Smart Contracts: The Future of Contracts, Brought To You By Blockchain – Above the Law

By Olga V. Mack      May 14, 2018

Smart contracts are a transformative new technology that can revolutionize the way businesses process deals.

If you’ve been following this series on blockchain, you now know blockchain’s disruption beyond bitcoin, how that disruption is affecting different industries, and how to get yourself ready for that cross-industry disruption. Now, it’s time to delve into another exciting application of blockchain: smart contracts. Smart contracts are a transformative new technology that can revolutionize the way businesses process deals.

So What’s Ethereum, Anyway?

Simply put, Ethereum is a cryptocurrency you can use to build “smart contracts.” You may be thinking, if contracts start getting smart, how long do I have my job as a lawyer? Spoiler alert: The term “smart contracts” is a mis-descriptive term, at least to some extent. Smart contracts are neither “smart,” nor really “contracts,” at least not in the classic sense of the word! First, we must explore the concept of “trust” and the related concept of “permanence.” Then, we will discuss the word “contract.” Understanding these terms is the secret to understanding “smart contracts” and harnessing their power.

More at: Smart Contracts: The Future of Contracts, Brought To You By Blockchain – Above the Law

Advertisements

The US Supreme Court Just Opened the Gates to Filing Crypto Class Actions in State Courts – Daily Business Review

By Justin Wales      March 22, 2018

This week’s U.S. Supreme Court decision in Cyan v. Beaver County Employees Retirement Fund could have a major impact on how and where we see class action securities claims brought against issuers of new cryptocurrencies.

By way of background, not even Satoshi Nakamoto, the pseudonymous developer credited with creating Bitcoin, could have predicted that the first truly transformative use of his innovative blockchain technology would be to disintermediate venture fundraising through the sale of proprietary virtual tokens. Unfortunately for the issuers of the more than 1,500 cryptocurrencies or tokens that have already been issued — many of which were promoted to inexperienced and unaccredited investors as nonsecurity “utility tokens” — the Securities and Exchange Commission has taken an increasingly hostile view of token sales. SEC head Jay Clayton has gone so far as stating that he has not seen a token sale that he does not consider the sale of securities.

The burgeoning crypto bar has been anticipating a wave of litigation around token sales instigated by the regulatory uncertainty over whether a token issuance necessarily constitutes the sale of a security, as well as by bad actors attracted to the space by the possibility of raising millions of dollars from an exuberant market that has not demanded the issuer first demonstrate that its technology is not mere vapor or that its claims are true. Thus far, however, there have only been a handful of class actions filed nationwide. As of the date of this publication, all of the class cases have been filed in federal court.

More at: The US Supreme Court Just Opened the Gates to Filing Crypto Class Actions in State Courts – Daily Business Review

Why blockchain challenges conventional thinking about intellectual property – TechXplore

By Alexandra Sims      February 27, 2018

Cryptocurrencies are getting a lot of attention, but finance is only one of many applications of the blockchain technology behind it.

Blockchain technology is poised to revolutionise almost everything from supply chains (including illegal fishing and human rights abuses), insurance and health.

It is flourishing in an open-source environment, which raises the question whether our current intellectual property laws are fit for purpose to foster innovation.

Intellectual property law’s incentive theory

Intellectual property laws, such as patents and copyright, are premised on the incentive theory. To incentivise people to create, they are given, in effect, a monopoly (with some exceptions) on their creations and can go to court and stop others from free-riding on their work.

The digital world has made the tension between innovators and free riders even more acute. In the pre-digital era, copying a book incurred considerable costs for the copier. Now, given that digital files can be copied indefinitely for near zero cost, one could argue that we need even stronger IP laws to prevent rampant and unfair copying.

More at: Why blockchain challenges conventional thinking about intellectual property – TechXplore

California Introduces Bill to Legally Recognize Blockchain Records – CryptoSlate

By Shiraz Jagati      February 26, 2018

With Arizona recently having passed a bill that allows citizens to pay their taxes via various cryptocurrencies, California has been the latest addition to the list of states that are now actively looking to incorporate blockchain technology into their daily mode of operation.

In a highly anticipated move, California lawmakers have introduced a new Assembly Bill on the 20th of Feb that pushes for the recognition of blockchain contracts, signatures and transactions for all legal purposes.

Jerry Brown CaliforniaJerry Brown is the current Governor of California, previously holding the position from 1975 to 1983, making him the state’s longest-serving Governor.

However, the tabled bill still needs to be approved by the state assembly and signed off by Governor Jerry Brown before it can take effect and become operational. The potential law reform is being championed by Ian Calderon —  one of the youngest members of the California state assembly.

More at: California Introduces Bill to Legally Recognize Blockchain Records – CryptoSlate

How Blockchain Technology Is Transforming the Legal Industry – Bloomberg Law

By Jasmine Ye Han      February 20, 2018

Blockchain is making its way in to the day-to-day legal practice of major law firms, such as K&L Gates.

It’s not just a technology that law firms are learning about for client matters. Blockchain could become a core way of how the modern legal practice operates.

“You don’t need to be doing initial coin offerings or issuing tokens to benefit from the blockchain,” Judith Rinearson, a partner in K&L Gates’ New York and London offices, told Bloomberg Law. Rinearson is leading an initiative at her firm that aims to eventually build an internal blockchain, which could be used in time-keeping, filing deeds, and handling merger and acquisition transactions, she said.

More at: How Blockchain Technology Is Transforming the Legal Industry – Bloomberg Law

Blockchain Integration Proof of Concept for Legal Market – Database Trends and Applications

January 31, 2018

NetDocuments, a cloud platform for legal IT, says it has completed a proof of concept for the integration of NetDocuments’ cloud platform with blockchain technology, enabling firms to validate document existence, details, status, and metadata via a verified and distributed digital ledger.

Incorporating blockchain technology into NetDocuments’ governance platform enables sensitive and transactional documents to be verified by posting to an open-source digital ledger, validating document details such as canonization, approval, status, filing and other relevant document information. Verified documents will retain a blockchain ID, ensuring accuracy through a distributed digital trust network. The technology integration includes blockchain certification of content stored in NetDocuments as well as certification of contents in local device storage.

More at: Blockchain Integration Proof of Concept for Legal Market – Database Trends and Applications

3 Risks Every Lawyer Should Know About Blockchain Technology – Above the Law

By Tom Kulik      January 22, 2018

This technology is as ingenious as it is effective, but as with all technology, it can also be legally deceptive for the unwary.

By now, most of you have probably heard about blockchain technology.  At its essence, it is a distributed ledger technology (“DLT”) that leverages a decentralized computer system to create secure, verifiable and permanent records of transactions. Each block contains data not only about the transaction, but other data that “links” it to the previous block in the chain. Think of a log of transactions (blocks) linked together (chain) in an encrypted ledger without a centralized administrator, replicated and authenticated across a computer network and synchronized so that they all reflect the information as it is updated.  You have probably heard it most often in conjunction with cryptocurrencies, such as Bitcoin and Ethereum — examples of decentralized, digital currencies that use blockchain technology at their core to verify and record the exchange of currency directly between two parties, all without the involvement of a centralized banking structure. This technology is as ingenious as it is effective, but as with all technology, it can also be legally deceptive for the unwary.

More at: 3 Risks Every Lawyer Should Know About Blockchain Technology – Above the Law