Blockchain: 5 Key Factors Policymakers To Consider
Blockchain is well-known as a relatively new and powerful technology that allows two or more parties to carry out a trusted and safe transaction with each other through a digital ledger and without an intermediary. Blockchain technology is used in many applications, such as cryptocurrencies, which is the most popular one. It involves buying and selling currencies like through PayTM Bitcoin and making a profit. Other applications include smart contracts, authenticity tracking, shared data, decentralized markets, and digital identity.
It’s expected that the government should be doing more to support blockchain, especially the policymakers, by creating a conducive regulatory environment for experimentation.
Policymakers must do all they can to support the innovation and adoption of blockchain. The primary way they can do this is by setting up targeted and flexible regulations. To do this, there are different fundamental factors that they have to consider. This guide will look at the top five key factors policymakers have to consider in the blockchain.
1. Have A Tech-Neutral Approach
One essential factor that policymakers have to consider is using a tech-neutral approach in setting up rules. The rules that they come up with should create a level playing field for all business applications and models rather than favoring one and being disadvantageous to the other.
As a policymaker, you should support all efforts to increase digitization but be neutral about particular technologies. Despite the technology used to digitize processes, the benefits will be the same either way, so there’s no point giving one application an edge over the other.
When policymakers are trying to choose the technology they should adopt, they should consider the project’s challenges and what makes each technology different as part of the tech-neutral approach. The same rules should be applied to other technologies offering similar goods and services.
As one builds a tech-neutral approach, it’s also essential to check whether the current rules apply to new applications that were not around when making that rule. This will ensure that the new applications are on equal ground with the old ones.
2. Legal Surety Of Blockchain Technology Applications
Another important factor that a policymaker has to consider is the legal aspect of blockchain technology applications. There’s no point in setting up policies when some blockchain applications are not yet legally binding, as this can cause trouble for the users along the road.
Everyday users will only begin to trust blockchain technology and its applications if they are sure that it can be used in legal disputes today. Blockchain allows users to record, share, and secure a ledger of transactions, so both private and public sectors can use it. One crucial law that needs to be considered is the user signatures and blockchain transactions being legally binding.
One example of this factor is the shift from wet to digital signatures. Although many people want to use digital signatures supported by blockchain, different complex and confusing laws, don’t give it a legal certainty. Only a few states have legitimized it.
Before making any policy related to blockchain-secured records and signatures, or other blockchain applications, policymakers should consider the factor of legal surety.
3. Having A Framework That Allows For Experimentation
The next item on our list of critical factors has a flexible regulatory framework that allows for experimentation. Policymakers cannot correctly support blockchain technology investigation without having a flexible regulatory environment where companies can try out different blockchain-related ideas.
There are different ways policymakers can take care of this factor, such as setting up administrative processes to organize and understand blockchain-based services and goods. This step should include interagency communication for all blockchain agencies in the state, so there will be no conflicting policies.
Another way a policymaker can consider a framework that allows for experimentation is by setting up different administrative tools. These tools will give blockchain companies relief, so they don’t have to turn to enforcement actions. This can be done by sending no-action letters to the related agencies.
Finally, the idea of a regulatory sandbox for blockchain experiments is a good idea. Policymakers can set up these sandboxes that give blockchain services or goods a safe landing by allowing agencies to test them with the policymaker’s supervision and in a confined environment.
4. Laws That Limit Or Prevent Blockchain
Another essential factor to consider when it comes to policymakers and blockchain is specific laws preventing or limiting this. It’s necessary to avoid passing laws that avoid applications of blockchain and technology. If such laws already exist, policymakers have to get rid of them if they want to support blockchain.
There are different kinds of laws that indirectly ban the use of blockchain. They include policies that weaken encryption standards. Having these kinds of policies in place will prevent businesses that want to apply blockchain from doing so. This is because blockchain requires high-tech and strong cryptography.
Another kind of policy limiting blockchain has ordered organizations to delete specific types of information and data. When there is a law for mandated data removal, it limits blockchain technology because it’s hard to remove data from the blockchain, especially public types.
Lastly, we have laws that restrict blockchain data from leaving the country’s borders. These laws will limit blockchain on a global stage, leaving the users only to use blockchain applications in their domestic country.
5. The International Use Of Blockchain
The final factor for policymakers to consider when trying to support blockchain is the international sector. In other words, policymakers should create international cooperation of blockchain regulations, regardless of the industry applied.
Public blockchain and other types of blockchain technology applications can function in the same way the Internet functions. So, it can be used in global systems rather than just individual companies. It will be hard to fully support blockchain if there are conflicting frameworks for businesses in different countries, so policymakers should consider the international sector.
They can take care of this factor by making their rules and policies align with those across borders, especially for a public blockchain.
Blockchain For Policymakers And The Common Man
The fascinating fact about blockchain is the fact that it concerns both policymakers and the common man. Policymakers are doing their best to support blockchain while the common man is benefitting from the technology.
One primary way you can benefit from blockchain is by investing in cryptocurrency. It’s easy to know how to buy Bitcoin in India or sell it. Apart from Bitcoin, there are other currencies you can invest in. Check out Vertex Market today to find out more.