The Basics Of Blockchain Law

To survey the media's depiction of blockchain, you'd be convinced that it is a legal topic that lands somewhere between the Wild West and early Silicon Valley with a good dose of both. Reality and the law, any blockchain attorney will tell you, tend to upend many of these narratives. Keep reading for a look at some of the basic ideas that form the legal framework for the use of blockchain.

Divorcing Blockchain and Bitcoin

One of the biggest misconceptions is that blockchain and cryptocurrencies like Bitcoin are fundamentally the same things. They are not. Bitcoin and similar cryptos are built on top of blockchain technologies, but many startups are focused on using blockchain systems for tasks like tracking inventory, fulfilling contracts, and enforcing compliance. Crypto is but one corner of that world.

What is Blockchain?

At its core, blockchain is a distributed ledger system designed to provide high trust in transactions, even under adverse circumstances. Using peer-to-peer technologies, highly anonymized and secure entries in the ledger are distributed to everyone connected to a network. No one has every piece of the ledger, and consequently, it's extremely difficult for any one party to take control of it and modify or delete entries.


Blockchain technologies are used in many fields, including finance, medicine, shipping, and communication. When many companies talk about ledgers being used, they are fundamentally talking about transactions, authentication, and contracts. That's not the entire idea, though.

If you need to be able to transmit information securely, there's likely to be a use case for blockchain. For example, Walmart and IBM use the technology to track produce from farm to checkout.


In the strictest sense, a blockchain lawyer will tell you that a ledger is a ledger, information is information and a contract is a contract. Virtualizing those legal concepts and distributing them doesn't change the conceptual framework to any serious extent.

Satisfying the court's demand for proof of ascension to a contract is the core legal challenge of using blockchain systems. Proof is generally supported in the same way that other obligations are handled, where one party shows when and how an agreement came to be.

Beyond the basics of contract law, privacy and regulatory compliance are the main legal concerns. Note that moving onto the blockchain doesn't mean saying goodbye to compliance. It merely changes the way compliance is reviewed and how you'll be required to show compliance. That often demands a knack for explaining technical concepts in a legal setting.

For more information, contact a blockchain lawyer.