Policy and regulatory challenges to deploying blockchain technologies

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Boujemi, Hanane
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University of Malta; DiploFoundation
Blockchain technologies are heralded by some as one of the most promising innovations after the Internet. The concept’s origins are linked to Bitcoin, a paperless cryptocurrency, and the first decentralized digital currency that works without a central bank or single administrator. The concept is generating worldwide interest because it challenges the status quo of centralised structures, and effectively omits intermediaries in exchanging values. Scepticism regarding whether or not blockchain technologies can deliver on their promise to omit centralised authorities is looming, however, due to the lack of concrete products to validate its use beyond the financial sector. Most of the ideas are still in the proof of concept phase, and most investments in these same concepts are merely speculative and are not representative of the real potential blockchain technologies offer.The hype surrounding blockchain can no longer be ignored as news breaks everyday about blockchain powered products mushrooming all over the world; hence, it is crucial to research its technical parameters, understand them, and aim to define the main challenges we could potentially face if it is widely adopted. The current discussion trends in technology circles suggests that blockchain technologies will be at the centre of innovative solutions to almost every dilemma humanity is facing. If that is the case, though, there is a need to identify the regulatory and policy implications of blockchain deployment due to its distributed and transnational nature. This dissertation provides overviews of blockchain’s history to understand its origins before moving on to investigate its core features and how it qualifies as a disruptive technology. A descriptive section on how blockchain technologies work follows to provide a description of its technical foundation and how it links to the theory of decentralised systems. The analysis extends to address the legal and policy implications of blockchain applications. The objective is to depict the importance of introducing regulation that promotes innovation and transparency in decision-making. Examples of governmental approaches in various jurisdictions then clarifies how regulatory frameworks are adapted to provide creative solutions to regulatory issues specific to blockchain technologies but without forgetting to present the legal challenges pertaining to their deployment. Additionally, the analysis explores to what extent the design criteria of blockchain technologies are compatible with currently implemented regulation. Finally, this dissertation highlights the issue of the governance structure of blockchain technologies, and how it can hinder the evolution of this technology in the absence of a baseline good governance model that is not solely grounded in the good intentions of coders. The focus is then shifted to analyse how to build consensus around blockchain-related challenges, the transparency of relevant decision-making processes, the balance of power in blockchain technologies as distributed structures, and how to maintain the interest of the minority in a majority-based consensus mechanism on which blockchain technologies thrive.