In this article Robert Herian expresses his opinion on the possibilities of Blockchain to offer a solution to some difficult ethical situations.
British Prime Minister David Cameron’s dealings with taxes and his invasion in 2013 to block transparency rules concerning offshore trusts faces more detailed study. It was said that the companies’ standards of trust funding must differ from the standards of owners and benefit-entitled citizens.
The Panama Papers raise essential issues whether trust funds are supposed to be more transparent to public examination. The main reason for this is connected with the just when people pay taxes. The Blockchain system can find a solution to this problem. It will give the opportunity to the trusts to be more transparent and guarantee the security of the possessions.
Trusts are complicated legal agreements but they have the same fundamental basis. Trusts were created hundreds years ago and they give a special individual method of personal estate management. This method is about how finances are used and is connected with the separation of ownership from the requirements of personal estate management that have a special ownership title.
There are different forms of trusts: public and private. Their history is based on the people’s wish to have an opportunity to protect their personal estate and, what is more important, to pass it to the descendants.
The beginning of trusts
The story of how trusts were created is connected with the Crusades and relates to the 11th and 12th centuries. Before leaving to fight in the Middle East, the Crusades chose the trustee who was supposed to manage their land on behalf of benefit-entitled citizens.
The method of property estate management and transfer hadn’t been regulated by Common Law which considered the friend as an absolute land owner when he was given the responsibilities.
But the law in England and Wales had a different view to the issue. But the Law was based on the justice and it spelled out some rules that preserved the interests of the family. The law gave strict responsibilities and obligations of trust and support to the trustee. So the friend had to take care of the personal estate as the Crusader wanted. Nowadays trusts have transformed into the forms of international commercial investment and trading tool; individual pension funds and charities. The just-mentioned structures are the most important.
These are the remains of the agreed principles between the Crusader, the trustee and the family.
So it said that the trusts are based on the traditional privacy models in the sphere of banking and finance. These models are supposed to protect the identities of the object of the trust as well as the investments and transactions.
The Blockchain technology makes some legal-like processes easier to use with the help of the special computer programs called “smart contracts”. Recently there was a research on how these programs might influence the trusts law and trusteeship. It is necessary to name some basic characteristics of Blockchain to understand if it can help to make trusts more open to the publics.
Blockchain is a peer-to-peer distributed account book system that can register information in a changeless way. It can transform to a register of property rights to personal estates and beneficial interests which are immensely important for the trust funds.
As far as the Blockchain is concerned it is really trustworthy concerning the information it deals with. Moreover the information that is added or registered on Blockchain is publicized giving the opportunity to examine the transparent history.
But it is not about the fact that the Blockchain is not private. The privacy of the financial data is supported and reached using different approaches.
There is an opportunity to use two sets of encoded keys, one public and one private, to confirm transactions. This way makes it possible to have secure private spaces that anyway stay in public view.
In comparison with other methods that support the privacy of investments by hiding all the process from public view, the Blockchain system just keeps public keys anonymous.
That means that a trust can be transformed into a “private space”. So any legally defined trust can be reflected in the Blockchain processes behind the “private space”. Robert Herian called it a “smart trust” that is a untroubled private space that is available for a detailed public study. The Blockchain system is called here a “third way” to existing privacy systems.
But that doesn’t mean that Blockchain “smart trusts” fit all the types of trusts as they have different shapes and sizes. Trusts are known for a long time and the Blockchain system is rather new. Undoubtedly it will take time to clear up all the spheres where these two systems can work together.