Tuesday, May 3, 2016

Another Technology to Plan For: Blockchain Contracts


As we all know, courts have to deal with contracts between parties.  And courts also very often have to verify the authenticity of information.

There is a lot of work going on using Blockchain database technology.  So it is time to learn about and plan for its use in the justice system.  We discuss below.




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A couple of weeks back I saw a good video introduction to Blockchain technology used in “Bitcoin” was posted on the Boing Boing blog that we are embedding in this post below (link here):




A further explanation is provided in a really excellent Wall Street Journal “The CIO Journal” blog post.  The author explains that Blockchain essentially implements a distributed ledger thus avoiding traditional clearing house roadblocks.  So think of the credit card/bank centralized systems.  When the connection between your ATM or the restaurant credit card system and the bank/clearinghouse fails, you can’t get your money or purchase your meal with your card.  But if the purchase was authorized using Blockchain type of technology, it wouldn’t matter that your bank’s server was down at that moment because the authorization or confirmation of your account is distributed eliminating single point of failure.

Now that you have a little idea of how a Blockchain works, there is a lot of work going on in applying the technology to what is termed “Smart Contracts”.  What does that mean?  Read on.

An article posted on “cryptocoinsnews.com” (yes, I had no idea there was such a website) titled “Are Smart Contracts the Future of Blockchain?”.  The article explains that the “term ‘smart contract’ was coined by Nick Szabo, one of bitcoin’s alleged creators in 1993 and essentially means “programmable money” or self-automated computer programs that can carry out the terms of any contract”. Interesting.

Another excellent article posted on coindesk.com (yes, again, who knew?) titled “9 Myths Surrounding Blockchain Smart Contracts” that I recommend that you should read in full provides welcome additional explanation.  In summary it notes:

  1. Smart contracts are the same as a contractual agreement
  2. Smart contracts are like Ricardian contracts (see definition here)
  3. Smart contracts are legally enforceable (editors note: I think this is the most interesting part to us in the courts)- Smart contracts are not law (yet), but they could represent pieces of a legal agreement. The legalities around smart contracts are a work in progress. A smart contract outcome could be used as an audit trail to prove that terms of legal agreement were followed or not.
  4. Smart contracts include Artificial Intelligence. (the answer is no)
  5. Smart contracts are Blockchain applications
  6. Smart contracts are easy to program.  (the author say the answer is both yes and no)
  7. Smart contracts are for developers only. (the author says true today but it is changing)
  8. Smart contracts are not safe. (the author says not true)
  9. Smart contracts have limited applications. (the author also argues that this is not true).

All of this is very interesting and I will be monitoring developments closely.  But we do see one immediate potential use for the courts: verifying judicial orders especially for jail and prison release. In our opinion the justice system has been crippled by the inability to create a verifiable electronic signature network for the myriad of the participating governments and agencies.  Simply the system has not been able to agree on the central repository.  By distributing this capability using Blockchain the “release smart contract” could be much more easily implemented since no one participant would be reliant upon any other.

IBM has put up an interesting Blockchain for Developers website that looks useful.

What do you think?  Please feel free to share any ideas, projects, or links to articles we should read in the comments below.

2 comments:

  1. Blockchain smart contracts provide data certainty, a tool that has many uses in administration of justice, from document authentication to smoothing processes that slow the system and overwhelm users. As a career litigator who now writes smart contracts, I see many use case applications for smart contracts in court administration.

    Eris Industries is lawyer-owned and focused, providing free and open source tools and tutorials for users to build their own smart contract solutions.

    https://blog.erisindustries.com/business/2016/04/03/wtf-is-eris/

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  2. I apologize for not including the link to the IBM Blockchain for Developers website link. It is: http://www.ibm.com/blockchain/for_developers.html - Jim

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