned to permissionless, and centralized to decentralized, impacts transaction processing speed, the relative security of the system, and the degree of control an enterprise user maintains – each choice involves tradeoffs.
Of course, implementing blockchain comes with some legal challenges. For example, healthcare companies will be concerned about healthcare privacy regulations, including HIPAA, and how these apply to blockchain. Companies that collect, store or process data about EU residents will wonder how blockchain systems can comply with the European Union’s new General Data Protection Regulation. Smart contracts and applications implemented on blockchain will raise new legal questions, and the open source issues underlying blockchain code may surprise some.
The full article, “How to Understand Blockchain,” is available in the PDF below.