The following Private Client guidance note Produced in partnership with James Brockhurst of Forsters provides comprehensive and up to date legal information covering:
This Practice Note explains the phenomenon of ‘crypto-assets’, namely assets which are issued using distributed ledger technology, alternatively known as blockchain technology.
It includes a discussion of how these assets are dealt with in practice and the issues that practitioners face in this evolving area.
A blockchain, in its purest form, is a digital ledger which records transactions chronologically and which is ‘distributed’ across a network of computers around the world. The novel feature of blockchain, as compared to existing ledgers, is that it is decentralised (distributed) and hence there is no centralised institution which maintains the ledger.
Private Client practitioners might better understand blockchain technology if they consider the functions of a blockchain. The core function of a blockchain is a mechanism for storing and transferring data on a decentralised platform. This means that blockchain technology can facilitate the transfer of any asset without the need for an intermediary.
It is a mechanism by which X can transfer an asset to Y, and that transfer is recorded on one single public (ie distributed) ledger.
However, a blockchain will not record the identities of X and Y. Instead, X and Y will each have what is known as a public key. A public key is their identity on the blockchain—it is comparable to a bank account, so that anyone who
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