BUILDING BLOCKS: THE EMERGENCE OF BLOCKCHAIN ARBITRATION
Dispute resolution is typically a complex and time-consuming process, particularly when the dispute in question involves parties from more than one jurisdiction. As such, any reliable method that advances efficiency is likely to be welcomed. To that end, the development of a new procedure for dispute resolution – blockchain arbitration – is being watched with keen interest.
Blockchain technology is a type of distributed ledger technology, which is essentially a digital database of information that can be simultaneously used and shared within a large, decentralised, publicly accessible network. The blockchain operates by time-stamping the hash of a block. That time-stamp can then be used as proof to show that the data must have existed at that particular time. Each block contains the data of the previous block, in its hash, thereby forming a chain. The hash algorithm protects the data or value, inside a block, from being replicated, which makes the block impenetrable. The database is open to all for scrutiny, eliminating the need for a central authority.
Blockchain arbitration refers to the process of resolving disputes using blockchain technology, predicated on certain automated functionalities. It can be divided into ‘on-chain’ and ‘off-chain’ processes. ‘On-chain’ arbitration involves the use of an automated smart contract while ‘off-chain’ refers to processes with less automation, such as only for the purposes of appointing an arbitrator.
Apr-Jun 2022 issue
Richard Summerfield