The challenges of cryptocurrency, NFTs, and smart contracts on litigation
The central concept was decentralisation, users transacting with each other without the need for an intermediary such as a bank or agent. This was possible only through the uniqueness of keys used to operate each transaction and the public nature of the chain.
The paper laid the foundation for blockchain technology and now, 14 years later, we have a cryptocurrency market estimated by Bloomberg to be worth £2.2 trillion, an NFT market of £29 billion, and contracts that can use this technology to perform themselves without human intervention.
The boom of this new decentralised world brings with it unique challenges for litigators. This article considers the current scope of cryptocurrency litigation and commercial disputes relating to cryptocurrency, NFTs, and smart contracts.
Interim orders
Although cryptocurrency transactions are necessarily publicly recorded, anonymity is central to their operation. In fact, Nakamoto advised that users create a new key (i.e a new code) for each transaction to prevent different transactions from being attributable to a single owner.
It is therefore unsurprising that cryptocurrency is particularly vulnerable to fraud, given that the currency can be held by anyone without any verification of identity. A report by Chainalysis in January 2022 found that illicit addresses already hold $10 billion worth of cryptocurrencies, the majority of which is associated with crypto theft. A common difficulty for victims of crypto theft and fraud is therefore uncovering the identities of their defrauders.
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