Law and the Blockchain by Debbie Ginsberg

Law and the Blockchain

By Debbie Ginsberg

Educational Technology Librarian, Chicago-Kent College of Law

The blockchain explosion is affecting many sectors, not least of which is the law.  Already, this technology is affecting not only the practice of law, but the law itself.

Practice of Law

One of the major legal practices affected by blockchain is contracts.  Programmable blockchains are capable of creating “smart contracts” – contracts that either execute themselves or can be programmed to take into account outside variables.  For example, we could use blockchain to program a contract where Acme sells Customer 1000 widgets for $1000 to ship in one week.  

The blockchain could implement a provision that Customer receives a 1% discount if the shipment is late.  The blockchain could also use an “oracle”, or a tool for incorporating outside information, to base the cost of the widgets on the price of steel.  See “ISDA/Linklaters Smart Contracts and Distributed Ledger – A Legal Perspective” for more information

Additionally, intellectual property practice is incorporating blockchain to manage asset life cycles.  Artists can use blockchain to sell access to media files directly to their consumers, tracking not only who should be able to use the assets, but who should get paid for their use.  See “How the technology behind Bitcoin could change the music industry – and help everyone get paid.”

Legal Blockchain

In the US, states are starting to pass laws to legalize blockchain.  For example Arizona passed a law that says:

A signature that is secured through blockchain technology is considered to be in electronic form and to be an electronic signature … A record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record.

(Note that Arizona also passed a law that forbid using blockchains to track gun ownership.)  Other states, including Vermont and Delaware, also have blockchain laws on the books.  See “Arizona Governor Signs Blockchain Bill Into Law.”

Often, states don’t create brand-new laws for each situation, but will often adopt model laws.  In July, the Uniform Law Commission passed a “Model Uniform Law” for using blockchain for digital currencies.  See “The Uniform Law Commission Has Given States a Clear Path to Approach Bitcoin.”

Law Libraries

This site has been collecting many ideas for using blockchain in libraries.  For law libraries, there is a further possibility – authenticating primary sources.  Right now, the federal government and some states authenticate primary law documents (e.g. statutes, case law, and regulations) by creating special files.  However, it’s not always possible to tell if the authenticated file is the most recent version of the law.  Blockchains could be used to designate a specific location where the most recent and authentic versions live.

What’s Next

We are just at the beginning of seeing some of the possible changes that blockchain will bring to the legal field.  Some states, like Illinois, are exploring ways to put real estate titles on the blockchain, which could change the law of real property (note some countries have already started this process).  See the Illinois Blockchain Initiative.

Some lawyers are exploring ways to put wills into a blockchain.  This would help ensure a person’s last wishes were not only well-defined, but self-executing.  For example, a blockchain will could automatically execute a provision such as “Jane Doe will receive $10,000 upon graduating college.”

We are only seeing the first changes that blockchain and related technologies are bringing to the practice of law.  The next few years could change law completely.