Blockchain: smart and justified

Yvonne Schäfer counts off the countries: “China is much farther ahead on this issue; Estonia goes without saying, and the Scandinavian countries are far in the lead, too.” The lawyer specializing in intellectual property rights has been addressing the “blockchain” topic for several years. “We are still at the beginning In Germany,” she remarks. For all the challenges that this technology poses, she takes a very optimistic view of the future. “The topic is mentioned seven times in the current coalition agreement,” Schäfer points out. She sees the current efforts to address the issue more actively.

China sees this future issue with different eyes. In 2017, for instance, more than half of the patent applications relating to blockchain were filed from China; so the US had already fallen behind, as t3n recently reported. A notable source of patent applications, for example, is the Chinese retail group Alibaba.

The 35-year-old lawyer at the SKW Schwarz law firm in Frankfurt currently sees great demand on the part of enterprises in particular. Especially in matters where proof of brand use is concerned, for instance. And around the topic of product piracy. Nevertheless, also where licenses are concerned; there are initial applications for the music sector. However, as Yvonne Schäfer also sees: “There are currently very few contacts on the topic of blockchain in Germany.”

The benefits

Blockchain can be used, for example, to provide seamless proof of intellectual property rights or to conclude licensing agreements. The major advantage of this technology: Since the blockchain network is decentralized, complex encryption is used and because the transactions are transparently chained in a chronological sequence, the technology is considered to be particularly secure and dependable. They are programmable rules in place, instituted based on the “if-then” principle. These advantages are also useful for applications in supply chains. Violations can be prosecuted. Stolen products can be located.

In Yvonne Schäfer’s view, the benefits of what are known as “smart contracts” are obvious in many industries. This way, for example, flight-delay insurance can be processed automatically in the future: the system would identify delays on a blockchain basis and automatically pay out money to the insured party; the insured party would not need to report the damage or file a claim. In principle, a “smart contract” could also simplify the purchase of vehicles by automatically generating and sending the new owner the deed to the vehicle and vehicle registration document once the funds-transfer transaction has been completed. “The simultaneous security and transparency of the transactions speak for this,” says the lawyer.

Another good example for Yvonne Schäfer is the use of blockchain technology in refugee aid. Datarella, Munich-based company, has developed a system that manages the allocation of aid once the people in need have been identified. The benefits are immense: intermediaries will no longer be needed, and transaction costs will drop significantly. The “blockchain” method also provides seamless auditing, real-time reports and thus significantly better control options.

Obstacles

There are still several obstacles that need to be overcome, however. One such hurdle, in Yvonne Schäfer’s view is the GDPR. “Because personal data are also processed very often in the blockchain, the GDPR must be observed. By its very nature, the storage of data within the blockchain is different from previous databases, because the storage here is permanent. It would therefore be desirable if there were other rules governing storage of personal data. Because blockchain storage is different, it also needs to be treated differently. To her, the fact that the issue is on the agenda within the government is a sign of further progress. The Digital Agenda Committee held a public hearing on the topic in November. Other questions that are still unanswered: What is the applicable law? How are terms and conditions taken into account? But also: Does blockchain registration count as evidence in a court of law?

Schäfer herself is involved in several expert groups on the topic of “blockchain.” These include Germany’s digital association, “Bitkom,” as well as specific committees of legal specialists working on IT and the law. She herself is not very enthusiastic about cryptocurrencies, a topic in their own right within the context of the blockchain. She is optimistic in spite of all the challenges that still need to be solved. “In my view, we will be able to establish blockchain technology in Germany,” she predicts.

Conclusion

In her opinion, enterprises considering working with the system should by all means look at the legal issues involved and contact a knowledgeable lawyer before implementing a blockchain project. Otherwise, there is a risk that a blockchain application cannot be used due to failure to clear legal hurdles. Only then does it make sense to search for providers for the application.