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As you know, the central concept of decentralization was to eliminate the chain of middlemen for users so that they could transact with each other without the need for a bank and any agent through this process. This was possible only through the unique way of processing and operating each transaction and the public nature of the chain.
The paperwork was started to introduce blockchain technology, and 14 years later, we have a cryptocurrency market worth almost £2.2 trillion, an NFT market of £29 billion, and the contracts that can use this technology to fulfil the process without any human intervention.
The entry of this new decentralized process brings new challenges for litigators. This blog considers the scope left for cryptocurrency litigation and commercial relationships relating to cryptocurrency, NEFTs and smart contracts.
But let us learn what cryptocurrency, NEFTs and smart contract is?
Understanding what these operations are and how they work in blockchain technology.
In order to make blockchain capable of working properly, it needs a working medium of exchange. Cryptocurrencies have filled this void and created a new challenge in the market. This is why today, the market capitalization of bitcoin has crossed over $1 Trillion. Etherium is nearly at $500 billion, and the third most capitalized cryptocurrency binance coin will cross $100 million soon.
If we talk about the future of cryptocurrency, it is well secured for investors interested in investing. Although volatile, they are a safe investment, and their value will be appreciated over time. As central banks continue to devalue their currencies, their alternative is the cryptocurrency market. Banks have shown that they are willing to reduce their value to benefit cryptocurrencies and their investors in India.
In simple words, A cryptocurrency is a digital or virtual currency secured by cryptography, making it nearly impossible to counterfeit or double spend. Many cryptocurrencies are decentralized networks that work on blockchain technology – a distributed ledger implemented by a separate network of computers. A defining characteristic of cryptocurrencies is that they are generally not issued by any central authority, theoretically making them independent from government interference or manipulation.
A smart contract is a process or full settlement agreement between two peoples in the form of the code language of a computer. All the process to make smart contracts is only with the help of blockchain technology, so they are stored securely in the public database and cannot change without permission. Due to the blockchain system, any third parties or any human interaction requirements are eliminated owing to its decentralized nature.
It needs many resources to make secure and smart contracts. However, it is not impossible to make such a system in India.
The primary statute regulating contracts in India is the Indian Contract Act, 1872. In simple words, an agreement to be enforceable by law must contain a valid offer, acceptance, and consideration. In smart contracts, there is offer, acceptance and consideration in the form of cryptocurrency. Therefore, the essential requirements of Section 10 are met, which means that smart contracts are enforceable under Indian law.
After officially making these smart contracts enforceable under Indian law, many companies started hiring developers to create this system. Many smart contract developers for hire in India build such a system by using blockchain technology for banks and other industries.
However, Suppose due care is not taken for the party being contracted. In that case, unsuccessful transactions will result on their own as there is no detailed system in law for the regulation of smart contracts. Smart contracts cannot be enforceable under Indian law if the rules and regulation policies in the contract are not mutual. As Indian law recognizes the concept of mutual consideration, its sabbatical would make the contract official. This situation can happen in the case of unilateral contracts.
However, a smart contract can still be implemented through code without much consideration. However, suppose such a contract is leaked. In that case, it will not be considered a leak according to the courts of India as there is no contract in the first place for the courts as there was no mutual consideration which is a requirement of a contract.
NFTs stand for non-fungible-tokens. NETs are cryptographic assets on a blockchain with a unique identifier representing ownership of your unique items. It cannot be replaced or changed because of its different properties. These properties defy fungible tokens like cryptocurrencies, which are the same as each other and, therefore, serve as a part of commercial transactions.
Now let's talk about the challenges they face throughout the process in the system.
The Challenges Cryptocurrency, NFTs and Smart Contracts are Facing Today
No matter how advanced these things look, there are many challenges in cryptocurrency, NFts and smart contracts in India. India is adopting all of these processes in their system slowly, but it will take some time. So, let's see what the challenges in the three elements are.
1. Challenges in Cryptocurrency
When cryptocurrency stepped foot in the market, most people didn't know about its technology or were not aware of it. Only a few people knew what a cryptocurrency was and its purpose.
But when it comes to the legality and officially introduction of such currencies, people initially thought that since the user's origin is not detectable, cryptocurrencies can be used for any illegal purposes and terrorist activities in places like the dark web etc.
To fund, illegally deal in drugs, black marketing and many more such activities. So, people backed out and did not support it, and it became very difficult to make cryptocurrency legal in all countries.
But nowadays, most countries use cryptocurrency, and now there is no regulation or ban on the use of cryptocurrency. You can buy cryptocurrency from legal sources like company apps. To make the buying process even easier, the cryptocurrency app developers are making their move and creating many apps so that people can buy cryptocurrencies most easily. This will give a huge boost to our economy.
2. Challenges in NFTs
The challenge in NFTs is the evaluation of price and value. The problem with NFTs is that their value may appreciate and depreciate unpredictability. NFTs' another challenge is regulatory and legal problems. Official recognition of NFTs securities is one of the biggest problems to be concerned about. There are many fraud cases about Ownership, fake NFTs, cyber threats and online frauds.
3. Challenges in Smart Contracts
Programming languages write smart contacts, for example- java, Python, C++, etc. Therefore, non-developers find it difficult to understand; the readability becomes blurry. If the contract is incomplete or interrupted, it should be recalled entirely again. Once distributed, smart contracts cannot be revised and can create unexpected outcomes if it goes unchecked. And the other challenge is having a lack of privacy and security terms.
After reading the above information on cryptocurrency, NFTs and smart contracts, it can be concluded. They have many challenges, but people are still trying to adapt to our system. The day is far when people will get used to this system, which will become legal in all countries very soon. The new wave of blockchain technology creates a new system in all industries.
Get ready to digitally transform your business.
DC Kumawat is the CEO of Orion InfoSolutions, a leading provider of IT solutions to
businesses of all sizes. He has over 12+ years of experience in the IT industry. He is a
passionate advocate for the use of technology to improve business performance. In his spare
time, DC Kumawat enjoys spending time with his family and reading. He is also a frequent
speaker at industry conferences and events.
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