Intellectual Property on The Blockchain - Trends 2020
Link to Hackernnon - https://hackernoon.com/intellectual-property-on-the-blockchain-trends-2020-b5z3wgi
We are SharpShark.io - a blockchain-powered tool for intellectual property management
With the spread of the Internet, a vast grey area has formed, since digital content is so simple to copy and paste. Although two modern directives (The Digital Millennium Copyright Act
and the EU Copyright Directive
) have improved the situation in relation to authorship, there are still very few tools available for automatically tracking copyright infringement. Plagiarism scandals occur on Blockchain too
It's quite challenging to create something by yourself without copying other products. Some companies take each other's technologies and change them a bit. However, others make a 100% copy of an already existing platform or instrument.
A recent example of this is the conflict between the crypto exchange BitMEX and its fellow exchange Binance. BitMEX blamed Binance for plagiarizing documents. On 2019, September 4, the platform published
a sarcastic tweet, saying:
"Congrats on the Testnet Futures launches @binance. Glad to see you enjoyed reading our documentation as much as we enjoyed writing it!"
The tweet included screenshots of Binance's overview of the Auto Deleveraging system for its new futures contracts. The text is word-for-word identical to that of BitMEX
. Binance CEO Changpeng Zhao reacted to this tweet, owned up to the mistake, and promised to fix it.
The conflict between Binance and BitMEX was not that resonant. However, some Blockchain conflicts can cost companies huge amounts of money. As happened to TRON.
TRON is the $2.8 billion project aiming to put the media and the entertainment sphere on Blockchain. Now it is under fire for its whitepaper, which looks to have plagiarized the whitepapers of two other crypto projects: at least nine pages copy the whitepapers of FileCoin and IPFS. Sometimes the text is written word for word, and sometimes it's carelessly copied. The whitepaper also copies key ideas without citations, including IPFS and BitSwap concepts. Moreover, the TRON team also stole code from their competitors' papers.
There's no crime in using sources for reference, but the TRON team offers no citations for these reproductions in their whitepaper. If they had quoted FileCoin and IPFS, then the company could have avoided such a catastrophe. Although we may expect to see plagiarism and scam projects in the crypto world, seeing this happen to a cryptocurrency that has entered Coin Market Cap's Top 10 is unprecedented.
Currently, people can not always prove the connection between themselves and their creations. However, with blockchain, the author can create this evidence in just 3 clicks for cents and transfer the rights via a token, signing the transaction with their private key. The token contains a timestamped copyright registration, which can serve as proof of authenticity. This is the most straightforward and most evident example of the tokenization of digital assets.
This breakthrough system can make copyright registration easier, more convenient, transparent, and far cheaper. On top of that, another feature of blockchain is that it is impossible to delete the registered work even if it is a matter of censorship.
By making it easier to access copyrighted content legally, blockchain can suppress copyright violations. Moreover, blockchain allows you to create continuously updated metadata that makes it easier to reward copyright holders. This also fits perfectly with the European Directive that every author is entitled to royalties. Authors can benefit from transparency and the ability to track the use of their work that can lead to increased revenue due to a reduction in intermediaries: no third party, just the author and the person who used their work.
Often the media and authors think, what's wrong with my content being used? After all, this means more coverage! But this coverage won't help the media business because it doesn't lead to a media site link. One more thing to mention, copyright also prohibits the processing of other people's works without permission. It often happens that when someone takes your work, they can change the facts beyond recognition and replace them with exactly the opposite.
Just a few examples of what can happen if someone takes your work without permission:
- they can take your text and attach an ethically incorrect illustration.
- they can use a paragraph or a quote out of context and distort the meaning, so the author and the publisher will have to deny any false accusations and deal with any reputational losses.
- they can enter your name, position, or the company name incorrectly.
Presumption of Authorship and the Problems it Brings
The presumption of authorship is a legal concept. It means that the author is the one listed as the author of the work unless the court has established otherwise. To comply with the legal requirements, it is enough to indicate the author's first and last name on an article, the cover of a book, or at the bottom of a site.
All this led to the establishment of a whole industry of ghostwriters – people who write texts instead of a public person and subsequently renounce ownership of the material. This means that the owner can change and reissue the work any way they want.
Blockchain services suffer from the fact that they do not check with authors before uploading, using the presumption of authorship. According to law, this is true. In fact, it creates a huge field for violations. In the absolute majority of the 3-4 generations of blockchain services, that can store metadata and use blockchain apostille as a base, you can upload any text found on the Internet and get a certificate in your name.
For me, as a founder of SharpShark
, it was not easy to take a decision to go a difficult path. The peculiarity of SharpShark is that our service checks the content for uniqueness before uploading and does not allow any material that is already available on the Internet. Yes, this has its flaws – authors won't be able to publish their works retroactively. I understand that we can lose some great authors with fantastic material. But this feature will protect other authors with fresh content as much as possible. Symbol
in the core, the 4th generation Blockchain technology, suited perfectly for intellectual property.
Keeping Content on Blockchain: Pros and Cons
There are many content projects on blockchain because content is a reliable way to fill the blockchain with transactions. The most popular project remains Steemit
, which presented the concept of awards for authors in tokens.
Steemit values unique content: the higher its quality is, the higher the user's reward is. You can earn money by posting and curating (voting and commenting on other users' posts). As everything in life, Steemit has both a good and a bad side.
Good: When there was not yet much content, and it was of high quality, the authors got high rewards. Bad: Good news spreads fast. When other authors heard about the opportunity to get good money quickly, many of them started to use cheap and not unique content that ruined the system. And as a result, the network has fewer readers, fewer rewards, fewer good authors, and less network value.
Firstly, I saw the idea of monitoring violations on Steemit. Thanks to @Anyx, a user (unfairly censored on Steemit now) who developed the bot specializing in monitoring content. Anyx, if you're reading this, we didn't use a single line of your code, and we really want you to join the team!
There were more services inspired by Steemit but none ever reached the same level. For example, civil
. They both offered journalists and authors tokens in return for posting content on their pages. But the problem was that good authors needed good money. The services didn't have enough resources to attract a significant quantity of good authors.
Blockchain as an evidence
Some courts already accept Blockchain as evidence. For the media is a chance to be extra progressivist and take all the headlines in world media, if Blockchain will be used as evidence in a physical court. Moreover, there are already cases of acceptance of blockchain as legitimate evidence. For example, The Law Commission in the UK accepts smart contracts as evidence in court
“California has its legislation for Blockchain technology. It shows Blockchain as a distributed registry technology that uses a distributed, decentralized, and shared registry. It can be public or private, with access rights management or open, with or without a tokenized crypto economy. Data in the record is protected using cryptography, it is immutable, auditable, and provides total authenticity” – resuming Vladimir Popov, who, with his company Synergis, provides SharpShark with a legal base.
– Between 2021-2025, data from blockchain systems will be used as evidence in all developed judicial systems: both at a national and international level, – says Popov.
submitted by BlockDotCo
How the Latest German Regulations Target Bitcoin Exchanges and Custodians
A new German law requires every entity that holds private keys for others (e.g.,비트코인 거래소
and/or bitcoin custodians) and that actively addresses the German market must become licensed as early as January 1, 2020. And to address the most common misconception right at the beginning: No, it absolutely not matter where your company is based. What matters is if you are addressing the German market with your services.
“The law implementing the amendment to the fourth EU money laundering directive (Federal Law Gazette I of December 19, 2019, p. 2602) included the crypto deposit business as a new financial service in the KWG . Companies that want to provide these services require BaFin’s permission when the law comes into effect on January 1, 2020. However, the law provides for transitional provisions for companies that have already performed the transactions that are now subject to authorization before they came into force.”
[Citation: Kryptoverwahrgeschäft (BaFin), translated from German]
Despite the many open questions that are still unresolved, let me start this piece by stating that I am a general supporter of regulation if executed right. And I believe this new law could pave the way for Germany to become the “Crypto Heaven” of Europe, as especially large financial institutions and investors are in favor of regulated entities. But to also be honest right from the start, this will heavily depend on how regulators finally deal with questions as they arise. Even the best of intentions can still backfire on the German ecosystem if executed poorly. But, I am full of hope that this will not be the case, as the regulators and the industry appear to be working together more and more. And by working with, instead of against, each other, good regulatory decisions seem possible.
Taking everything into account, here are the four things I believe to be the main challenges regarding the new regulations:
- Lack of Clear Definition
There is no clear definition of what “actively addressing” the German market means; this will be decided on a case-by-case basis. By one possible interpretation, anyone operating a designated German website or offering German marketing material is likely to be actively addressing the German market. But if someone — for whatever reason — has a growing number of German customers without any “official” marketing, it could also be concluded you somehow MUST be actively addressing the German market (as otherwise you simply wouldn’t be able to gain this many new customers from Germany).
- Lack of “Passporting”
As the French are currently sorting out their regulations as well, it would have been great if both countries would have agreed on potentially “passporting” their respective licenses, meaning that if you are licensed in Germany, you could also operate in France without applying for a new license (or registering, to be exact). Although we strongly believe that this will come soon, it would have been great to have this agreement right from the start.
- Lack of Clarity
For an outsider not familiar with German regulations and law, the means of implementation and the timelines might seem strange (although they are very clever in fact). In short, you are deemed to be a licensed provider as of January 1, 2020, provisionally and retroactively, if you state to the officials that you plan to apply for a license before March 31, 2020, and then hand in your application before November 30, 2020 (yes, it appears to ask you to go back in time). This also means that if you say you are going to apply for a license before March 31, 2020, and then don’t hand in your application before November 30, 2020, you are deemed to have been illegal since January 1, 2020.
Furthermore, it also means that if you are conducting your business as you always have, you will most likely be deemed illegal since January 1, 2020. And that is a felony and not a misdemeanor. Although this is the case, some market players really seem to rely on a tactic called “reverse solicitation” (which means that basically a customer is free to choose whatever supplier he or she wants) and not apply for such a license.
I strongly believe that this is not the best idea, given the massive political implications of this new rule. As we’ve seen in the past, I would assume that Germany’s Federal Financial Supervisory Authority (BaFin) will regulate pretty strictly in this case, as otherwise the new law would simply make no sense and would harm the German economy, which would make little sense from a German point of view.
- Lack of Communication for International Stakeholders
Big improvements are needed on the communication side, especially regarding the international community as this is an international topic. Up until now, I have seen neither a direct translation of the law nor any advice in English from the regulators. Although this is advantageous for those of us who work in consultancy and advise exchanges and custodians in exactly these matters, this lack of clear communication from regulators is problematic in general.
A Strangely “Un-German” Lack of Structure
I sometimes laugh at a very funny “cultural” thing. Germans are known to have a form and a rule for pretty much everything. And it is true, that is how we are (with all the pros and cons that come with it). So it feels bizarre that, in this instance, it is not the case; hence the need for us to work together with regulators in order to establish proper rules and regulations on the fly.
For example, MPC (multi-party computation) is not addressed in the new law yet; the question of multisignature issues is also still open – among a myriad of different other, sometimes very specific issues. This lack of clarity makes a typical German feel pretty uncomfortable, as we are simply not used to that. What we have, at best, is a step-by-step approach with educated guesses and a lot of communication still to come.
The Role of Custodial Service Entities
Another interesting fact is the way custodians (tech providers) are dealing with these issues. According to a study carried out by Digital Assets Custody (to my knowledge the largest digital assets custodian comparison website on the internet), it seems as if most specialized infrastructure providers for digital assets custody seem to be avoiding regulation like the plague by stating that they would only serve as a tech provider and not as a custodian that needs to be regulated.
While I understand this avoidance approach, as regulation comes with its very own challenges, it seems shortsighted. On the one hand, I believe that regulation will ultimately evolve, concentrating on exchanges as a first step, but then they will come to focus on custodial services.
Depending on each entity’s respective tech stack and business model, it seems possible to me that not only the exchange but also the custodian will ultimately be deemed regulated entities. So it is basically just a matter of time before the regulators come knocking. And as seen in the past, it’s usually a good idea to be ahead of the game.
Solutions for Custodial Dilemmas
It is interesting to see that the new law around custodianship functions as kind of a wake-up call for the industry, although the respective players should have been alert in regards to Germany beforehand. This goes back to the view of the BaFin that judged Bitcoin as a so-called “Unit of Account,” making it a financial instrument; therefore, everybody dealing with these financial instruments should already have the proper licenses. This means that if you were to operate a bitcoin exchange you would — depending on the business model — need a license as a multilateral trading facility, for example. The Berlin Court of Appeal expressed a different view of this in a court case, resulting in some confusion here.
With the introduction of the newly created term “Krytowerte” (direct translation would be “crypto values”), it is now clear that bitcoin is indeed considered to be a financial instrument and that every entity dealing with it will have to be regulated in the same manner as firms dealing with any other financial instruments.
As the respective licenses are subject to the specifics of the business model, it is hard to give some “general information” about what is needed. The custodian licensing will most likely require two “fit and proper” managing directors, €125,000 (≈$136,000) in starting capital plus setup costs of around €250,000–€350,000 (≈$272,000–$380,000) and recurring yearly costs of €350,000 (≈$380,000). (These are rough estimations and can vary widely depending on your business model and various costs.)
All in all, the new law makes operating a digital assets business harder. But on the flipside, it also brings some degree of clarity and security to the people who interact with providers in the digital asset space.
Will everybody be happy with this new direction? No. But it’s a start.
This is an op ed by Dr. Sven Hildebrandt. Views expressed are his own and do not necessarily reflect those of Bitcoin Magazine or BTC Inc.
submitted by ashraf102