The use of cryptocurrency is revolutionising commercial transactions in several ways. Firstly, in terms of efficiency, cryptocurrency uses blockchain technology and each transaction is verified and recorded in a decentralised and secure manner. This eliminates the need for third-party intermediaries such as banks or payment processors, reducing transaction costs and increasing the speed of transactions.
Secondly, with regard to privacy, cryptocurrency offers greater privacy in transactions. According to a survey conducted by cybersecurity firm Kaspersky in 2022, over half of cryptocurrency users prioritise privacy and security over convenience and ease of use in their transactions. Since cryptocurrency transactions are decentralised, they are not tied to an individual’s identity or personal information, making them more private and secure.
Finally, from a global economic perspective, cryptocurrency offers new opportunities for international commerce. In January 2022, the Central Bank of Nigeria reported that the country’s monthly cryptocurrency transactions had reached $90 million, highlighting the growing adoption of cryptocurrency as a means of facilitating international trade and overcoming traditional financial barriers. As cryptocurrency operates independently of national currencies, it offers a way to conduct cross-border transactions without the need for currency conversions and other barriers to international trade.
As cryptocurrency gains popularity, lawyers must be prepared to navigate the legal implications of this technology. One of the most pressing concerns is how to regulate and tax cryptocurrency transactions. While many countries have implemented some form of regulation, the laws surrounding cryptocurrency remain largely ambiguous. This highlights the need for lawyers to adapt to this evolving area of law, with a particular focus on tax law, IP law and securities law.
The recent collapse of FTX and other cryptocurrency platforms has raised concerns about issues such as money laundering, fraud, and hacking. Cryptocurrency transactions can be difficult to trace and recover in the event of theft or fraud. As such, lawyers must be equipped to advise their clients on how to protect their assets and navigate legal disputes related to cryptocurrency.
With the increasing use of cryptocurrency in commercial transactions and demand for lawyers who understand the legal implications of it, cryptocurrency is recently one of the most common commercial awareness topics that would come up in a law firm’s interviews and understanding it can provide a competitive edge in the job market.
Law students should consider taking courses on cryptocurrency, blockchain technology, and the legal implications of these innovations. Additionally, participating in internships or clinics focused on cryptocurrency and blockchain can provide valuable experience to prepare students to enter the rapidly evolving legal profession.
Despite the setbacks experienced by FTX, Bitcoin, and other cryptocurrency platforms, the future of cryptocurrency in commercial transactions appears bright. As businesses seek faster, cheaper, and more secure transactions, the use of cryptocurrency is likely to increase.
The rise of cryptocurrency is transforming the way we conduct commercial transactions, offering new opportunities for security, efficiency, and international commerce. However, this new technology also brings with it a range of legal implications, including regulation, taxation, and security. Lawyers and aspiring lawyers must stay informed about this fast-moving field to ensure they are prepared to navigate the legal challenges of cryptocurrency and its impact on commercial transactions.
By Wing Han Chan
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