The risk of improperly gathering or even tampering with evidence exists in almost all dispute resolution processes, including litigation and arbitration. Digital evidence, such as emails, photos and videos, is not always secure and can be manipulated.
Blockchain, the technology behind cryptocurrencies such as bitcoin, offers a potential solution to safeguarding evidence by making it possible to determine when, how, by whom and from where the evidence was created or modified.
How does blockchain work?
Put simply, blockchain records and verifies data in a decentralised way. This means that the ledger is replicated and visible to all users in the network. In contrast, traditional centralised ledgers require a trusted third-party intermediary to hold the data. Decentralised ledger technology means that new transactions are shared across the network in real time and all copies of the ledger are updated accordingly.
Evidence is therefore automatically saved using cryptographic hashing to preserve its authenticity. Hashing means taking an input of any length and turning it into an output of a fixed length, usually as a long string of letters and numbers, known as a hash. Data on the blockchain is therefore 'hashed' in each block. If the block is changed, the hashed value would be different, making it easy to detect changes. Everyone in the network can verify whether a new transaction is valid based on the historical records available to them. This allows for secure storage and transmission of data.
See our video for further explanation.
China paves the way for securing evidence through blockchain
Last month, the Qingdao Arbitration Commission in China’s Shandong province – together with Baidu, China’s leading search engine – launched a blockchain solution for arbitration. This new venture uses the immutability of blockchain to ensure a secure and reliable log of evidence.
Earlier this year, China’s Supreme Court held that evidence authenticated with blockchain technology is binding in legal disputes, paving the way for blockchain-based evidence to be used in Chinese courts and tribunals.
The future of blockchain in dispute resolution
The UK's Ministry of Justice is also investigating the use of blockchain to secure digital evidence, but this is just one of many potential use cases for blockchain’s capabilities.
Kleros, a decentralised adjudication system, already uses the technology to arbitrate a variety of disputes arising out of smart contracts. Similarly, Mattereum has developed a decentralised dispute resolution and enforcement platform.
As blockchain develops, the potential remains for dispute resolution processes to be streamlined even further.