No one could have imagined such a complex development of blockchain 1 at the birth of Bitcoin 2, and no one, or perhaps only Satoshi Nakamoto 3, could have imagined how the economic system would be impacted, or rather disrupted, by this technological “revolution.”
After the Internet, blockchain marked the beginning of a new era in which digital cannot be considered merely an alternative to physical.
New technologies create new interactions, new opportunities, and new risks and responsibilities.
It can be imagined that even the legal sector might face a “second life,” and in a few years, the law as we know it could be just a small part of what we will need in daily life. Therefore, it will also be the task of the law to grasp, interpret, and translate into suitable rules the new technological world in which blockchain will increasingly play a key role.
In some jurisdictions, activities might already be underway to develop appropriate regulatory frameworks aimed at adopting blockchain technology.
Regarding the Italian legal system, a first attempt was made through the Simplification Decree of 2019, the conversion law of Decree-Law 135/2018, whose Article 8-ter recognizes that:
“The storage of an electronic document through the use of technologies based on distributed ledgers produces the legal effects of electronic time stamping as per Article 41 of EU Regulation No. 910/2014 of the European Parliament and the Council of July 23, 2014.”
In this sense, once the document is “stored” on blockchain, a precise timestamp would be recognized, allowing it to serve as a definite proof element that could be presented in court.
In an increasingly digitalized context, the legal sector could thus find functional optimization through the implementation of blockchain technology and its applications, such as smart contracts.
Blockchain could also be used to ensure the transparency and integrity of evidence and information presented during the trial, providing numerous benefits, including in the process of notifying judicial acts. For example, encrypted legal documents recorded on blockchain would provide indisputable proof of their authenticity and origin.
Smart contracts 4, defined as “self-executing” contracts programmable on blockchain, would offer a unique opportunity to automate notifications in processes once certain conditions are met.
Imagine a scenario where a court judgment is issued: a smart contract could be programmed to automatically send the notification via certified email (PEC) by linking the interested parties’ addresses on a dedicated blockchain platform, thus validating the notification securely and promptly.
Moreover, the blockchain structure could be directly integrated with the PEC mailboxes of the involved parties and the courts, ensuring a secure and reliable communication flow. This would reduce the risk of human errors and ensure complete traceability of notifications, improving the overall efficiency of processes.
In such a context, greater protection of sensitive data traffic could be guaranteed.
Blockchain technology, in fact, offers an innovative solution to ensure the security and confidentiality of personal and sensitive information.
Thanks to its decentralized and immutable structure, blockchain reduces the risk of data manipulation, providing a secure “chain of custody” for sensitive information entered by users.
For example, consider the case of sensitive data such as birth certificates or legal documents: using blockchain, such documents, through encryption, would be accessible only to authorized parties and would provide indisputable proof of the data’s integrity and origin.
Implementing blockchain-based access mechanisms allows users to exercise complete control over their personal data, deciding who can access and use such information, thereby ensuring greater privacy and data security.
However, on the subject of privacy and how it relates to blockchain technology, it is worth highlighting that the GDPR 5 (European Regulation No. 679/2016), the most recent regulation on the processing and protection of personal data, was conceived for a system with centralized intermediaries, the so-called “data controllers and processors,” who usually process data with a “one size fits all” 6 logic. This paradigm has so far been applied to the entire digital economy ecosystem, populated by various types of service providers offering services to users and consequently processing their data.
Blockchain technology, on the other hand, attempts to create an economy (and, if we want, an ecosystem) based on diametrically opposed concepts of decentralization and disintermediation, according to which each individual is the master of themselves and the information that accompanies them.
It should be noted that the preparatory work for the European Data Protection Regulation began in 2012, a year when this technology was not yet known to most users and did not yet arouse such strong interest.
However, it is evident that the philosophy underlying the GDPR refers to a centralized ecosystem and not a decentralized one, given that the entire Regulation presupposes the existence of a central entity that determines the purposes and means of processing and can identify, authorize, and constantly monitor its processors. Certainly, given the decentralized nature of the most important and widespread blockchains, it is difficult to think that their use could be prohibited or limited due to non-compliance with regulatory principles.
Indeed, GDPR compliance does not concern the technology itself but its use 7.
The Regulation does not intend to prohibit any processing in principle but requires that for each treatment, even potential, the controllers have conducted an “assessment” and made efforts to “minimize” any risks. Technology is usually neutral and self-determined and, consequently, does not feel the norms: it is the individuals using such technology who must consider the issue and verify its applicability.
Therefore, although the GDPR is abstractly applicable, it would face a difficult adaptation, especially concerning the pseudonymity guaranteed by blockchain protocols.
Additionally, by its very nature, blockchain would not allow the definitive fulfillment of some rights recognized to data subjects by the GDPR, specifically the right to erasure (the so-called right to be forgotten) and the right to rectification of data, due to its intrinsic characteristics of immutability and transparency.
The hope, therefore, is for an awareness on the part of the Community legislator, who, realizing the widespread use of the tool and the undeniable benefits it could bring to user activities, may find a way to eliminate possible frictions with the regulatory framework and thereby endorse a more profitable mass adoption.
Furthermore, to ensure greater protection in the management of sensitive data, numerous states are considering the use of blockchain technologies.
Recently 8, the United Arab Emirates (UAE) integrated the Cardano blockchain into their criminal investigation operations.
The project was announced during the World Police Summit in Dubai, where the Dubai Police presented a Cardano application focused on the secure management of data related to criminal investigations. During the summit, the police department presented a pilot project demonstrating the platform’s ability to securely share sensitive criminal investigation data with international authorities, including Interpol.
The presentation highlighted the high security of the platform in transferring important forensic information among different international stakeholders through blockchain technology.
This UAE initiative undoubtedly represents a practical application of blockchain technology beyond its traditional financial uses, highlighting its potential in protecting and managing decentralized data.
In conclusion, the combined use of blockchain technology and its applications offers significant potential to improve the efficiency, transparency, and security of information. However, currently, the legal systems that seem to have embraced this technology with greater enthusiasm appear to be those of common law, which, having never had such systems, see in this technology the possibility of implementing effective traceability systems. It is evident, though, that even in civil law jurisdictions, including Italy, where the presence of public registers with similar characteristics already exists, there are commendable attempts at a legal approach, demonstrating a strong attention to this disruptive technology that promises positive impacts on the way relationships are managed at the national and international levels.
The legal issues raised, as noted, deserve non-defeatist attention. Clearly, this is a topic we will be called upon to discuss at length in the coming years, and it will be a challenging task for jurists and legislators to find the best way to achieve a suitable symbiosis between law and technology.
1 To give a definition, the word “blockchain” means “chained blocks” and can be imagined as a concatenation of blocks consisting of a set of verifiable transactions, capable of connecting different nodes, physically made up of each participant’s servers in the network, which are used by individuals to participate in decision-making. One of the fundamental characteristics of blockchain is that it is comparable to a ledger in which every operation is recorded in the system and cannot be changed, modified, or tampered with in any way. In fact, to add a new block to the chain, a precise consensus protocol among these nodes is required. Once consensus is expressed by all the “servers,” the new block is added and each node updates its copy without any possibility of modifying the data once validated and entered.
2 Bitcoin: a peer-to-peer electronic payment system (https://bitcoin.org/it/documento-bitcoin).
3 In general, the birth of Bitcoin is full of curious stories and uncertainties. First and foremost, the identity of Satoshi Nakamoto, whose name does not seem to be traceable to any individual.
4 Smart contracts are computer codes inserted into distributed ledgers or blockchains, which store the result of their execution on these ledgers. The first person to talk about smart contracts was Nick Szabo, defining them as “computerized transaction protocols that execute the terms of a contract.”
6 https://www.mofo.com/resources/insights/210112-one-size-fits-all
7 A topic also addressed by The European Union Blockchain Observatory & Forum, Blockchain and GDPR (https://www.eublockchainforum.eu).
8 https://coinedition.com/cardanos-real-world-adoption-uae-embraces-the-blockchain
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