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Legal Daily focuses on blockchain: new topics and new ideas of the rule of law, and supervision must keep up

Time : 03/10/2021 Author : 6mxcuv Click : + -
        On October 24, the Political Bureau of the CPC Central Committee held the 18th collective learning on the current situation and trend of blockchain technology development. When presiding over the study, General Secretary Xi emphasized that the integrated application of blockchain technology plays an important role in the new technological revolution. For a time, blockchain technology has become the most concerned topic in society. What are the current applications of blockchain in the judicial field? What legal risks should we pay attention to in developing and applying blockchain technology? Please pay attention to a group of articles compiled and published in this issue of "voice edition". Blockchain is a chained database that combines data blocks in chronological order in a way that connects them back and forth. It is a distributed ledger that cannot be tampered with and forged in a cryptographic way.
        The characteristics of blockchain, for example, every time the villagers in a village have a transaction, they broadcast the transaction information to all the villagers through the village radio. After the villagers verify, this information is recorded in their respective account books. This chain recorded in chronological order is blockchain. Blockchain is traceable, extremely difficult to tamper with, and has high credibility. Therefore, blockchain has high application value in areas where credit is lacking, such as digital asset transfer, data rights confirmation, bills, securities, deposit certificates or anti-counterfeiting traceability. At present, the application based on blockchain technology can be divided into three types of scenarios: first, value transfer, such as the creation of virtual currency and its transfer between different accounts; The second is the type of deposit confirmation, which records information on the blockchain, such as electronic contracts and copyright confirmation; Third, authorization management, such as using smart contracts to control data access.
        In addition, with the continuous upgrading of application requirements, there are also scenarios of multi type integration. Because blockchain has the characteristics of point-to-point, borderless, sovereignty free and no specific legal liability subject, it not only brings great convenience, but also brings many risks. At present, the application of blockchain in financial related fields is the most concentrated, and the legal risks related to blockchain mainly occur in this aspect (in other fields, blockchain is more as a neutral technology to improve economic efficiency, and the legal risks involved are relatively limited at present). The first is the legal risks related to bitcoin. Bitcoin is the first mature and large-scale application of blockchain. At present, its market value is about US $160billion.
        In the departmental norms issued by China's financial regulators, the connotation or extension of virtual currency represented by bitcoin is not expressly stipulated or explained, and there are loopholes and gaps in legislation. First, in specific judicial practice, there are differences in the court's determination whether bitcoin belongs to legal property or computer information. Judicial decisions can not play a guiding role, and even have different judgments in the same case. Second, it is difficult to identify the market price of bitcoin. At present, there is no legal virtual currency trading platform in theory, and there is a lack of reasonable price reference. The price of bitcoin fluctuates violently, and it is difficult for law enforcement and judicial personnel to issue authoritative judgments on the price of bitcoin involved. It is easy to find that there are errors in conviction and sentencing due to the difficulty in determining the price of bitcoin, which is detrimental to judicial authority.
        Third, there are difficulties in jurisdiction and law enforcement. Bitcoin, an asset based on token, is different from traditional account assets (such as bank deposits). Bitcoin can be sent point-to-point, easily avoiding the financial supervision of a single sovereign country. In recent years, bitcoin has been gradually used as a means of payment for illegal transactions on the dark network; Some suspect use bitcoin as a tool for money laundering. Due to the quasi anonymity of bitcoin, it is difficult to monitor and track illegal and criminal acts. For cross-border network crimes involving bitcoin, its jurisdiction needs to be further clarified by legislation. The second is the legal risks related to ICO.
        ICO is called "initialcoinoffering" in English, which means the first public sale of tokens. ICO is a way for blockchain start-ups to issue initial digital tokens for project financing, and it is also an important application of blockchain technology in the field of crowdfunding. Although since September 2017, ICO financing has been completely prohibited in China. However, due to the difficulty of comprehensive and effective supervision of ICO, there are many illegal and criminal acts of black box operation and even pyramid selling. A large number of overseas ICO project parties exaggerate, even completely fabricate the project prospect, cheat the property of Chinese citizens, and are suspected of fund-raising fraud.
        Thirdly, the legal risks of blockchain in the non-financial field will gradually appear in the future, so we need to prepare for a rainy day. The Internet can solve the problem of information transmission, but it cannot solve the problem of physical transmission and physical verification. It is not easy to rely on blockchain to solve the tracking, anti-counterfeiting, quality assurance, etc. during the transmission or transportation of various certificates, such as the confirmation of rights on the chain, archives, etc. For example, at present, judicial deposit is realized through blockchain, which has been recognized by the judicial interpretation issued by the Supreme People's court in 2018. However, the judicial deposit based on blockchain can only ensure the authenticity of information in the digital world, and it is difficult to ensure the authenticity and accuracy of information outside the chain at the source and when it is written into the blockchain.
        Therefore, for the blockchain with judicial certificates, the relevant institutions need to conduct qualification certification and strict audit on the nodes connected to the blockchain to ensure the reputation of the information source in advance. Similarly, in the future, when various equity certificates (such as real estate certificates) are put on the chain, and blockchain is used for anti-counterfeiting and traceability, how can we ensure the authenticity and credibility of the information on the chain from the source? This requires the law to regulate in advance. Otherwise, once there are negative consequences, such as the rights and interests certificate of the chain transaction is forged in advance, the loss will be difficult to recover or will need to pay a very high price. In this regard, it is necessary to formulate corresponding specifications and set basic standards for nodes accessing the blockchain.
        Finally, the growing popularity of smart contracts based on blockchain is generating some new legal risks. For example, if the transaction object involved in the smart contract is prohibited by laws and regulations, how can the writer of such code be legally bound? If the civil subject who reached the smart contract is a person who does not have full civil capacity, can the smart contract be regarded as a civil contract? Is such a contract legally effective? In this regard, we need to further clarify the future legislation. In addition, some personal behavior data or privacy (such as medical information) are linked. In order to prevent the leakage of personal privacy, it is necessary to have complete standards or rules and guidelines in advance, and set up an encryption and authorization mechanism for personal information on the chain.
        In short, the blockchain industry needs to be regulated and even legislated by the state to promote the safe and orderly development of the blockchain industry. First, it will be very difficult to rely solely on one country to regulate in this ban mode. Therefore, it is suggested that regulators strengthen international cooperation and strengthen international regulation. Especially with the United States, Western Europe, Japan and South Korea and other regions with developed virtual currency markets. Second, carry out the pilot of ICO regulatory sandbox park to reduce the risk of ICO. Regulators can encourage some qualified local governments to carry out ICO regulatory sandbox parks and pass the filing, review and sandbox test of relevant local professional institutions. Third, promote industry self-discipline to make up for legislative deficiencies.
        Incomplete rule of law is the new normal in the era of transformation. The blockchain industry is developing with each passing day. For the legal risks of blockchain in specific application fields, it is difficult for legislation to keep up with the development of the industry, and it is not a panacea to legislate one by one. The author believes that regulators can promote industry self-discipline, and industry self-discipline organizations can formulate self-discipline regulations, industry standards and industry internal guidelines and norms to make up for the inherent shortcomings of legislation. Finally, promote the integration of blockchain technology and regulatory technology. Blockchain brings various challenges to legislation and regulation, which requires regulators and legislators to change their inherent thinking. With the help of blockchain technology and smart contracts, laws and contract terms can be transformed into simple and definite code based rules, which will be automatically implemented by the underlying blockchain network.
        In the future, technical rules will increasingly assume the same role and function as legal rules. With the help of codes, the government can transform some laws into technical rules and implement them by the underlying technical framework, so as to reduce the need for supervision and continuous implementation, reduce the cost of compliance and law enforcement, and reduce the inherent uncertainty of the legal text. At present, blockchain technology is still far from mature. Regulators can shape new specifications through different forms, affect code rules, and finally realize some internal governance of blockchain through automatic program operation, saving regulatory resources. (the author is a professor of Law School of Central University of Finance and Economics). In September, 2018, the judicial blockchain of Hangzhou Internet court was officially launched and put into operation, and then a number of alliance chains involving the confirmation and protection of rights were successively added.
        At present, the Hangzhou Internet court has realized the real-time uplink of key links that affect the quality and efficiency of trials and the credibility of justice, such as prosecution, filing, service, cross examination of evidence, trial opening, trial, execution, file management, data management, etc. In specific trial practice, the judicial blockchain technology of Hangzhou Internet court is mainly used in network copyright, adjacent right infringement disputes, network financial loan contracts, small loan contract disputes and other cases. The introduction of blockchain technology plays an important role in facilitating mass litigation, serving judges in handling cases, improving the quality and efficiency of trials, and promoting judicial openness. First, it is conducive to solving the identification problems of electronic evidence.
        Evidence is the basis and core of litigation. Electronic data in the case trial will involve four stages: the generation, storage, transmission and submission of electronic data. If there is a problem in any link, it is difficult to be accepted. Based on the decentralized structure of the judicial blockchain, tamper proof, encrypted storage and other characteristics, it can ensure the authenticity of the whole process of electronic data from generation, storage, transmission to final submission. Second, it is conducive to resolving disputes in advance. Because the judicial blockchain solves the problem of difficult identification of electronic evidence, based on the fact that the objective facts have been fixed and the parties cannot deny, the dispute can be resolved through pre mediation, which improves the efficiency of safeguarding rights and the ability to resolve disputes.
        Third, it is conducive to improving judicial efficiency. Even if the case enters the proceedings, combined with the transaction hash, the time to save the block, and the height of the block, from the perspective of civil evidence recognition, it is enough to constitute the dominant evidence recognition. Judges can focus more on judicial decisions, which greatly improves the trial efficiency. Fourth, it is conducive to the batch collection and classification of electronic evidence. Judicial blockchain can realize the batch collection and classification of electronic data evidence, and provide important support for batch filing, batch trial, artificial intelligence and intelligent trial. In September, 2018, the Hangzhou Internet court heard a case of infringement of the right of information network communication. In this case, the plaintiff obtained evidence and deposited evidence of the defendant's publishing of the alleged infringement article through the judicial blockchain platform, forming the relevant hash value and evidence documents.
        The court accepted the plaintiff's evidence in the trial, ordered the defendant to infringe and compensate the plaintiff for economic losses. After the judgment of the first instance was pronounced, neither party appealed and it has taken effect. This case is the first case in which the judgment confirms the way of obtaining evidence and depositing evidence on the judicial blockchain platform, and thus clarifies the review and judgment rules of electronic data formed by the judicial blockchain platform as evidence. On this basis, this case uses a shorter trial time to achieve the trial result of the conclusion of the case, saves the cost of the parties participating in the litigation, and improves the efficiency of the court in dealing with the case. In the trial of intellectual property dispute cases, the case withdrawal rate of judicial blockchain deposit is as high as 98.5%. This high withdrawal rate is mainly behind the recognition of blockchain deposit effectiveness by both the plaintiff and the defendant.
        After the introduction of judicial blockchain technology, through statistical calculation, it can help the parties save an average of 800 yuan in travel expenses, notarization fees and 16.8 hours on the way in the mediation and trial of network copyright and adjacency infringement disputes, reducing the litigation burden of the parties. In online shopping contract disputes and online service contract disputes, we helped e-commerce platforms and online service platforms reduce the dispute rate from 5% to less than 0.01%, saving a lot of risk control costs and legal costs. In online financial loan contract disputes and small loan contract disputes, we helped financial institutions realize a structured batch litigation system, with an average trial period of 24.6 days, which greatly improved the trial efficiency, and was conducive to ensuring the safety of bank credit funds and preventing financial risks.
        On October 24, Hangzhou Internet court also launched the judicial application of smart contracts based on judicial blockchain technology. In the future, it will take the lead in promoting the application in the fields of network service contracts and Internet financial contracts. The whole process of contract signing, performance, mediation and filing of disputes will be put on the chain. Take the performance of the contract as an example. After the traditional contract is signed, its performance completely depends on the personal credit of the parties. If one party breaches the contract, the other party needs to spend a lot of time and energy collecting evidence and safeguarding rights, with low illegal cost, long safeguarding cycle and high cost. Smart contract is to compile the terms of the contract into a set of computer code, which will run automatically after the parties to the transaction sign.
        Once the agreed conditions are met, the corresponding results will be triggered immediately. The whole transaction and state processing are automatically completed by the intelligent contract system built in at the bottom of the judicial chain, and the whole process is transparent and tamperable. The introduction of smart contracts is expected to improve the contract performance rate and effectively deal with a few breaches. (the author is the president of Hangzhou Internet court, interviewed and collated by our reporter Ma Shujuan). Due to the inherent shortcomings of electronic data, such as "virtuality, vulnerability, concealment and easy tampering", the lack of corresponding technical standards and practical means in the actual trial, and the lack of understanding of Internet technology by front-line judges, in the past judicial practice, electronic data was accepted as "highly difficult and inefficient".
        However, since the Beijing Internet court established the electronic evidence open ecological platform last year &mdash& mdash; This situation has changed since the "balance chain". The "balance chain" electronic evidence platform has attracted 19 nodes, including judicial institutions, industry organizations, large central enterprises, and large Internet platforms. In order to effectively support the Internet trial and truly solve the problems of difficult evidence collection, difficult certificate storage and difficult identification, the Beijing Internet court has compiled and issued the access standard for the electronic evidence platform of the Beijing Internet court and the code for the connection and management of the balance of the Beijing Internet court, which provides a comprehensive understanding of the third-party access platform from the aspects of institutional qualifications, professional and technical capabilities, the security of the platform, and the security of the generation, collection, storage and transmission of electronic data Compliance, etc. put forward clear requirements, which can be accessed only when the access standards are met.
        For online electronic evidence, it must be cross examined by the parties in court before it can be recognized by the judge. At present, the "balance chain" has access to dozens of application units from technical services, intellectual property, electronic contracts, financial services, third-party depository certificates and so on. Since the launch of "balance chain" on September 9, 2018, there have been more than 9.3 million electronic data on the chain, and the amount of cross chain deposit certificate data has reached hundreds of millions. During the trial of the case, 2452 pieces of cross chain deposit data were verified, involving 459 cases. After cross examination in court, no party raised an objection to the authenticity of the evidence deposited and certified on the blockchain. The specific operation process of "balance chain" is: after the application access party generates or receives the electronic evidence, it will summarize it in time and broadcast it to the trusted alliance chain network. After the certificate is successfully deposited, the "balance chain" will return the unique certificate number; When there is a lawsuit, the application access submits electronic evidence and certificate number to the litigation platform of Beijing Internet court; The litigation platform of Beijing Internet court inquires the content of the deposit certificate from the trusted alliance chain according to the litigation number; According to the contents of the deposit, automatic summary comparison is made to verify the authenticity, integrity and time of the electronic evidence.
        That is, in judicial practice, on the one hand, the "balance chain" can deposit the litigation documents and evidence uploaded by the parties to the electronic litigation platform to prevent tampering and ensure litigation security; On the other hand, we can verify the litigation evidence that has been stored in the "balance chain", so as to solve the difficulties of the parties in obtaining evidence and authentication
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